Reductions in Medicare Hospital Readmissions: Real or Illusory?

Hospital readmissions pose serious risks to patients, especially to Medicare patients who are older and typically sicker than other patients. Hospital stays increase the risk of infection and medication error, put patients through physical and psychological stress (i.e. being woken up multiple times a night, falls on the way to the bathroom), and increase Medicare expenditures. Under the Hospital Readmission Reduction Program (HRRP) created by the Affordable Care Act, hospitals are penalized by Medicare if beneficiaries are readmitted (to any hospital) within 30 days of discharge. The goals of the HRRP are to:

  1. Improve care transitions
  2. Reduce the burden of readmission for Medicare beneficiaries
  3. Reduce the cost of readmissions to the taxpayer

The program does have critics since many factors that can influence a readmission fall outside the control of the hospital. To respond to this concern, Medicare has loosened the rules for safety-net hospitals, which tend to care for sicker and more frequent patients. Medicare uses an “all cause” definition of readmission, meaning that any unplanned hospital stay within 30 days of discharge is considered a readmission, regardless of the reason for readmission.

Under the HRRP, hospitals with readmission rates that exceed the national average are penalized by a reduction in payments across all Medicare admissions. CMS adjusts the readmission rate for certain demographics of a hospital’s general patient population and readmitted patient population and then calculates the “excess” readmissions. Even with rate adjustments, there is still a disparity between hospitals that treat low-income patients. For 2017, 66% of hospitals with the lowest share of low-income patients received readmission penalty compared with 86% of hospitals with the highest share of low-income patients.

Due to the time it takes to collect and analyze data, readmission penalties are applied to past years of patient readmissions. For example, penalties in FY17 were based on readmissions from 2012-2015 for specific clinical conditions — heart attack, heart failure, pneumonia, COPD, hip or knee replacement, and coronary artery bypass grafts. The maximum penalty rate was set at 3%, which was applied to 1.8% of hospitals. The average hospital penalty (among penalized hospitals) was 0.74%. In total, CMS estimated that penalties assessed in FY17 totaled $528 million.

There have been measurable reductions in readmission rates since the HRRP was established — 2.3-3.6% reduction for the various covered conditions versus a 1.7% reduction for conditions not covered by the policy– and MedPAC reports that the HRRP has resulted in a net savings of nearly $2 billion per year.

Source: MedPAC analysis of 2008 through 2016 Medicare claims files for Medicare FFS beneficiaries age 65 or older.

Keeping patients from being readmitted to the hospital has necessitated collaboration between hospitals and community organizations, including home health agencies and nursing homes. In one example, home health providers meet patients prior to initial discharge to build trust with patients and families. This same group also discussed the importance of flu shots for nursing home staff to protect patients, for whom the flu can become pneumonia, further exacerbate COPD, and lead to a necessary hospitalization. In Lake Havasu, Arizona, paramedics visit discharged patients to ensure they are following their discharge orders.

However, even while MedPAC found reductions in risk-adjusted readmissions, new research published in Health Affairs found these reductions to be “illusory or overrated.” This conclusion is based on a change in the standards for diagnosis codes that hospitals can use when submitting a Medicare claim that occurred concurrently with HRRP program implementation. The authors of this study are calling for more research to determine whether the HRRP had any impact on readmission rates.

There is no shortage of inquiry into the HRRP and its impact on patients and providers. Research published in December in JAMA investigated the association of the HRRP and an increase in patient-level mortality. The authors performed a retrospective cohort study of hospitalizations for heart failure, acute myocardial infarction, and pneumonia among Medicare patients across a large time period intended to capture mortality rates before and after HRRP implementation. The study found that the HRRP was significantly associated with an increase in 30-day post discharge mortality after hospital discharge for heart failure and pneumonia, but not for acute myocardial infarction. The authors also called for further study into this issue.

Even if the HRRP has not reduced readmissions rates as hoped, it has spurred some communities to implement creative care transitions to better serve patients outside the hospital. This outcome should be championed and expanded as a means to address social determinants of health that often prevent patients from succeeding in managing their health at home.

Image from Lehigh Valley Hospital-Muhlenberg.

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