By Rishi Garg, MD, MBA

Optum 360 Physician Advisor

A patient was admitted to the hospital for a large bowel obstruction from colorectal cancer. The patient was treated conservatively and the symptoms completely resolved fairly quickly. The patient did not require any surgical or endoscopic intervention during the initial admission. After a two-and-a-half day hospital stay, the patient was discharged. Unfortunately, given the patient’s underlying history of advanced colorectal cancer, the patient was re-admitted approximately 20 days later for recurrent large bowel obstruction, which this time required an invasive stent placement. During this subsequent readmission, the patient’s clinical course was complicated by a prolonged ICU stay for sepsis. After a two-week hospitalization, the patient was successfully discharged. The patient’s insurance plan was provided by a commercial payer.

Readmission Penalty

Given that the patient was re-admitted in less than 30 days for the same DRG, this patient fell under the commercial insurance plan’s re-admission policy. According to this plan’s policy, “we will not recognize and reimburse another DRG for members that are re-admitted to the same facility for the same symptoms…within 30 calendar days.” The exceptions to this policy are for: 1) symptoms unrelated to the initial admission, 2) planned re-admissions, 3) re-admissions due to unavoidable complications, 4) or if the member left the facility AMA.

Is the Standard of Care Appropriately Reimbursed?

This case highlights an important dilemma facing hospitals and physicians across the US. The standard of care was provided and well documented at both the initial admission and subsequent re-admission. The patient’s clinical condition improved with conservative care during the initial admission without the need for surgery or stenting. Nonetheless, the insurance company denied payment to the hospital through the commercial plan’s readmission policy, which was upheld during peer-to-peer discussion. Essentially, a large portion of the patient’s care provided during the latter two-week re-admission was unreimbursed. The hospital had little financial recourse, except for a written appeal.

A Well-Intended Policy with Some Unfortunate Consequences

Data on the costs of re-admissions are best derived from Agency for Healthcare Research and Quality. Per Healthcare Cost and Utilization Project, the estimated cost of Medicare all cause readmission was $41.3 billion (2011), with congestive heart failure, septicemia, and pneumonia being the top three conditions. After the passage of the Hospital Readmissions Reduction Program (HRRP), per Zuckerman, et al, readmission for the targeted conditions fell from 21.5% to 17.8%. Although not explicated stated, I assume this led to reduced Medicare costs, taxpayers savings, and better medical care. I also assume such savings would also be seen on the commercial side with similar policies in place. However, as with everything in life, well-intended policies can have unfortunate consequences. In our case, recurrent large bowel obstructions are inherent to patients with advanced colorectal cancer. No matter the care, a re-admission—along with the penalty—is foreseeable.

Will Medical Care be Further Driven by Financial Concern?

I can’t help but think about the larger ramifications of this case. I remember, back in medical school, raising my right hand and repeating the mantra, “do no harm.” But in reality, do no harm sometimes means you won’t get paid. In this case, the hospital will ultimately be responsible for the cost of the readmission. However, with many hospitals facing increased competition, reduced margins, and declining profits, and given the size of the readmission penalties, will future medical care be further driven by readmission penalties? Only time will tell.