Aging Options

Kaiser Health News Report: Medicare Cuts Payments to Nursing Homes Whose Patients Keep Ending Up in the Hospital

Save as PDF

Nursing home operators across the U.S. are being put on notice by the federal government: if their residents keep winding up in the hospital for reasons that could have been avoided, Medicare plans to hit the nursing homes right in the wallet. At the same time, the feds have announced financial incentives for nursing homes with better than average patient health.

Nursing Home Penalties and Bonuses: a Common Sense Approach

We discovered this common-sense piece of news here in a story just published on the Kaiser Health News website. (The story was also carried on National Public Radio.) Writer Jordan Lau says, “The federal government has taken a new step to reduce avoidable hospital readmissions of nursing home patients by lowering a year’s worth of payments to nearly 11,000 nursing homes. It gave bonuses to nearly 4,000 others.” According to the article, this new Medicare initiative, which is determined by each nursing home’s hospital readmission rates, marks an effort to “significantly expand” the plan to “pay medical providers based on the quality of care instead of just the number or condition of their patients.”  This type of penalty-and-incentive system has been used with hospitals, says Kaiser, but not nursing homes – until now.

“These bonuses and penalties are also intended to discourage nursing homes from discharging patients too quickly,” Kaiser reports – “something that is financially tempting as Medicare fully covers only the first 20 days of a stay and generally stops paying anything after 100 days.” Hospitals, says Lau, “have gotten used to facing financial repercussions if too many of their patients are readmitted, suffer infections or other injuries, or die.” Now nursing homes will face similar Medicare scrutiny. And because many nursing homes operate on tight profit margins, one expert stated in the Kaiser article that these penalties “could mean a significant amount of money.”

The Standard: Hospital Readmission Within 30 Days

According to the article, the key measure Medicare will be watching is how many nursing home residents end up being readmitted to the hospital within 30 days of having been released and sent back home.  While readmission rates are actually declining, the issue still affects many thousands of people. “Hospitalizations of nursing home residents, while decreasing in recent years, remain a problem, with nearly 11 percent of patients in 2016 being sent to hospitals for conditions that might have been averted with better medical oversight,” the Kaiser article reports. Based on an analysis of readmission rates, Medicare is adjusting a year’s worth of payments, impacting almost 15,000 nursing homes nationwide, with more than two-thirds being penalized and the remainder receiving a bonus.

The actual per-resident dollar amounts may not seem like much but they can really add up. Over the government’s fiscal year, which began last October and ends in September of 2019, “the best-performing homes will receive 1.6 percent more for each Medicare patient than they would have otherwise. The worst-performing homes will lose nearly 2 percent of each payment. The others will fall in between.”  One Ohio-based nursing home operator said that 12 of its 15 non-profit facilities are going to face penalties which may add up almost $100,000 over the course of the year.

Nonprofits Outperform For-profit Facilities

A look at the data by Kaiser Health News shows nonprofit and government-owned facilities generally outperforming for-profit nursing homes, which make up two-thirds of the nation’s facilities. There’s also wide variance state by state: “In Arkansas, Louisiana and Mississippi, 85 percent of homes will lose money, the analysis found. More than half in Alaska, Hawaii and Washington state will get bonuses.” The Kaiser article includes a chart of each state’s performance.

Of course, the plan has its detractors. “Some consumer advocates fear that nursing homes will be reluctant to admit very infirm residents or to re-hospitalize patients even when they need medical care,” Kaiser states. One San Francisco-based reform advocate worries that nursing homes that “have done all they can to prevent return trips to the hospital” will be unfairly punished by the way the program is designed. She asks, “At what point have we achieved all we can achieve?” Nevertheless, other spokespeople for the nursing home industry say they’ve known for quite some time that this new Medicare effort was coming and they claim to be supportive. Medicare estimates that the new carrot-and-stick approach will result in more than $300 million being “redistributed” from poor-performing homes to better ones, and overall the program will save Medicare an additional $200 million.

As we said here on the AgingOptions blog in a recent article about nursing homes, families need to do their homework when it comes to choosing the right place for a loved one who needs nursing care. The keys, say the experts, are to visit in person, evaluate the facility carefully, and talk to residents and their families. You will have to be the advocate for your loved one if at any time you suspect he or she is receiving substandard care. This is also a time when you and your family will want to call on the services of a senior housing professional such as the staff at Better Care Management. They help families handle the complexities associated with aging, including in-home care, housing placement, hospitalization and government programs. Contact our office during the week if you would like more information about their services.

Make Sure the Pieces Fit Together

Housing is a critical element in retirement planning, but it’s only one facet of many that must be taken into account in order for your plan to be truly complete. For example, you may have the best housing plan in place, only to have it derailed by an unexpected medical crisis. This in turn triggers a financial crisis which can precipitate a family crisis. Health, housing, finance and family all have to be considered together, along with the necessary legal framework to help you protect your assets as you age and avoid becoming a burden to those you love.  Fortunately, that type of highly comprehensive planning is readily available today, in the form of an AgingOptions LifePlan, an approach to retirement planning that is truly groundbreaking. Please come join us and find out more, without cost or obligation, by attending a free LifePlanning Seminar with Rajiv Nagaich. We offer these highly popular, information-packed sessions in locations throughout the region: you can click here for our current listing, then register for the date and time that works for you. It will be a pleasure meeting you soon at an AgingOptions LifePlanning Seminar with Rajiv Nagaich. Age on!

(originally reported at

Need assistance planning for your successful retirement? Give us a call! 1.877.762.4464

Learn how 70% of retirement plan fails and find out how you can avoid this

Find out more about LifePlanning

Your Cart is empty!

It looks like you haven't added any items to your cart yet.

Browse Products
Powered by Caddy
Skip to content