Medicare must make changes to the Hospital Readmissions Reduction Program

It's fair to say that when hospital executives grumble about something that cuts into their organizations' bottom lines, I tend to take each of their claims with skepticism.

But in the case of the Centers for Medicare & Medicaid Services' Hospital Readmissions Reduction Program (HRRP), they have a very good case.

The HRRP was created as part of the Affordable Care Act, and its intentions are pure: Push hospitals to cut down on the readmissions of patients within 30 days of their discharge.

Patients wind up back in the hospital for a variety of reasons, including hospitals dropping the ball on follow-up care. And such readmissions cost a huge amount of money: The Agency for Healthcare Research and Quality (AHRQ) estimated that readmissions cost the Medicare program $24 billion for the first 11 months of 2011, or nearly $27 billion a year. That's not even including the costs for privately insured or Medicaid patients.

Not long after, the HRRP was implemented, and it began clawing back some payments to hospitals as a financial incentive to keep readmissions under control. The penalties apply to all Medicare patients--not just for those who were readmitted. Last year, more than 2,600 hospitals received penalties that cost them a total of $428 million. They have made some inroads in cutting readmissions, but nothing earth-shaking.

But data has begun to roll in suggesting that hospitals cannot control all of the factors that determine whether a patient may wind up being readmitted. The most powerful of the information came from a recent study in JAMA Internal Medicine. When factoring in 29 different variables hospitals cannot control for--such as income and a patient's cognitive function--the performance gap between the highest and lowest-performing hospitals was narrowed by nearly half. Another study by Truven Health Analytics confirmed that a patient's employment status is the top socioeconomic factor affecting readmissions for patients who were treated for heart failure, heart attacks or pneumonia.

Hospitals have been focusing more specifically on post-discharge care coordination. That has met with positive results, and it is likely that they will implement more of these programs in the future.

You could also argue that hospitals could beef up or reboot their community benefits programs to try and impact their patients in a way that would make their readmission less likely. But the scope and breadth of such programs would be so ambitious that only the wealthiest of hospitals or healthcare systems could make a difference--and those are not the ones who attract patients whose personal lives make them likelier candidates for readmissions.

There are bills in Congress that may address the issue of socioeconomic disparities within the HRRP, but given its dysfunctional nature as of late, CMS may have to make some changes on its own. Everyone wants the program to succeed, but no hospital should receive penalties due to circumstances beyond its control. -- Ron (@FierceHealth)