How to build a model that will be gamed
I can’t help but think that the new Medicare readmissions penalty, as described by the New York Times, is going to lead to wide-spread gaming. It has all the elements of a perfect gaming storm. First of all, a clear economic incentive:
Medicare last month began levying financial penalties against 2,217 hospitals it says have had too many readmissions. Of those hospitals, 307 will receive the maximum punishment, a 1 percent reduction in Medicare’s regular payments for every patient over the next year, federal records show.
It also has the element of unfairness:
“Many of us have been working on this for other reasons than a penalty for many years, and we’ve found it’s very hard to move,” Dr. Lynch said. He said the penalties were unfair to hospitals with the double burden of caring for very sick and very poor patients.
“For us, it’s not a readmissions penalty,” he said. “It’s a mission penalty.”
And the smell of politics:
In some ways, the debate parallels the one on education — specifically, whether educators should be held accountable for lower rates of progress among children from poor families.
“Just blaming the patients or saying ‘it’s destiny’ or ‘we can’t do any better’ is a premature conclusion and is likely to be wrong,” said Dr. Harlan Krumholz, director of the Center for Outcomes Research and Evaluation at Yale-New Haven Hospital, which prepared the study for Medicare. “I’ve got to believe we can do much, much better.”
Oh wait, we already have weird side effects of the new rule:
With pressure to avert readmissions rising, some hospitals have been suspected of sending patients home within 24 hours, so they can bill for the services but not have the stay counted as an admission. But most hospitals are scrambling to reduce the number of repeat patients, with mixed success.
Note, the new policy is already a kind of reaction to gaming that’s already there, namely because of the stupid way Medicare decides how much to pay for treatment (emphasis mine):
Hospitals’ traditional reluctance to tackle readmissions is rooted in Medicare’s payment system. Medicare generally pays hospitals a set fee for a patient’s stay, so the shorter the visit, the more revenue a hospital can keep. Hospitals also get paid when patients return. Until the new penalties kicked in, hospitals had no incentive to make sure patients didn’t wind up coming back.
How about, instead of adding a weird rule that compromises people’s health and especially punishes poor sick people and the hospitals that treat them, we instead improve the original billing system? Otherwise we are certain to see all sorts of weird effects in the coming years with people being stealth readmitted under different names or something, or having to travel to different hospitals to be seen for their congestive heart failure.