Readmission reduction program persistently penalizes some hospitals, study finds

The Hospital Readmissions Reduction Program created under the ACA may persistently penalize hospitals with certain characteristics, according to a recent study published in Health Affairs.

Researchers analyzed penalty data from 2013 to 2017 for 3,229 hospitals, comparing it with hospital characteristic data from the American Hospital Association Annual Survey and CMS impact file data, which includes Medicare disproportionate share hospital information. They did not include hospitals with missing characteristic data.

Here are their main findings.

1. More than half of hospitals in the program (52.4 percent) were penalized all five years. Those penalized year after year tended to be urban, major teaching, for-profit, large- or medium-sized and more likely to have a higher proportion of Medicare patients.

2. Hospitals treating socioeconomically disadvantaged patients were also more likely to be penalized. Often socioeconomic factors cause readmissions and cannot be captured in claims data, according to the study. The report demonstrated that safety-net hospitals have reduced readmission rates more than non-safety-net hospitals, yet have been unable to improve as much in the program. "Safety-net hospitals play a critical role in treating underserved and vulnerable populations, and policy makers need to be cognizant of the unintended effects of penalty programs on these institutions," the researchers wrote.

3. Low volume of complex cases was also a factor in 5-year penalization. The researchers were surprised to find hospitals with a more complex case mix were actually less likely to be penalized all five years than those with a smaller proportion of complex patients. Hospitals with complex case mixes generally started out with lower penalties and their penalty increases over time were also smaller compared to hospitals with less complex case mixes. "These findings are somewhat paradoxical, as more medically complex patients are more likely to be readmitted following discharge," the authors wrote. "It may be that hospitals treating more medically complex patients already have infrastructure in place to prevent readmissions and, therefore, fared better under the HRRP compared to their peers."

4. Hospitals penalized in the first year of the program were more likely to continue to be penalized, and to be penalized more, throughout the program. The study illustrated that hospitals that fell behind early had difficulty catching up. "[E]ven if hospitals made improvements in readmission rates over time, they continued to receive penalties if they were unable to make comparatively greater reductions in readmissions," the authors wrote.

5. Penalties grew a little bit over the five years studied, from 0.29 percent in 2013 to 0.60 percent in 2017. Though this means the penalties doubled, the researchers classified this growth as only "modest" because the program ramped up over the 5-year time period, so that hospitals actually had more ways to be penalized by the end of the period.

The researchers concluded the HRRP led to persistent penalization and that CMS should consider alternative ways to structure the program. "Persistent penalization could have a sizable financial impact on particular hospitals, limiting their ability to meet the needs of the populations they serve and invest in quality improvement activities," they wrote.

 

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