Lillian Cretacci went into Mercy Hospital sick on Christmas Eve, and when she returned to her West Seneca home a few days later, the hospital did something hospitals never used to do.

She received special attention at discharge and then a visit from a nurse at her home to make sure her medications were all in order and a follow-up appointment with a doctor was scheduled.

Business changed big time for hospitals this year, and Cretacci’s case is one small example of what’s playing out across the nation as a result of new Medicare policies under the federal health reform law.

In October, Medicare started fining facilities, including 12 in Western New York, for too many patients returning within 30 days of discharge because of complications.

And in January, Medicare started rewarding or penalizing hospitals based on their performance on basic quality measures and surveys of patient satisfaction. A disproportionate number of Buffalo hospitals were penalized.

The new policies are meant to make hospitals more financially accountable for the care they provide. It is the government’s biggest effort yet in a movement to pay health care providers for the quality and not just the quantity of care they deliver.

Medicare penalized 71 percent of the nation’s hospitals, including 12 in Western New York, for having too many preventable readmissions, according to an analysis by Kaiser Health News. The penalties here ranged from $2,000 at Brooks Memorial Hospital in Dunkirk to $33,000 at Kenmore Mercy to $938,000 at Kaleida Health, according to initial estimates from the Healthcare Association of New York State.

On the quality measures, 92 percent of hospitals in Buffalo received a penalty and 8 percent got a bonus, making it one of the worst performing regions in the country, Kaiser found.

Nationally, on average, 48 percent of hospitals received a penalty and 52 percent a bonus.

Hospital officials see the measures as works in progress that will require refinement.

“Churning patients through hospitals and not creating comprehensive systems of care, that’s not good for patients or for costs,” said Joseph McDonald, chief executive officer of Catholic Health.

“Everybody recognizes that the reimbursement system has to take into account quality of care. That historically has not happened,” said Dr. Brian Murray, chief medical officer at Erie County Medical Center.

Murray and others noted that the way hospitals have been paid in the past encouraged shorter patient stays and, as result, risked discharging patients too soon.

“Now we’re planning for discharge from the time a patient comes in,” he said.

Medicare is the federal health program for individuals 65 and older. About 20 percent of hospitalized Medicare patients – 2.3 million people – are readmitted to a hospital within 30 days of discharge, according to a key study on readmissions in the New England Journal of Medicine. About 90 percent of the readmissions were unplanned and cost the government $17.4 billion in 2004 alone, the study found.

Reasons for readmissions

Experts say many of the avoidable readmissions result from medical errors, confusing discharge instructions, poor coordination among different health care providers and inadequate support at the patient’s home.

Patients receive conflicting advice. They don’t understand how to take their medications. Physicians often don’t know when their patients are released, and patients fail to make follow-up appointments.

“The penalty is a counterbalance to excessive cost-cutting at hospitals in which you get your patient length of stay so low that it creates a readmission,” said Bruce Boissonnault, co-chairman of the National Quality Forum Steering Committee that looked at the best way to measure readmissions. “It also encourages coordinating care with doctors in the community.”

The bonuses and penalties based on the quality of care arise out of another government program called value-based purchasing. Medicare scores hospitals based partly on how well they perform on basic quality measures, such as how quickly heart attack patients receive angioplasty to open clogged arteries and whether surgery patients received the correct antibiotics. The score also incorporates patient ratings on their hospital stays, including how well nurses and doctors communicated with them.

Reducing readmissions seems easy but isn’t.

For one thing, not every readmission is preventable, and those that are can be difficult to predict.

In recent years, hospitals, health insurance companies and Buffalo-area community organizations have taken steps to reduce readmissions with varying success.

Urban facilities here employ programs similar to the one Cretacci used at Catholic Health, but they don’t receive extra funding for them.

The hospital system attempts to identify patients at high risk for readmission, including those with poor health literacy, depression, five or more medications and little or no help at home.

Nurses visit patients within 48 hours of discharge to go over medications, check the safety of the home and ensure that an appointment is made with a primary-care physician.

“The hospital was a good experience, but I’m not going back,” said Cretacci, 73, who was admitted with excessive fatigue and high blood pressure after spending a day preparing a holiday dinner for 17 people and decorating the Christmas tree.

Better instructions

The program is considered a success with a readmission rate of only 6.7 percent. But officials say addressing readmissions is a struggle that requires constant experimentation and review.

ECMC, for instance, says every patient now leaves with a link to a primary physician, and the facility is moving to individualized rather than one-size-fits-all discharge instructions. Kaleida Health says it, too, is stressing that patients get a timely appointment with a doctor and better discharge instructions.

Although the readmission penalties appear here to stay, there remains debate about their validity.

Studies indicate that hospitals in poorer communities have higher readmission rates than those in more-affluent areas. Hospital officials want the government to take into account socioeconomic status, a factor out of their control. It’s also unclear just how many of the discharges are preventable within the 30-day time frame or exactly how much readmissions reflect poor quality.

“The financial incentives don’t line up between the hospitals and the doctors in the community. There is no penalty to the doctor who tells the patient to go back to the hospital when it can be avoided,” said Dr. Margaret Paroski, chief medical officer of Kaleida Health.

Large, teaching and safety-net hospitals, categories that would include Kaleida Health’s facilities, are those most likely to be penalized, researchers found in a study last month in the Journal of the American Medical Association. It’s not entirely clear why, although it’s thought to be related to the severity of illnesses and socioeconomic status.

Critics also question whether the government is measuring the right thing. They contend it makes more sense to hold hospitals accountable for issues that result in complications and deaths.

“The priorities are off,” said Dr. Ashish Jha, a professor at the Harvard School of Public Health who has studied readmissions. “Readmissions are important. But if you want to improve quality, begin with mortality rates and adverse events.”

Advocates counter that readmission penalties mark an important moment in reforming the payment system. “This is a stake in the ground,” said Ann Monroe, president of the Heath Foundation for Western & Central New York. “We’re in the shakedown phase of defining what is a hospital’s role in keeping people healthy.”