Persistent readmission rate penalties are counterproductive

A new study suggests hospitals that are penalized for their 30-day Medicare readmission numbers often have a limited ability to solve the problem.

The Affordable Care Act’s Hospital Readmissions Reduction Program (HRRP) has targeted providers with incentives meant to reduce the rate of avoidable readmissions, in a bid to reduce overall healthcare costs. While some studies have linked penalty payments to lower readmission rates, questions remain regarding whether those lower rates have a measurable effect on improved outcomes, per previous reporting by FierceHealthcare.

Researchers from the University of Tennessee Health Science Center and the Virginia Commonwealth University looked at the trends that have developed over the first five years of the HRRP, during which time more than half of participating hospitals received penalties every year. They published their findings this week in Health Affairs.

In cases where hospitals frequently received penalties, researchers wrote they saw “a sizable financial impact on particular hospitals, limiting their ability to meet the needs of the populations they serve and invest in quality improvement activities.”

In particular, safety-net hospitals and similar organizations catering to socioeconomically disadvantaged patients, a demographic prone to readmissions, saw greater penalties. Larger hospitals, hospitals in urban areas, and major teaching hospitals also saw greater penalties than their peers. While hospitals that treat larger numbers of Medicare patients also paid more in penalties, those that cared for more Medicare patients with complex medical conditions saw a lower burden than their peers, a phenomenon the authors suggest may stem from existing infrastructure to prevent readmissions for those patients.

The study noted that the 21st Century Cures Act allows the HRRP to adjust for socioeconomic status beginning in fiscal 2019, but the authors suggest policymakers investigate other alternatives that could retain incentives for hospitals to reduce readmission rates without the counterproductive financial side effects of persistent penalization.