Three-Year Impact Of Stratification In The Medicare Hospital Readmissions Reduction Program

The Medicare Hospital Readmissions Reduction Program (HRRP) financially penalizes hospitals with high readmission rates. In fiscal year 2019 the program was changed to account for the association between social risk and high readmission rates. The new approach stratifies hospitals into five groups by hospitals' proportion of patients dually enrolled in Medicare and Medicaid, and it evaluates performance within each stratum instead of within the national cohort. Its impact on hospitals caring for vulnerable populations has not been studied. We calculated the change in average annual penalty percentage, before and after stratification, for safety-net hospitals, rural hospitals, and hospitals caring for a high share of Black and Hispanic or Latino patients. We found that stratification by proportion of dual enrollees was associated with a decrease in penalties by -0.09 percentage points at hospitals with the highest proportion of dual enrollees, -0.08 percentage points at rural hospitals, and -0.06 percentage points at hospitals with a large share of Black and Hispanic or Latino patients. Fully adjusted analyses suggest that these patterns were driven by penalty reductions at rural hospitals and hospitals disproportionately serving Black and Hispanic or Latino patients. Given the allocation of fewer penalties to these hospitals, we conclude that the stratification mandate was a modest step toward equity within the HRRP.