Fiscal penalties for low-performing hospitals linked to improved readmission rates

The financial penalties instituted by the ACA's Hospital Readmissions Reduction Program were associated with a reduction in readmissions, an analysis published in the Annals of Internal Medicine found.

Researchers from three Boston-based institutions – Beth Israel Deaconess Medical Center, Harvard T.H. Chan School of Public Health and Massachusetts General Hospital – led the analysis. They researched the effects of the HRRP, which was implemented in 2012 to curb the number of Medicare patients readmitted within 30 days of discharge following treatment for common conditions like heart failure, pneumonia and heart attack.

Medicare fee-for-service hospitalization data from more than 2,800 U.S. hospitals between 2000 and 2013 were included in the analysis. Data from more than 15 million Medicare discharges were analyzed.

Here are three findings from the analysis.

1. All four groups of hospitals outlined in the study – organized into highest performing, average performing, low performing and lowest performing hospitals based on the amount of penalties incurred under HRRP – improved on some level, according to the report.

2. The lowest performing hospitals with the highest penalties saw the largest improvements in readmissions. Specifically, for every 10,000 patients discharged annually, the lowest performing hospitals avoided 95 readmissions they would have seen before readmissions were penalized under the ACA.   

3. "It's a testament to the fact that hospitals do respond to financial penalties, in particular when these penalties are also tied to publicly reported performance goals," co-senior author Francesca Dominici, PhD, professor of biostatistics and senior associate dean for research at Harvard T.H. Chan School of Public Health, said in a prepared statement.    

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