30-Day Readmission Penalty Denials Scrapped by Medicare Managed Care

Original story posted on: April 3, 2019

Hospitals may consider abandoning their contracts.

There are few things managed Medicare plans have come up with that are more unfair to hospitals than denials due to readmission. Hospitals with contracts with managed Medicare payers often must endure these denials, as they are not often excluded in contracts.

Managed Medicare companies cite the Centers for Medicare & Medicaid Services (CMS) readmission policy as the basis for their denials. CMS instructs hospitals to combine for billing purposes when a patient is readmitted on the same calendar day for the same or a similar diagnosis. CMS also requests that hospitals combine admissions when premature readmission or quality-of-care issue leads to. Conversely, most managed Medicare payers deny all readmissions within 30 days of discharge.

Hospitals have been working to reduce readmissions for approximately six years. The main causes of readmissions are medication noncompliance and lack of timely physician follow-up. The seven-day readmission rate can be reduced by improving these two issues. Hospitals have provided resources to form readmission teams, which work hard to reduce readmissions. Readmissions after seven days generally are caused by chronically ill, elderly patients who need additional care.

However, even the best hospital performers have readmission rates of approximately 15 percent. Should managed care be permitted to deny 15 percent of their admissions to your organization? Some Medicare managed care payers consider of these denials if you can demonstrate readmission for patient noncompliance or lack of transition of care. But this seems to be the exception to the rule.

Last week I had an egregious readmission case. An elderly COPD patient was treated for respiratory failure. He was transferred to a subacute facility, where he had good physician follow-up and maintained excellent medication compliance. Ten days after hospital discharge, he to the emergency department in respiratory and was intubated and ventilated. It took two weeks in critical care for the patient to recover. The two-week admission, including his critical care days, denied due to the payer’s readmission policy. Is that fair? Is that reasonable?

Hospital contracting and finance must raise their voices regarding this practice. Alternatively, hospitals may consider abandoning their contracts, which forces Medicare managed care to adhere to CMS rules, which do not follow this practice.


Dr. Howard Stein is the associate director of medical affairs and a physician advisor at Centrastate Medical Center in Freehold, N.J. He has been a full-time physician advisor for 13 years and a part-time physician advisor since 1993. He is a board-certified family physician who served as an assistant clinical professor of family medicine at Robert Wood Johnson Medical School in New Brunswick, N.J. and at the University of Medicine and Dentistry of New Jersey (UMDNJ) in Newark, N.J. He is board-certified by the American Board of Quality Assurance & Utilization Review Physicians. Dr. Stein is also an executive board member of the American College of Physician Advisors.

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