Report, hospital leaders make case for revamping readmissions penalties

A new AHA TrendWatch report calls for refinements in Medicare’s Hospital Readmissions Reduction Program (HRRP) that achieve the goal of reducing readmissions without unfairly penalizing hospitals.

The March 19 report, “Rethinking the Hospital Readmissions Reduction Program,” notes that the national readmission rate – when patients return to a hospital within 30 days of discharge – is declining. But reducing readmissions is a “complex undertaking because not all readmissions can or should be prevented; indeed, some are planned as part of sound clinical care,” the report states.

While hospitals are working to reduce readmissions caused by clinical care practices, many other factors contribute to readmissions that are beyond hospitals’ control, such as poverty and “lack of access to supportive services in the community that aid post-hospitalization recovery,” the report says. It says the program should focus penalties on admissions that are avoidable and related to the initial admission. And it says an “adjustment for sociodemographic factors will ensure that hospitals serving higher-risk populations do not incur disproportionate penalties.”

The report’s findings were discussed at an AHA-sponsored briefing held March 19 on Capitol Hill. Hospital leaders shared with congressional members and staff their concerns with shortcomings in the HRRP, and expressed support for recently introduced legislation aimed at providing a level playing field for hospitals serving larger number of poor patients. Hospitals shouldn’t be “penalized for resources and functions they cannot control,” said Michael Langberg, M.D., Cedars-Sinai's chief medical officer in Los Angeles.

The readmissions legislation. On March 10, a bipartisan group of House and Senate lawmakers introduced legislation that the AHA and hospital leaders say would improve the HRRP by factoring sociodemographic status into hospital readmission rates.

The Affordable Care Act’s HRRP aims to reduce preventable readmissions by penalizing hospitals with 30-day readmission rates in excess of what was expected for certain conditions after adjusting for case mix. However, readmissions are influenced by factors beyond the hospital’s control, and studies have shown that the challenges faced by urban and rural, low-income populations bear directly on those outcomes.

The “Establishing Beneficiary Equity in the Hospital Readmission Program Act,” S. 688/H.R. 1343, would require the Centers for Medicare & Medicaid Services (CMS) to account for patient sociodemographic status when calculating the risk-adjusted readmissions penalties. The legislation’s sponsors – Sens. Rob Portman, R-Ohio, and Joe Manchin, D-W.Va, and Reps. Jim Renacci, R-Ohio, and Eliot Engel, D-N.Y. – said it would overall improve quality of care, increase accountability for all inpatient hospitals and further reduce preventable Medicare readmissions.

In a press statement, AHA Executive Vice President Rick Pollack expressed the association’s support for the legislation. “When recovering from illness or injury, everyone wants to get better as quickly as possible,” Pollack said. “That’s why hospitals are strongly committed to reducing unnecessary readmissions.” He said the legislation “will improve the fairness of CMS’ readmissions program and help ensure hospitals have the critical resources needed to care for their most vulnerable patients.”

For the fiscal year (FY) beginning Oct. 1, 2014, hospitals that run afoul of the HRRP standard face a reduction of up to 3% in their Medicare reimbursements. When calculating each hospital’s readmission rate, CMS uses three full years of previous data to determine hospital performance. For penalties that will be imposed in FY 2015, CMS based its calculations on hospital readmissions that occurred from July 2010 through June 2013.

The HRRP measures put pressure on hospitals to improve patient care and better coordinate services after discharge through relationships with home health service organizations and skilled nursing facilities. But safety-net hospital leaders say the penalties create an unlevel playing field. They say the penalties, combined with spending cuts imposed through other Medicare legislation, threaten their long-term viability.

Through the HRRP, CMS calculates a predicted rate and an observed rate of readmissions for every hospital in the nation. It then calculates the variation between those two rates, and hospitals with excessive readmissions incur a penalty. But, as hospital leaders point out, CMS does not account for sociodemographic factors beyond the hospital’s control when calculating excess readmissions.  As a result, hospitals caring for disadvantaged patients tend to incur higher readmission penalties.

“For example, many patients simply cannot afford the treatments necessary to ensure recovery from illness and injury,” the AHA’s Pollack observed. “Community services, such as primary care, mental health services, physical therapy and easy access to appropriate food, are not available to some patients when they are released from the hospital.”

S. 688/H.R. 1343 will “greatly improve the fairness of readmission penalties by taking into account both the proportion of the hospital’s patients eligible for both Medicare and Medicaid and the patients’ sociodemographic status,” he added. “This recalibration ensures hospital performance is compared equally while maintaining an incentive for all hospitals to reduce unnecessary readmissions.”

At an AHA-hosted Capitol Hill briefing, hospital leaders March 19 called for changes to Medicare’s Hospital Readmissions Reduction Program. From left are Michael Langberg, M.D., Cedars-Sinai’s chief medical officer; William Pinsky, M.D., Ochsner Health System’s executive vice president; and Rachel George, M.D., Presence Health’s system vice president.