Reducing Readmissions: How Are Hospitals Responding to New Penalties?

August 2013
By HCFO Staff

High rates of hospital readmissions are widely recognized as a significant problem among Medicare beneficiaries.  These re-hospitalizations not only drive up health care costs, but may reflect low quality of care, poor coordination among providers, and a lack of understanding among patients about how to manage their own conditions.  In a recent article in The New York Times, Judith Graham explores the strategies some hospitals are using to reduce readmissions and avoid new penalties in place under health care reform.

The need to reduce hospital readmissions has received added emphasis with the start of the Hospital Readmissions Reduction Program (HRRP), an initiative under the Affordable Care Act (ACA) that penalizes hospitals with high 30-day readmission rates for patients with heart attack, heart failure and pneumonia.  The program took effect in October 2012 for discharges that occurred between July 2008 and June 2011, and many hospitals are already feeling the effects.  According to Kaiser Health News, 2,213 hospitals—or approximately two-thirds of those whose readmission rates were reviewed—were penalized in the first year of the program.  Of those hospitals, 276 received the maximum penalty—a 1 percent cut in their Medicare payments.  The maximum penalty will grow to 2 percent in October and to 3 percent the following year, with the possibility that other conditions may be added to the program as well.

As Graham reports, some hospitals have responded to the penalties by studying why patients with conditions such as heart failure return to the hospital.  They’re also testing strategies for improving patients’ transitions back home, such as spending more time teaching patients and caregivers about how to manage their condition and connecting patients with community supports such as transportation and home health care.  However, as the article notes, most hospitals still have a long way to go in involving patients in efforts to prevent avoidable readmissions.

In a HCFO-funded study, Kathleen Carey, Ph.D., of Boston University, is examining the intended and unintended consequences of the HRRP, with the goal of providing important early information that may help policymakers refine the program moving forward.  Dr. Carey is using databases available through the Agency for Healthcare Research and Quality’s (AHRQ) Healthcare Cost and Utilization Project to look at all acute care hospitalizations for the three targeted conditions in New York, North Carolina and Utah for the years 2008 and 2011—before and after the ACA was signed into law.  The assumption is that hospitals’ responses to the HRRP began in 2009-2010 and that effects were manifest by 2011.  As a control, Dr. Carey is using Medicare patients with gastrointestinal conditions, which also have high readmission rates.  In addition to assessing how readmission rates for the targeted conditions change under the HRRP, Dr. Carey is also examining possible strategic behavior by hospitals that may reduce quality of care and/or offset expected savings to Medicare.  This behavior includes increased use of the emergency department and observation stays, as well as increased readmissions after 30 days.

Additional information about Dr. Carey’s HCFO study is available here.  Study findings are expected to be available in 2014.