President Barack Obama’s Affordable Care Act – known to friend and foe alike as Obamacare – is rapidly settling into America’s landscape. In politics, its virulence is receding: Republicans are far more muted in their attacks than anyone expected a few months ago. The outcome to next week’s midterm US elections will not hinge on the public’s ambivalence about the law. On the ground, its impact is spreading like an inkblot.
According to HCA Holdings, one of America’s largest hospital operators, both hospital admissions and profits have jumped in the past year. That may be a bit surprising given that many worried that readmission penalties, falling Medicare and Medicaid reimbursement, and exchange plans squeezing hospital margin would cause the industry to stagger.
Obamacare has its work cut out for it. Healthcare spending in the U.S. totals about $3 trillion annually, and growing expenses tied to caring for ageing baby boomers has industry watchers expecting that healthcare spending could climb toward $5 trillion by 2024.
In 2013, healthcare spending by the Centers for Medicare and Medicaid ( CMS ) totaled just over $1 trillion. While that’s huge, it pales in comparison to the CMS forecast that spending by Medicaid and Medicare will reach a combined $2.5 trillion in 2024. In an attempt to lower that spending, Obamacare includes a slate of provisions aimed at reducing costs.One is particularly intriguing, as it’s targeted at wiping out $17 billion of Medicare spending on arguably unnecessary readmissions at hospitals around the country.
The ACA requires hospitals to report readmissions, and if those readmission rates don’t pass muster with regulators, hospitals can face hefty penalties. The CMS decides which hospitals will be penalised by using national readmission rates for five patient conditions (including heart failure, heart attack, and pneumonia) to create a baseline expectation. Hospitals that beat the baseline pass, while those who fail see the amount of their Medicare reimbursements get reduced the following year.
At the end of last week, officials announced that Medicare would be fining the largest number of hospitals ever for readmissions offenses. More than 2,600 hospitals will be fined this year, a figure up by more than 400 from last year. The average penalty is up substantially, from 0.38 percent to 0.63 percent this year, according to a Kaiser Health News analysis.