Will Proposed Changes to the Hospital Readmissions Reduction Program Save Safety-Net Hospitals From Further Penalties? | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Will Proposed Changes to the Hospital Readmissions Reduction Program Save Safety-Net Hospitals From Further Penalties?

July 20, 2017
by Rajiv Leventhal
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Industry leaders review a recent CMS rule and how it might make things fairer for hospitals that serve low-income and clinically complex patient populations

In April, the Centers for Medicare and Medicaid Services (CMS) proposed a rule that included in it an important change in how hospitals would be scored within the Hospital Readmissions Reduction Program (HRRP).

The rule, which would take effect in FY 2019, would require Medicare to consider social risk factors when calculating hospital penalties under the HRRP, as mandated by the 21st Century Cures Act. This modification was something that healthcare stakeholders have long been calling for, as they attest that the HRRP disproportionately penalizes institutions that serve low-income and clinically complex patient populations.

Historically, HRRP, since it began in 2013, has assessed readmissions rates for certain conditions and has penalized those hospitals whose patients had higher readmission rates than would be expected. But, the readmission rates used in the program have not accounted for the demographics of a hospital's patient population. Then came the Cures Act, which mandated that HRRP begin to account for patients' socioeconomic status in its assessment of readmissions performance.

According to an Advisory Board analysis of the April CMS rule, the federal agency “intends to sort hospitals into five peer groups according to their dual-eligible inpatient stay ratio. Within each peer group, hospitals' excess readmission ratio for each of the program's six conditions will be compared to the group's median excess readmission ratio for that condition. The proposed change, which is designed to be budget-neutral for Medicare, would shake up the magnitude of HRRP penalties, especially for some safety-net hospitals.”

Indeed, as further noted in a rule analysis from The BDO Center for Healthcare Excellence & Innovation, a consulting firm dedicated to helping healthcare organizations achieve optimal clinical and financial performance, “Dual-eligible patients are historically more expensive for hospitals, skewing the readmissions figures for safety-net hospitals, leading to unfair penalties against them and inhibiting their ability to provide the best quality of care to populations that need it the most.”

But, according to the center’s officials, the suggestions put forth in the CMS rule would allow safety-net hospitals to control for variables often out of their control as they relate to dual-eligibility. However, they stated in their analysis, when it comes to high readmission rates and the associated penalties, other population factors are often also at play regardless of a hospital’s quality scores including: the proportion of patients who are linguistic minorities; the proportion of patients who have behavioral health diagnoses; and the proportion of patients with minimal social support.

Recently, two senior leaders at the center—Bill Bithoney, M.D., senior fellow at The BDO Center for Healthcare Excellence & Innovation, and Patrick Pilch, national co-leader at the firm—spoke with Healthcare Informatics about their high-level takeaways from the rule, the impact that it might have on the HRRP, and what they would like to see further changed in the final rule, expected to drop this fall. Below are excerpts of that interview.

What were your main takeaways from the rule, as it relates to the Hospital Readmissions Reduction Program?

Bithoney: We saw it as a leap forward and that CMS is taking into account dual-eligible patients, as they typically cost three to four times as much [as non-dual-eligibles], largely because they have great needs but also because of their social, behavioral and demographic issues. So we felt that it was a great leap forward to take into account these sociodemographic factors. However, one could also take into account other things—some people have recommended strongly that we look at census tracts and the poverty within the census tract that the hospital operates. So let’s look at the population in general, and those social demographic issues that are associated with that poverty, such as the presence of isolated linguistic minorities and the increased prevalence of behavioral issues and opioid issues.

Bill Bithoney, M.D. & Patrick Pilch

I would also like to see them take into account the proportion of patients included in the hospital sample that have three or four serious medical diagnoses. It’s well-known that you are much more likely to be readmitted if you have three or four of these [conditions compared to one]. Medicare can take this into account; it’s not that hard. The data capacity of Medicare is incredible and has been burgeoning; they can calculate a risk score for [all of the lives that they cover]. So you can weigh the hospital’s readmission rate by any of these factors. These risk scores are all weighted based on how many diagnoses a patient has, and you get a medical risk score. The only place CMS does social weighting of risk in PACE [Programs of All-Inclusive Care for the Elderly], where they have a RAPS [Risk Adjustment Processing System] score that begins by taking into account the Medicaid population of all patients, not just dual-eligibles. So there’s a mechanism that exists in CMS to do just that—weighing hospitals by if their patients have three or four diagnoses and if they are poor.


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