As with hotels, having heads in beds is a central way to gauge hospital revenue. But the game is changing under healthcare reform. Medicare has stopped reimbursing for select preventable medical errors and is now turning its attention to preventable readmissions. With the advent of accountable care organizations and payment bundling, hospitals are starting to jump on the cost-control bandwagon partnering with physicians and commercial payers as well as with CMS to generate shared savings by delivering better care. Best of all, there is evidence that these strategies are working.

They are also generating a new category of healthcare quality measures: the all-cause readmission rate. Prior to 2010, CMS began measuring readmission rates in its Medicare fee-for-service program. For 2011, the National Committee for Quality Assurance also added an all-cause readmission measure to its HEDIS measures, an evolving set of metrics that is used to accredit health plans, physicians and medical groups in the United States. And in April 2012, the National Quality Forum endorsed both of these metrics. A study published the same month, however, calls such measures into question.

Researchers at the University of California-San Francisco Medical Center reported that the all-cause measure inflated readmission rates by 25 percent in their study of 320 spinal surgery patients. In other words, one of every four cases was improperly measured as a readmission either because it was misclassified or had actually been the result of a planned procedure. The dollar value attached to those misclassifications was more than $1 million.

These results follow other studies that criticize the accuracy of the measure. Granted, these concerns are being voiced by the very stakeholders (hospitals and health systems) that will be held accountable for preventable readmissions. But the criticism also comes at a time when hospitals will face penalties for high readmission rates.

There is no question that preventable readmissions play a role in the skyrocketing cost of healthcare, as much as $15 billion per year for Medicare beneficiaries alone by some estimates.. Keeping patients out of the hospital will be good business and better treatment under healthcare reform. This question is how we get there.

And whether there will be a mint on the pillow when we do.

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