Blog -- the Clearinghouse for the Future of Pharmacy Benefits

Improved Pharmacy Care May Help Prevent Costly Hospital Readmissions

In a rapidly changing health care system, one of the greatest challenges facing stakeholders is how best to ensure greater value for our nation’s health care spending.   In 2011, our nation spent $2.7 trillion on health care.   Prescription drugs account for about 10 percent of that spending, but their beneficial effects on reduced spending may well be disproportionate.   Many seniors take five or more prescriptions daily, including those with chronic illnesses that could lead to frequent hospitalizations.  For many conditions, prescription drugs are a front-line defense and ensuring better adherence as part of a coordinated care program can yield dividends for patients, providers, and payers.

One cost-driver gaining increased attention is avoidable hospital re-admissions.  Last October, Medicare began penalizing hospitals with higher-than-expected readmissions for patients initially hospitalized for heart failure, heart disease, and pneumonia.  According to the federal government data, about one in five Medicare beneficiaries who are hospitalized require readmission within 30 days.  Medicare estimates these readmissions cost the program at least $26 billion annually.   Numerous data suggest that a lack of care coordination – including follow-up visits with physicians and patients’ failure to adhere to prescribed drug therapies – could be a major cause for hospital readmissions.   Hospital readmissions needlessly cost our system billions of dollars every year, undermine patients’ quality of life, and divert scarce resources from other priorities.

While Medicare’s new efforts are in their infancy and too early to measure fully, numerous data suggest that improved care coordination – of which prescription drug adherence is an important link – can improve outcomes and help reduce hospital readmissions.  Consider:

  • The entire current issue of the Journal of the American Medical Association is devoted to examining strategies that help to prevent hospital readmissions.  One of the case studies highlighted reports that a multi-city Medicare quality initiative reduced readmissions by nearly 6 percent compared to similar communities.  The quality initiative focused on common-sense strategies, such as linking up clinical and social service agencies for better care integration and instructing patients on post-discharge self-care.  More promisingly, the authors estimate a 4-1 return on investment relative to efforts to mitigate hospital readmissions.  While this effort pre-dates Medicare’s new initiative, those kinds of numbers are certain to get the attention of budget-strapped states and federal agencies.
  • A 2010 analysis of federal and state government data by America’s Health Insurance Plans found seniors in Medicare Advantage have lower risk-adjusted hospital readmission rates than patients in Medicare fee-for-service.   The study analyzed data from nine states and found reductions in risk-adjusted hospital readmission rates averaged 14-29 percent among seniors in Medicare Advantage compared with Medicare fee-for-service. 
  • As we noted late last year, the Congressional Budget Office, Congress’ chief budget agency, recently issued a report that concluded that seniors who take their prescription medicines can avoid hospitalizations and lower Medicare’s overall medical costs.   

The underlying causes of hospital readmissions are complex and not easily addressed.  Some hospitals are simply more sophisticated than others at identifying high-risk seniors.  Patients’ overall health status, cultural barriers, insurance coverage, and socio-economic status are all factors that contribute to increased readmissions.   For a variety of reasons, large teaching hospitals and safety-net facilities are most likely to be penalized by Medicare for readmissions.    Nonetheless, the system is moving in the right direction and recognizing that better care coordination – including prescription drug adherence – is essential to helping prevent hospital readmissions.