Medicare penalizes KRMC for rate of readmissions

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The main entrance to Kalispell Regional Medical Center. (Matt Baldwin/Daily Inter Lake)

Kalispell Regional Medical Center was one of nine Montana hospitals penalized for failing to meet federal standards to reduce unnecessary readmissions under the Hospital Readmission Reduction Program.

This is the first time Kalispell Regional is being penalized under the act. It faces a 0.13% cut to Medicare payments in 2020, while The HealthCenter – which is part of Kalispell Regional Healthcare – is also being penalized, though that cut is just 0.01%.

These cuts are well below the national average of 0.71% and below other hospitals in Montana facing cuts. Northern Montana Hospital in Havre will get a 0.45% cut, while St. Peter’s Hospital in Helena, St. James Health in Butte and Community Medical Center in Missoula are also facing cuts.

Kaiser Health News reported that Medicare is penalizing 2,583 hospitals nationwide. That is 83% of the 3,129 hospitals evaluated by the program, and Medicare estimates the cuts will cost hospitals $563 million over the next year.

The program cuts Medicare payments to hospitals that are determined by the Centers for Medicare and Medicaid Services to have excess readmissions. Cuts for fiscal year 2020 are based on performance from July 1, 2015, through June 30, 2018.

According to information about the program on the Medicare website, penalties are dependent on how often Medicare patients are readmitted within 30 days following treatments for heart problems, pneumonia, hip and knee replacements and coronary artery bypass surgery.

Doug Nelson, chief medical officer of Kalispell Regional Healthcare, said the cuts amount to a $45,000 reduction in Medicare payments for fiscal year 2020. He said Kalispell Regional’s 30-day readmission rate is about 7.5% lower than the national average.

“I don’t think it [the Medicare cuts] will have a tangible effect on the care we provide or the quality of the care we provide,” Nelson said.

He said the small penalty is a result of a slight increase in readmissions following bypass surgeries. But he pointed out that an individual could return to the hospital with a kidney infection or other unrelated condition, and it would still count against the hospital.

“The intent of the act is good …. We all want to provide excellent care,” he said.

Yet there are “escalating standards” that make it more difficult to reach the Medicare targets as hospitals improve their readmission rates, Nelson said.

“There is no payment for meeting or exceeding” the readmission standards, said Bob Olsen, senior vice president of the Montana Hospital Association. “There’s only a penalty for failing.”

Olsen emphasized Montana is doing well compared to the rest of the country, and the state’s hospitals are improving their readmission rates. Montana hospitals were penalized $600,000 by Medicare in fiscal year 2019, and that is down to $290,000 in 2020.

Olsen said this is less than 1% of the state’s total Medicare payments.

He also said readmission is just one element of how Medicare assesses hospitals, and Montana is excelling in the other two elements: hospital-acquired conditions and a quality metric that looks at measures such as patient satisfaction.

Olsen said when the other two are taken into account, the 13 Montana hospitals assessed by Medicare are receiving a net gain of $600,000 from Medicare.

Though Montana is doing well relative to the rest of the country at cutting readmissions, the rising age and increasing number of Medicare patients will make it a challenge to improve on readmission rates, he added.

Montana is the sixth-oldest state in the country, according to the U.S. Census Bureau. In some counties, including Lincoln and Sanders counties, over 25% of the population is age 65 or older.

Olsen said hospitals will need to continue developing services that cater to Medicare patients to stay on top of the aging population and keep readmission rates down. He said older age groups prefer to stay at home, know their provider personally and have procedures done locally. They often do not have immediate family to keep help with care.

“Older people by definition are more complex patients,” Nelson said.

According to the Kaiser Family Foundation, there were just under 60 million Medicare beneficiaries in 2018. AARP predicts that number will rise to 81 million by 2030.

Reporter Colin Gaiser can be reached at 758-4439 or

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