Is the Hospital Readmission Reduction Program (HRRP) reducing hospital readmission rates?

The New England Journal of Medicine published a special article this week which they address four hypotheses of why hospital readmission rates have dropped from 21.5% in 2007 to 17.8% in 2015.  The authors stated that “Despite the importance of readmissions, there has been little study of the effect of the program. Published epidemiologic data suggest that overall national rates of readmission decreased through 2012. There is also evidence that stays in observation units have increased during this same period. Critics of the Hospital Readmissions Reduction Program have worried that hospitals might be achieving reductions in readmissions by keeping returning patients in observation units rather than formally readmitting them to the hospital.”

The authors examined four hypotheses that they proposed would address concerns and help provide an understanding of the impact of the HRRP implementation and impact of the payment penalties:

  1. Changes in rates of readmission in response to the ACA were greater for targeted conditions than for non-targeted conditions.
  2. The decreasing trend in readmission rates persisted after the initial implementation of the program.
  3. The trends in use of observation units did not change after adoption of the ACA.
  4. Hospitals that had a greater increase in observation-unit stays did not have a greater reduction in readmission rates.

The authors determined that:

  1. Readmission rates for both targeted and non-targeted conditions began to fall faster in April 2010, after the passage of the ACA, than before. Readmission rates continued to decline from October 2012 through May 2015, albeit at a slower rate.
  2. The passage of the ACA was associated with a more substantial decline in readmissions beginning in April 2010 for targeted than for non-targeted conditions.
  3. The rate of observation service use for both types of conditions was increasing throughout the study periods.
  4. There was no significant association within hospitals between increases in observation service use and reductions in readmissions during the implementation period.

Despite the fact that the authors observed an increase in the use of observation services, they believe that there are other and maybe even greater factors impacting the increase, such as the lack of clarity and confusion surrounding whether an inpatient stay would be deemed inappropriate by the Medicare recovery audit contractor (RAC) programs. While the authors comment that ACA and the HRRP may have had a broad effect on patient care, especially for targeted readmissions, they failed to address what may be occurring with patients that is reducing the readmission rates and the impact to quality patient care. In summary, the authors found “a change in the rate of readmissions coincident with the enactment of the ACA, which suggested that the Hospital Readmissions Reduction Program may have had a broad effect on care, especially for targeted conditions. In the long-term follow-up period, readmission rates continued to fall for targeted and non-targeted conditions, but at a slower rate. We did not see large changes in the trends of observation-service use associated with the passage of the ACA, and hospitals with greater reductions in readmission rates were no more likely to increase their observation-service use than other hospitals.”

Read more at:

The New England Journal of Medicine

CMS Readmission Reduction Program

What are Readmissions and the HRRP?

A readmission is a hospitalization that occurs shortly after discharge, typically within 30 days of discharge. Section 3025 of the Affordable Care Act added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program (HRRP), which requires CMS to reduce payments to IPPS hospitals with excess readmissions, effective for discharges beginning on October 1, 2012. Essentially, Medicare has defined payment penalties for hospitals which the acceptable rates of readmissions, and is increasing them annually, in an effort to decrease readmissions by encouraging facilities to engage in quality improvement and process redesign that reduces readmissions. The HRRP penalizes hospitals that have readmission rates that are higher than would be expected on the basis of readmission performance over 3 previous years of quality data collected. For example, fiscal year 2015 penalties are based on readmissions from 2010 through 2013. When the program came into effect in 2013, the maximum penalty was 1% of a hospital’s Medicare base diagnosis-related-group (DRG) payments per each claim. However, in 2015 the penalty has been increased to 3%.