Issue re-cap: Medicare has begun penalizing U.S. hospitals for having too many counts of patient re-admissions. Unacceptable numbers of re-admissions will be penalized by reducing the reimbursements paid by Medicare back to hospitals for their services. Other hospitals are skirting the issue by accepting patients under “observation”, which delays the clock on a formal admission.

Hospitalization brings high financial costs. In fact, patient hospitalizations account for approximately 30% of all medical spending in our economy. Specifically, this accounts for almost 37% of all Medicare spending. And this issue is spotlighted because almost 18% of all Medicare patients are re-admitted within 30 days.   Our elderly parents and senior population is especially at risk for re-admittance.  Rough estimates on the costs of this patient churning process range from $15 – 17 billion per year.

Due to the overwhelming financial impact of Medicare on our economy, there have been enacted new (changing) rules in regard to patient/hospital care. One area of focus has been to more tightly scrutinize hospitals for patient admission. As a part of the Affordable Care Act 2010, the Hospital Readmissions Reduction Program is a penalty-only plan designed to retrieve payments from hospitals that are receiving or have received additional revenue associated with re-admitted patients.

The underlying assumption here is hospitals have gotten fat, or lazy, or inefficient in patient discharges — which has led to significant patient “re-admission” for the original diagnosis. Simply, Medicare has begun an attempt to cut duplication and unnecessary re-imbursement costs.