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Most Hospitals Received Annual Penalties For Excess Readmissions, But Some Fared Better Than Others
Michael P Thompson1, Teresa M Waters2, Cameron M Kaplan3
1Michael P. Thompson (mthompson@uthsc.edu) is a postdoctoral fellow in the Department of Preventive Medicine at the University of Tennessee Health Science Center, in Memphis.
Insights
The Hospital Readmissions Reduction Program (HRRP) often penalizes hospitals persistently. Many hospitals struggle to reduce penalties, suggesting a need for alternative program structures to improve care quality.
Area of Science:
- Health Policy
- Healthcare Management
- Public Health
Background:
- The Affordable Care Act established the Hospital Readmissions Reduction Program (HRRP).
- HRRP imposes financial penalties on hospitals with high 30-day Medicare readmission rates.
- Understanding the long-term impact and characteristics of penalized hospitals is crucial.
Purpose of the Study:
- To analyze the financial penalty burden of HRRP over its initial five years (FY2013-2017).
- To identify characteristics of hospitals consistently penalized.
- To examine trends in penalties and the relationship between baseline and subsequent performance.
Main Methods:
- Retrospective analysis of hospital penalty data from fiscal years 2013 to 2017.
- Evaluation of hospital characteristics associated with persistent penalties.
- Assessment of penalty changes over time and correlation with initial performance.
Main Results:
- Over half of hospitals faced penalties in all five years.
- Average penalties doubled from 0.29% to 0.60% but remained modest.
- Urban, teaching, large, for-profit, and safety-net hospitals bore greater penalties.
- Hospitals with higher proportions of medically complex patients experienced lower penalties.
- High baseline penalties predicted continued high penalties.
Conclusions:
- Persistent penalization is a significant issue for many hospitals under HRRP.
- Hospital characteristics influence penalty burden, with unexpected findings for medically complex patients.
- Alternative program designs may be necessary to effectively reduce readmissions without causing persistent penalties.
Abstract:
The Hospital Readmissions Reduction Program (HRRP) initiated by the Affordable Care Act levies financial penalties against hospitals with excess thirty-day Medicare readmissions. We sought to understand the penalty burden over the program's first five years, focusing on characteristics of hospitals that received penalties during all five years, how penalties changed over time, and the relationship between baseline and subsequent performance. More than half of participating hospitals were penalized by the Centers for Medicare and Medicaid Services in all five years of the program. From fiscal years 2013 to 2017, the growth in average penalties was modest, doubling from 0.29 percent to 0.60 percent, despite increasing opportunities for penalization. The penalty burden was greater in hospitals that were urban, major teaching, large, or for-profit and that treated larger shares of Medicare or socioeconomically disadvantaged patients. Surprisingly, hospitals treating greater proportions of medically complex Medicare patients had a lower cumulative penalty burden compared to those treating fewer proportions of these patients. Lastly, we found that hospitals with high baseline penalties in the first year continued to receive significantly higher penalties in subsequent years. For many hospitals, the HRRP leads to persistent penalization and limited capacity to reduce penalty burden. Alternative structures might avoid persistent penalization, while still motivating reductions in hospital readmissions.
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