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Medicare Reimbursement to be Cut at Many Indiana Hospitals

— October 25, 2018

Medicare Reimbursement to be Cut at Many Indiana Hospitals

A September report from the Centers for Medicare and Medicaid Services examined data for patients who returned from July 2014 to July 2017, and approximately 80 percent of Indiana’s hospitals face penalties totaling $12 million and reimbursement cuts for having too many patients who returned for care within a month of their discharge.  The report showed patients returned after being hospitalized for conditions such as heart failure, heart attacks, pneumonia, chronic lung disease, hip and knee replacements, and coronary-artery bypass graft surgeries.  The state is ranked 29th nationally for percentage of hospitals penalized.

Medicare payments at 66 Indiana hospitals will be cut $12 million in 2019, an increase from $9 million in penalties three years ago.  Only 17 Indiana hospitals weren’t penalized, and 37 hospitals are exempt because they serve children, veterans, and psychiatric patients, are critical-access hospitals or have too few cases.

Readmissions normally indicate that treatment which should have been administered during the initial visit wasn’t or that it wasn’t adequate.  Readmissions cost taxpayers billions of dollars a year, according to the federal government.  So, for the seventh consecutive year, Medicare is using the pressure of lower reimbursements to get Indiana’s hospitals to improve.

“It’s a complex problem, and I think all the hospitals are trying to do better, improve the quality,” said David Blish, director of healthcare consulting at Katz Sapper & Miller in Indianapolis. “It’s a major management focus in every facility.”

Medicare Reimbursement to be Cut at Many Indiana Hospitals
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He added, “Twenty years ago, patients would be admitted, stay until they’re healed, and then be discharged.  Now, the admissions decision is pretty complicated.  People are coming to the hospital, but they’re not technically admitted.  They’re staying 24 or 36 hours and then leaving, all under observation status.”

“It’s getting more difficult,” echoed Brian Tabor, president of the Indiana Hospital Association. “Hospitals have picked a lot of the low-hanging fruit in terms of strategies.  And so, the work gets harder and harder.”

The hospital facing the highest penalty in central Indiana is Community Hospital North in Indianapolis.  It will see its Medicare reimbursements cut 1.56 percent.  Community Health Network said many of the readmissions are the result of readmissions from nursing home patients with severe conditions, such as chronic obstructive pulmonary disease, heart disease, and pneumonia.

Officials are trying to address the problem by sending nurse practitioners, pharmacists, and social workers to the homes of discharged patients to ensure they continue to receive proper care.   Hospitals are also sending patients home with a thick, detailed packet of discharge instructions and a month’s worth of medications.

“This is the continual pounding by CMS that has been going on for 30 or 40 years—of, ‘How do we reduce the amount of money that we pay out?’” said Ed Abel, director of healthcare practice at Indianapolis-based Blue & Co. “It’s just another way to reduce hospitals’ reimbursement.”

Nationally, Delaware and the District of Columbia are at the top of the list with 100 percent of their hospitals have reimbursement cut and being penalized.  The best performer is South Dakota at 28 percent.


66 Indiana hospitals hit with $12M in readmission penalties from Medicare

66 Indiana hospitals fined for having too many patient readmissions


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