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Social risk adjustment in the hospital readmission reduction program: Pitfalls of peer grouping, measurement
Monica S Aswani1, Eric T Roberts2
1Department of Health Services Administration, University of Alabama at Birmingham School of Health Professions, Birmingham, Alabama, USA.
Objective:
To examine the limitations of peer grouping and associated challenges measuring social risk in Medicare's Hospital Readmission Reduction Program (HRRP). Under peer grouping, hospitals are divided into quintiles based on the proportion of a hospital's Medicare inpatients with Medicaid ("dual share"). This approach was implemented to address concerns that the HRRP unfairly penalized hospitals that disproportionately serve disadvantaged patients.
Data:
Public data on hospitals in the HRRP.
Design:
We examined the relationship between hospital dual share and readmission rates within peer groups; changes in hospitals' peer group assignments, readmission rates, and penalties; and the relationship between state Medicaid eligibility rules and peer groups.
Data Collection:
Public data on hospital characteristics and readmission rates for 3119 hospitals from 2019 to 2020.
Principal Findings:
The proportion of dual inpatients among hospitals of the same peer group varied by as much as 69 percentage points (ppt). Within peer groups, a one ppt increase in dual share was associated with a 0.01 ppt increase in the difference from the median readmission rate (p < 0.001). From 2019 to 2020, 8.8% of hospitals switched peer groups. Compared to hospitals that did not switch, those moving to a lower peer group had a higher mean penalty in 2020 (0.096 ppt; p = 0.006); those moving to a higher group had a lower mean penalty (-0.06 ppt; p = 0.079). However, changes in penalties did not correspond to changes in readmission rates. Hospitals in states with higher Medicaid income eligibility limits were more likely to be in higher peer groups.
Conclusions:
Peer grouping is limited in the extent to which it accounts for differences in hospitals' patient populations, and it may not fully insulate hospitals from penalties linked to changes in patient mix. These problems arise from the construction of peer groups and the measure of social risk used to define them.
Insights
Peer grouping in Medicare's Hospital Readmission Reduction Program has limitations. It may not fully account for patient population differences, potentially penalizing hospitals serving disadvantaged populations unfairly.
Area of Science:
- Health Services Research
- Health Policy Analysis
- Healthcare Quality Improvement
Background:
- Medicare's Hospital Readmission Reduction Program (HRRP) uses peer grouping to adjust for socioeconomic factors.
- Hospitals are categorized into quintiles based on the proportion of Medicare-Medicaid dual-eligible patients ('dual share').
- This system aims to prevent unfair penalties for hospitals serving high-need populations.
Purpose of the Study:
- To evaluate the effectiveness and limitations of peer grouping in measuring social risk within the HRRP.
- To assess whether the current peer grouping methodology adequately addresses disparities in hospital performance metrics.
Main Methods:
- Analysis of public HRRP data for 3119 hospitals from 2019-2020.
- Examination of the relationship between hospital dual share and readmission rates within peer groups.
- Assessment of changes in peer group assignment, readmission rates, penalties, and the influence of state Medicaid eligibility rules.
Main Results:
- Significant variation in dual share (up to 69 percentage points) existed within peer groups.
- A 1 percentage point increase in dual share correlated with a 0.01 percentage point increase in the difference from the median readmission rate (p < 0.001).
- Hospitals switching peer groups experienced changes in penalties, but these changes did not align with readmission rate fluctuations. Higher Medicaid income eligibility in states correlated with higher peer group assignments.
Conclusions:
- The current peer grouping strategy has limitations in capturing patient population diversity.
- The methodology may not sufficiently protect hospitals from penalties influenced by shifts in patient demographics.
- The construction of peer groups and the chosen social risk measure contribute to these challenges.
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