Decreases In Readmissions Credited To Medicare's Program To Reduce Hospital Readmissions Have Been Overstated.

Ody C1, Msall L2, Dafny LS3, Grabowski DC4, Cutler DM5.

Author information

1: Christopher Ody ( c-ody@kellogg.northwestern.edu ) is a research assistant professor in the Kellogg School of Management, Northwestern University, in Evanston, Illinois.
2: Lucy Msall is a PhD candidate in the Booth School of Business, University of Chicago, in Illinois.
3: Leemore S. Dafny is the MBA Class of 1960 Professor of Business Administration at Harvard Business School, in Boston, Massachusetts.
4: David C. Grabowski is a professor in the Department of Health Care Policy, Harvard Medical School, in Boston.
5: David M. Cutler is the Otto Eckstein Professor of Applied Economics in the Department of Economics at Harvard University and a research associate at the National Bureau of Economic Research, both in Cambridge, Massachusetts.

Abstract

Medicare's Hospital Readmissions Reduction Program (HRRP) has been credited with lowering risk-adjusted readmission rates for targeted conditions at general acute care hospitals. However, these reductions appear to be illusory or overstated. This is because a concurrent change in electronic transaction standards allowed hospitals to document a larger number of diagnoses per claim, which had the effect of reducing risk-adjusted patient readmission rates. Prior studies of the HRRP relied upon control groups' having lower baseline readmission rates, which could falsely create the appearance that readmission rates are changing more in the treatment than in the control group. Accounting for the revised standards reduced the decline in risk-adjusted readmission rates for targeted conditions by 48 percent. After further adjusting for differences in pre-HRRP readmission rates across samples, we found that declines for targeted conditions at general acute care hospitals were statistically indistinguishable from declines in two control samples. Either the HRRP had no effect on readmissions, or it led to a systemwide reduction in readmissions that was roughly half as large as prior estimates have suggested.