Does Accounting for Patient Characteristics Impact Hospital Readmission Penalties?
The Medicare Hospital Readmissions Reduction Program (HRRP) was implemented by the Center for Medicare and Medicaid Services (CMS) in fiscal year (FY)2013 to withhold reimbursement as a financial penalty to hospitals with high readmission rates. Initially, the penalty was determined by comparing a hospital’s readmission rate to the national average, but in FY2019, HRRP was updated to account for socio-economic differences between hospitals’ patient populations. The update was proposed to decrease the financial burden of hospitals that serve vulnerable populations by stratifying hospitals into 5 peer groups. Penalties would be determined by comparing readmission rates within groups, instead of to the overall national average.
Under the HRRP, hospitals are stratified into five groups according to the number of hospitalizations they had in which patients were dual-enrolled, meaning they were eligible both for Medicare and full-benefit Medicaid. A recent study looked at the impact this new stratification had on hospitals by comparing the average annual penalty percentage of safety-net, rural, and racial and ethnic minority-serving hospitals the 3 years before the 2019 change compared to that of the subsequent 3 years. Among the 5 hospital peer groups, the group with the lowest socioeconomic status had a decrease of -0.05 penalty percentage points, and the group with the highest socioeconomic status had an increase of +0.17 penalty percentage points. Rural hospitals experienced a decrease of -0.13 penalty percentage points compared to urban hospitals, and hospitals with the highest proportion of racial/ethnic minority patients had a decrease of -0.06 penalty percentage points. This seemingly shows a trend in the direction of advancing health equity, as hospitals that care for more vulnerable populations are being penalized less than those serving more patients of privilege.
Of note, most of the post-stratification period occurred during the COVID-19 pandemic which significantly influenced emergency and elective health care use. CMS adopted several policies to suppress many hospital quality measures, including the HRRP, to account for the public health emergency, and this surely influenced the study's analysis.
Future studies should not only aim to reassess the financial impact the HRRP updates have had, but to assess if this translates into better patient outcomes. Is the HRPP tier system associated with patient outcomes, especially equity-related outcomes? While the trend seems to favor greater health equity in terms of financial penalizations to hospitals, there are no specific patient-centered measures, and researchers, policymakers, and CMS should consider addressing this in future analyses and policy updates.
ABSTRACT
Shashikumar SA, Waken RJ, Aggarwal R, Wadhera RK, Joynt Maddox, KE. Three-year impact of stratification in the Medicare Hospital Readmissions Reduction Program. Health Aff (Millwood). 2022;41(3):375-382.
Background: The Medicare Hospital Readmissions Reduction Program (HRRP) financially penalizes hospitals with high readmission rates. In fiscal year 2019 the program was changed to account for the association between social risk and high readmission rates. The new approach stratifies hospitals into 5 groups by the hospitals' proportion of patients dually enrolled in Medicare and Medicaid, and it evaluates performance within each stratum instead of within the national cohort. Its impact on hospitals caring for vulnerable populations has not been studied.
Design, Setting, and Participants: We calculated the change in average annual penalty percentage, before and after stratification, for safety-net hospitals, rural hospitals, and hospitals caring for a high share of Black and Hispanic or Latino patients.
Results: We found that stratification by proportion of dual enrollees was associated with a decrease in penalties by -0.09 percentage points at hospitals with the highest proportion of dual enrollees, -0.08 percentage points at rural hospitals, and -0.06 percentage points at hospitals with a large share of Black and Hispanic or Latino patients. Fully adjusted analyses suggest that these patterns were driven by penalty reductions at rural hospitals and hospitals disproportionately serving Black and Hispanic or Latino patients.
CONCLUSIONS AND RELEVANCE
Given the allocation of fewer penalties to these hospitals, we conclude that the stratification mandate was a modest step toward equity within the HRRP.
EMRA + PolicyRx Health Policy Journal Club: A collaboration between Policy Prescriptions and EMRA
As emergency physicians, we care for all members of society, and as such have a unique vantage point on the state of health care. What we find frustrating in our EDs - such as inadequate social services, the dearth of primary care physicians, and the lack of mental health services - are universal problems. As EM residents and fellows, we learn the management of myocardial infarctions and traumas, and how to intubate, but we are not taught how health policy affects all aspects of our experience in the ED. Furthermore, given our unique position in the health care system, we have an incredible opportunity to advocate for our patients, for society, and for physicians. Yet, with so many competing interests vying for our conference education time, advocacy is often not included in the curricula. This is the gap this initiative aims to fill. Each month, you will see a review of a new health policy article and how it is applicable to emergency physicians.