Late last year, the federal Medicare program began withholding funds from most of the hospitals in New Jersey due to concerns about readmission of elderly patients within a month of being discharged. The problem is that for most of the hospitals in New Jersey, many elderly patients return for care within a month of being discharged. High readmission rates often indicate poor planning and follow-up care after discharge. This results in higher health care costs.
The Affordable Health Care Act was passed in 2009 as a major overhaul of the health care system in this country. Under the Act, Medicare regulates funds provided to hospitals which accept Medicare. The Act also empowers Medicare to withhold a small percentage of funds it pays to medical providers in certain situations.
Under the Act, hospitals accepting Medicare patients are required to reduce the number of patients who are readmitted within 30 days of being discharged after being treated for the following:
Across New Jersey, 62 hospitals and hospital networks will lose an average of nearly .7% on every Medicare reimbursement. This is the highest loss among all other states. Out of the 62 hospitals penalized, approximately 20 will lose the maximum of 1% per bill.
However, the penalties are probably too low to make a real difference. The world of medical billing is complex, but it is nothing compared to the world of Medicare billing. Medicare only pays a percentage of the actual amount of a given medical bill. Every procedure, whether at a hospital or a doctor's office, is given a special Medicare billing code which has a corresponding fee schedule based on the geographic location and year the service was performed.
For example, for a $1,000 hospital bill, Medicare will pay an average of 20%-30% of that bill, or $200 or $300. One percent of the adjusted amount in this example is a whopping $2.00 or $3.00. For a hospital bill of say $10,000, the hospital is going to lose $20.00 or $30.00. Even aggregated across the total number of a hospital's Medicare patients per year, the grand total loss is still probably too low to persuade a hospital to re-evaluate discharge follow-up procedures, let alone make needed changes.
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