Medicare Texts: Budget, Rules, Methods

1. Readmission Rules

42 CFR 412.154 - Regulations for the Hospital Readmissions Reduction Program.

Medicare's summary web page and separate page of information for FY 2016

August 4, 2014 Final Rule for Fiscal Year 2015 (which starts October 2014) 

May 15, 2014 Proposal for Fiscal Year 2015 (which starts October 2014) or individual sections

• "we estimate that the reduction to a hospital's base operating DRG payment amount to account for excess readmissions of selected applicable conditions under the Hospital Readmissions Reduction Program will result in a 0.2 percent decrease in payments to hospitals for FY 2015 relative to FY 2014." Note they do not estimate dollars or numbers, as they did in 2013 below.

August 19, 2013 Final Rule for Fiscal Year 2014 (which starts October 2013) or individual sections

• "We recognize that performance-based payment programs may have the potential for unintended consequences. We are committed to monitoring the COPD measure and assessing unintended consequences over time, such as the inappropriate shifting of care, increased patient morbidity and mortality, and other negative unintended consequences for patients." (p.50650)

• "we will monitor the THA/TKA readmissions measure closely for any unintended
  consequences that may arise from implementation of this measure, and adjust the
  Hospital Readmissions Reduction Program, accordingly." (p.50664)

• "In this final rule, we estimate that 2,225 hospitals will have their base operating DRG payments reduced by their hospital-specific readmissions adjustment, resulting in a 0.2 percent decrease, or approximately $227 million, in payments to hospitals overall for FY 2014 relative to no provision." (p.51020)

May 10, 2013 Proposal for Fiscal Year 2014 (which starts October 2013) or individual sections

• "In this proposed rule, we estimate that the reduction to a hospital's base operating DRG payment amount to account for excess readmissions of selected applicable conditions under the Hospital Readmissions Reduction Program will result in a 0.2 percent decrease, or approximately −$175 million, in payments to hospitals for FY 2014." (p.27497)
• Proposal to cover knee and hip replacements (arthroplasty)
• Proposal to cover emphysema and chronic bronchitis (COPD)

August 31, 2012 Final Rule for Fiscal Year 2013 (which started October 2012) or individual sections

• "we estimate that the Hospital Readmissions Reduction Program will result in a 0.3 percent decrease, or approximately $280 million, in payments to hospitals." (p.53268)
• "We recognize that performance-based payment penalty or incentive programs may have the potential for unintended consequences. We are committed to monitoring the measures and assessing unintended consequences over time, such as the inappropriate shifting of care, increased patient morbidity and mortality, and other negative unintended consequences for patients." (p.53376)

2. Methodology for Counting Readmissions

• Their equations explain 3% of the variation (R-squared) in readmissions among heart failures (p.30), 5% for heart attacks (p.30) and pneumonia (p.29). These percents date from 2008 and have not been updated.
  
• Medicare now shows c-statistics between 0.61 and 0.66. The c-statistic has a scale of 0.5 to 1, where 0.5 means their equations do no better than chance, and 1 means their equations are perfect. "Models are typically considered reasonable when the C-statistic is higher than 0.7 and strong when C exceeds 0.8 (Hosmer & Lemeshow, 2000; Hosmer & Lemeshow, 1989)." So none of their equations is "reasonable," and they still rate hospitals with them. 

3. Medicare Budget

President, The Budget for Fiscal Year 2014, April 2013

• "The Budget encourages appropriate use of inpatient rehabilitation hospitals and adjusts SNF payments to reduce unnecessary hospital readmissions, saving almost $5 billion over 10 years." (p.38)

Dept. of Health and Human Services 2014 Budget in Brief, April 2013

• asks Congress to reduce "payments by up to three percent for SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2017" (p.54).
• These penalties would be based on patients starting in July 2012, so nursing homes already need to think about filtering the people they accept.

Dept. of Health and Human Services 2014 Centers for Medicare & Medicaid Services Justification of Estimates for Appropriations Committees, April(?) 2013

• "the goal of a three-year, 20% national reduction in readmissions within 30 days of hospital discharge." (p.227)

• "The Partnership for Patients [public-private partnership] has set two ambitious goals for all U.S. hospitals by the end of 2013: 1) reduce preventable all-cause harm by 40 percent, and 2) reduce hospital readmissions by 20 percent." (p.292)

Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds 2013 Annual Report, April 2013

Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds 2012 Annual Report, April 2012

Earlier Trustee Reports

Congressional Budget Office, Letter to Majority Leader, November 2009
"Estimate of Effects on Direct Spending and Revenues for Non-Coverage Provisions of the Patient Protection and Affordable Care Act By fiscal year, in billions of dollars.
...                                    2013  2014  2015  2016   2017  2018  2019  2010-2019
Hospital Readmissions    -0.1    -0.3    -1.1    -1.3    -1.3    -1.4    -1.5       -7.1
Reduction Program" (p.26)

4. Accountable Care Organizations

42 CFR Part 425 - Medicare Shared Savings Program

December 21, 2012 ACO 2013 Program Analysis Quality Performance Standards Narrative Measure Specifications

November 2, 2011 Final Rule for ACOs

2011 Pioneer ACO Request for Application

2009 Physician Group Practice Demonstration Evaluation Report (PGP)

• "The PGPs have reported implementing or enhancing a variety of care management programs that focus on improving the efficiency and quality of health care. These programs include ... end-of-life/palliative care programs" (p.6)
• "Since most of the savings are returned to the sites as performance payments, the net savings to the Medicare Trust funds in the first two years of the Demonstration were minimal when expressed as a percentage of all Target Expenditures." (pp.9, 45)

5. See also list of reports from MedPAC, a Congressional Agency