Most Facilities in Hospital Readmissions Reduction Program Penalized

The majority of facilities participating in the Hospital Readmissions Reduction Program (HRRP) in fiscal year (FY) 2021 have been penalized for readmitting too many patients according to CMS standards.

Data recently published by CMS shows that about 82 percent of the 3,080 hospitals having their readmission rates assessed as part of the program received a penalty because of their rates from July 1, 2016, to June 30, 2019.

That represents 2,545 hospitals, or about half of all US community hospitals according to the latest data from the American Hospital Association (AHA).

Hospitals that CMS has deemed as having excess readmission rates for six common conditions, including heart failure and pneumonia, will have their Medicare reimbursements under the Inpatient Prospective Payment System (IPPS) reduced.

The average payment adjustment factor for FY 2021 is about 0.993, which is approximately a 0.69 percent reduction in Medicare reimbursements.

Over 600 hospitals, however, will see a reduction of 1 percent or more.

Hospitals in the program can face a maximum adjustment of 3 percent of their Medicare IPPS reimbursements.

Additionally, the data showed that a similar number of hospitals with a higher proportion of patients dually eligible for Medicare and Medicaid were penalized under the HRRP in FY 2021 versus hospitals treating the smallest percentage of the patients.

This is the third year that CMS has grouped hospitals in the HRRP by the proportion of dually eligible patients served. The change was implemented as part of the 21st Century Cures Act to make the HRRP fairer for safety-net hospitals, which have historically been penalized more under the program than their peers.

The FY 2021 data showed that 499 of the 616 hospitals in the peer group with the highest percentage of dual-eligible patients were penalized versus 448 of the hospitals in the peer group with the least proportion of the patients.

The two groups also had a similar average payment adjustment factor at approximately 0.994 and 0.991, respectively. Although, more hospitals in the lowest peer group for dual-eligible patients faced a penalty over 1 percent (about 23 percent) compared to hospitals in the highest peer group for the patients (about 16 percent).

The peer groups appear to be working as Congress intended, however, recent studies have called the entire HRRP methodology into question.

A study recently published in JAMA Cardiology found that almost one-third (31 percent) of hospitals in the program should have been penalized by CMS but were not because of the margin of error associated with 30-day risk-standardized readmission rates.

The same margin of error also likely led to errors when calculating the magnitude of penalty amounts, according to the study from researchers at the Richard A. and Susan F. Smith Center for Outcomes Research in Cardiology.

The findings indicate the need for either a longer data collection period or new measures, the researchers stated.

The latter solution was also recently suggested in two new studies from the UT Southwestern Medical Center. The studies – one of which was also published in JAMA Cardiology, the other being in Circulation –  advised CMS to add a new metric to examine how many of the initial 30 days following hospitalization are actually spent at home.

“The current readmission penalty has been a matter of debate,” said Ambarish Pandey, MD, first author of the study published today in JAMA Cardiology, as well as of the earlier study published in Circulation in July.

“Some hospitals that have had lower readmission rates were actually having high mortality rates,” added Pandey, assistant professor of internal medicine at UT Southwestern. “If you die, you're not going to be readmitted.”

A “30-day home time” metric would provide a more comprehensive picture and be more patient-centered, Pandey concluded.

CMS has already altered the HRRP and other value-based purchasing programs to accommodate hospitals during the COVID-19 public health emergency. In September, for example, the agency modified data reporting requirements for the programs since data from earlier in 2020 would not reflect hospital performance under normal circumstances.

The agency also indicated that it may suspend the program in the future if the COVID-19 public health emergency continues to impact hospital performance, Kaiser Health News reported in its story breaking FY 2021 HRRP results.