Three More Things to Know About Readmissions

April 1, 2021
April 1, 2021

This blog post excerpts an article by Robin L. Rose, MBA, Vice President, Healthcare Resource Group, HealthStream, in the Q3 2015 issue of PX Advisor, our quarterly magazine designed to bring you thought leadership and best practices for improving the patient experience.

  1. More than three-fourths of hospitals were penalized in FY2015.

    Hospitals with readmission rates that exceed the national average are penalized by a reduction in payments across all of their Medicare admissions—not just those which resulted in readmissions. CMS began imposing penalties in FY2013 when the maximum penalty was 1% of the hospital’s base inpatient claims. This amount increased to 2% in FY2014 and will remain at 3% for FY2015 and subsequent years. Some 78% of acute care hospitals (2,610) were assessed a penalty for FY2015, up from 66% the year before, due in part to the fact that the number of diagnoses monitored by CMS increased from three to five. The penalties assessed by CMS for FY2015 totaled approximately $428 million.

  2. Hospitals caring for the neediest patients are most likely to incur a penalty.

    The American Hospital Association recently conducted an analysis looking at how HRRP penalties varied by hospitals’ Disproportionate Patient Percentage (DPP). They concluded that hospitals with a high percentage of needy patients were not only much more likely to be penalized but also more likely to pay a higher penalty. Many are worried that these penalties will have unintended consequences on our nation’s teaching and safety-net hospitals. According to Steven Lipstein, president and CEO of BJC HealthCare in St. Louis, “[Because penalties fall disproportionately on] teaching and safety-net hospitals that care for disadvantaged patients, the Hospital Readmissions Reduction Program diverts money away from these hospitals and has the unintended consequence of worsening disparities between rich and poor.” 

  3. Hospitals are only one piece of the readmissions puzzle.

    Recent analyses of hospital readmission rates posted by CMS on its Hospital Compare website indicate that the variables that most directly impact hospital readmissions are actually things that are outside the control of an acute care hospital. A widely-quoted study on this topic concluded that some 58% of the variation in hospital readmission rates can be accounted for by the county in which the hospital is located. In fact, county measures such as socioeconomic status (SES), availability of primary care physicians, and nursing home quality explain nearly half of this county-level variation. When hospital-level variables such as hospital ownership, teaching status, bed size, and safety-net status were added, very little additional variance was explained. These findings cast some doubt on the design of the HRRP, and the study authors conclude, “That the majority of the unexplained variation in hospital readmission rates can be attributed to counties rather than hospitals suggests that narrowly targeting hospitals with reimbursement adjustments and other incentives can lead at best to marginal improvements in readmission rates; the more effective policies might be directed at the wider system of care, including primary care and nursing home quality.”