Program Designed To Reduce Readmissions Imposed Significant Penalties on Hospitals Treating Disadvantaged Patients
Hospitals that treat large numbers of disadvantaged patients received significant financial penalties because they did not meet goals set by the Hospital Readmissions Reduction Program (HRRP), a part of the Affordable Care Act, an AHRQ study found. The analysis, published in the May issue of Health Affairs, found that financial penalties that hospitals endured under the HRRP limited the ability of those hospitals to engage in quality improvement efforts to reduce those penalties. The HRRP began imposing penalties in October 2012 on hospitals with higher-than-expected readmissions for heart attack, heart failure and pneumonia among fee-for-service Medicare beneficiaries. Previous research indicated that hospitals have been successful overall in reducing readmissions under the HRRP. This study found that in the first five years of the program, more than half of hospitals received penalties, which totaled $1.9 billion. But the penalty burden was greater among safety net hospitals that treated larger shares of Medicare or disadvantaged patients; were urban, large and for-profit; and had a major teaching component. Access the abstract.
Most Hospitals Received Annual Penalties For Excess Readmissions, But Some Fared Better Than Others
Abstract
The Hospital Readmissions Reduction Program (HRRP) initiated by the Affordable Care Act levies financial penalties against hospitals with excess thirty-day Medicare readmissions. We sought to understand the penalty burden over the program’s first five years, focusing on characteristics of hospitals that received penalties during all five years, how penalties changed over time, and the relationship between baseline and subsequent performance. More than half of participating hospitals were penalized by the Centers for Medicare and Medicaid Services in all five years of the program. From fiscal years 2013 to 2017, the growth in average penalties was modest, doubling from 0.29 percent to 0.60 percent, despite increasing opportunities for penalization. The penalty burden was greater in hospitals that were urban, major teaching, large, or for-profit and that treated larger shares of Medicare or socioeconomically disadvantaged patients. Surprisingly, hospitals treating greater proportions of medically complex Medicare patients had a lower cumulative penalty burden compared to those treating fewer proportions of these patients. Lastly, we found that hospitals with high baseline penalties in the first year continued to receive significantly higher penalties in subsequent years. For many hospitals, the HRRP leads to persistent penalization and limited capacity to reduce penalty burden. Alternative structures might avoid persistent penalization, while still motivating reductions in hospital readmissions.
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