- A recent change to the CMS Hospital Readmissions Reduction Program led to fewer penalties for teaching hospitals, hospitals in disadvantaged neighborhoods and hospitals that treat high proportions of beneficiaries with disabilities, a study published in JAMA this week reports.
- The rule, which took effect in fiscal year 2019, separated hospitals into five groups, each with similar proportions of dual eligible patients and adjusted payments for socioeconomic factors. Of the 3,049 hospitals studied, those treating higher levels of patients who are dual enrolled in Medicare and Medicaid are estimated to see a collective decrease of $22.4 million in penalties. Hospitals treating lower levels of dual enrollees are estimated to pay an additional $12.3 million in penalties.
- Teaching and rural hospitals often treat the most complex and costly patients, yet under previous HRRP rules, they also faced higher penalties. The study authors advised policymakers to monitor the impact of the 2019 HRRP rule on readmission rates in addition to hospital finances.
The recalculated HRRP was mandated by the 21st Century Cures Act and finalized by CMS for 2019 a year ago. The move was applauded by many providers, but they may not have anticipated the level of results this study estimates, especially at the state level.
Study authors Karen Maddox and Andrew Qi of the Washington University School of Medicine in St. Louis and Mat Reidhead of the Missouri Hospital Association said the shifts in penalties at state levels were "even more striking" than the collective figures. California hospitals will get a minimum $6.5 million reduction in penalties, for example, while Florida hospitals will receive $2.5 million in additional penalties.
Those stark contrasts are due to state Medicaid eligibility cutoffs, as states with higher cutoffs will see greater reductions in penalties than states with lower cutoffs, according to the authors.
HHS and the Medicare Payment Advisory Commission had previously estimated the HRRP overhaul would benefit safety net hospitals, as did a Kaiser Health News analysis published in September.
Safety net hospitals have been pushing for a change to the HRRP before it was implemented. A data brief published by America's Essential Hospitals in 2015 demonstrated how, under one year with the traditional HRRP in place, hospitals that treated higher levels of low-income patients were 2.67 times more likely than other hospitals to get hit with penalties.
Opponents of the program argued it was inherently unfair: Hospitals that serve patients who are socioeconomically disadvantaged are more likely to have higher readmission rates.
Many of the adverse factors associated with readmissions are "largely outside the control of hospitals," the authors of a 2013 Health Services Research study wrote. By failing to take the financial and clinical pressures of treating vulnerable patients into consideration, unchanged readmission rates were the best case scenario for the then-unimplemented program. At worst, they wrote, the program would hinder patient access.
Such criticism was met with resistance from some who argued taking social risk into account would hinder hospitals' motive to improve readmission rates. Maddox and her co-authors write that their study proves the opposite.
High penalties actually might have "impeded hospitals' efforts to reduce readmissions by reducing resources in already constrained environments," they wrote. Now, money saved from the rule change might be spent making those improvements.