"It's modest, but it's a start," said Dr. John Santa, director of the Consumer Reports Health Ratings Center. "Should we be surprised that industry is objecting? You would expect them to object to anything that changes the status quo."
For the first year, the penalty is capped at 1 percent of a hospital's Medicare payments. The overwhelming majority of penalized facilities will pay less. Also, for now, hospitals are only being measured on three medical conditions: heart attacks, heart failure and pneumonia.
Under the health care law, the penalties gradually will rise until 3 percent of Medicare payments to hospitals are at risk. Medicare is considering holding hospitals accountable on four more measures: joint replacements, stenting, heart bypass and treatment of stroke.
If General Motors and Toyota issue warranties for their vehicles, hospitals should have some similar obligation when a patient gets a new knee or a stent to relieve a blocked artery, Santa contends. "People go to the hospital to get their problem solved, not to have to come back," he said.
Excessive rates of readmission are only part of the problem of high costs and uneven quality in the U.S. health care system. While some estimates put readmission rates as high as 20 percent, a congressional agency says the level of preventable readmissions is much lower. About 12 percent of Medicare beneficiaries who are hospitalized are later readmitted for a potentially preventable problem, said the Medicare Payment Advisory Commission, known as MedPAC.
Foster, the hospital association official, said medication mix-ups account for a big share of problems. Many Medicare beneficiaries are coping with multiple chronic conditions, and it's not unusual for their medication lists to be changed in the hospital. But their doctors outside sometimes don't get the word; other times, the patients themselves don't understand there's been a change.
Another issue is making sure patients go to their required follow-up appointments.
Medicare deputy administrator Jonathan Blum said he thinks hospitals have gotten the message.
"Clearly it's captured their attention," said Blum. "It's galvanized the hospital industry on ways to reduce unnecessary readmissions. It's forced more parts of the health care system to work together to ensure that patients have much smoother transitions."
MedPAC, the congressional advisory group, has produced research findings that back up the industry's assertion that hospitals serving the poor, including major teaching facilities, are more likely to face penalties. But for now, Blum said Medicare is not inclined to grade on the curve.
"We have really tried to address and study this issue," said Blum. "If you look at the data, there are hospitals that serve a low-income patient mix and do very well on these measures. It seems to us that hospitals that serve low-income people can control readmissions very well."
Under Obama's health care overhaul, Medicare is pursuing efforts to try to improve quality and lower costs. They include rewarding hospitals for quality results, and encouraging hospitals, nursing homes and medical practice groups to join in "accountable care organizations." Dozens of pilot programs are under way. The jury is still out on the results.