MedPAC: Medicare's readmission program not causing increase in observation stays 

A stethoscope and paper money.
MedPAC issued its June report to Congress last week. (Getty/utah778)

CMS' readmissions reduction program isn't responsible for an uptick in observation stays.

That, according to the Medicare Payment Advisory Commission (MedPAC) June report (PDF), which was submitted to Congress on Friday. In the analysis, the group concluded the Centers for Medicare & Medicaid Services' Hospital Readmissions Reduction Program (HRRP) isn't driving the trend. 

Researchers have suggested that more hospitals may be putting patients in observational care as a way to avoid the HRRP penalties. MedPAC found that while observation stay rates did increase at a slightly faster rate following the launch of HRRP, this trend is also seen among patients who were not initially admitted to the hospital. 

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The increase in observation stays also only offsets a small amount of the readmissions eliminated by the program, according to MedPAC.  

RELATED: Data shows link between hospital quality and readmission rates 

"We conclude that the reduction in readmission rates reflects real changes in practice patterns and not simply a shifting of short-stay admissions into observation stays to avoid readmission penalties," the group said. 

MedPAC also found that the program is leading to lowered readmission rates among target populations. For example, MedPAC said that between 2010 and 2016, the readmission rates for patients with heart failure and heart attack decreased by between 1.4% and 3.6%, respectively, saving Medicare $20 billion each year. 

However, despite MedPAC's estimates, recent research has questioned whether HRRP actually saves hospitals money, and if it makes patient care safer. A recent study from Cedars-Sinai Medical Center found such wide variations on cost savings that it couldn't conclusively determine that the program saves money. 

A study from UCLA also linked lower readmission rates among heart failure patients to higher mortality rates, and another found no correlation between lower readmission rates and the level of care delivered or improved outcomes. 

RELATED: Study links financial penalties to lower readmission rates 

MedPAC addressed the UCLA survey in its report and said it found "no evidence" to suggest that the decreased readmissions were leading to higher mortality rates in this patient population. 

"To the extent that there is any effect, we find the HRRP may have slightly improved (reduced) mortality rates," the group said. 

The commission also reiterated its support for cutting Medicare's payment rates to standalone emergency rooms in the report. It proposed earlier this year that Congress cut payments to free-standing ERs located within six miles of an on-campus hospital ER by 30%. 

"Under current law, hospitals have a financial incentive to build new off-campus EDs and colocate physician offices and specialty clinics within them," MedPAC said. 

Groups such as the American Hospital Association warned that the change could impact patient access in underserved areas. 

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