Your Health, Guaranteed

Proposed tweak to health-care could save billions.
June 4, 2012

Amid the rancor over the future of the Affordable Care Act (ACA), a Duke student has come up with a small tweak to the law that could save taxpayers billions.

Noah Kalman, a dual-degree M.D./ M.B.A. student at Duke’s Fuqua School of Business, suggests that hospitals be required to offer patients warranties on medical services. In a paper for The New England Journal of Medicine, Kalman and two coauthors say such a provision could reduce hospital readmissions that now cost Medicare $17 billion each year.

According to a 2009 study, nearly 20 percent of Medicare beneficiaries are rehospitalized within thirty days of discharge, often because of infections, complications, or inadequate communication during their initial visit. “Unfortunately, hospitals have no financial incentive under the current Medicare reimbursement system to reduce readmissions,” says Kalman. “The ACA’s proposed penalties for hospital readmissions are likely too weak to solve the problem, and the ACA offers no benefit for hospitals that reduce their readmission rates.”

Kalman and coauthors Robert Berenson, from the Urban Institute, and Ronald Paulus, from Mission Health System in Asheville, write that the ACA could be modified to allow Medicare to either eliminate or reduce payments for many or all readmissions within a designated period after discharge.