A recent Yale School of Medicine study found that hospitals financially penalized under the Hospital Readmission Reduction Program — enacted as part of the 2012 Patient Protection and Affordable Care Act — reduced their readmission rates at a higher rate than nonpenalized hospitals.
Led by medical school professor Nihar Desai and funded by the federal Agency for Healthcare Research and Quality, the work was a collaboration between scientists at Yale and New York University. The researchers investigated trends in readmissions using Medicare data from 2008 to 2015 and discovered that following the announcement of the HRRP, penalized hospitals were more likely to reduce readmissions for all conditions. The study was published in the Journal of the American Medical Association on Dec. 27.
“The hospitals that reduced readmissions the most were those that were most likely to be financially penalized when the penalties kicked in, which implies that penalties can improve quality and readmission performance for hospitals with the most room for improvement,” said Kumar Dharmarajan, a medical school professor and co-author on the study.
In March 2010, the HRRP was announced as a component of the ACA that sought to reduce hospital readmissions. The program stated that hospitals with excessive readmission rates for three target conditions — heart failure, heart attack and pneumonia — would be financially penalized through the withholding of Medicare payments. These three targets were chosen because readmissions following hospitalization for these conditions are common, costly and often preventable, Desai said.
Medical school professor and co-author on the study Jeph Herrin explained that hospitals sometimes discharge patients before they are ready, causing some patients to return to the hospital shortly after they are discharged.
There has been accumulating evidence that many hospital readmissions throughout the past decade could have been avoided through a variety of ways. These include better education of patients while they are in the hospital, greater connections to outpatient care after discharge, and more follow-up, according to senior author and NYU professor Leora Horwitz.
“[The passage of the HRRP] was the first time there was a financial incentive to avoid readmissions, because if you could get your rates below average, then you would not be penalized,” Horwitz said. “You would save some money.”
Using data from more than 48 million hospitalizations among Medicare beneficiaries in the U.S., the researchers found that readmission rates for the target conditions declined significantly more than rates for nontarget conditions at hospitals later subject to HRRP penalties. These results imply that these hospitals specifically focused efforts to improve readmission outcomes for patients admitted for these target conditions, according to Desai.
“In contrast, at hospitals not subject to financial penalties, readmission rates for nontarget conditions had declined comparable with those for target conditions, suggesting that broader, system-wide readmission reduction strategies were more likely to have been employed,” Desai said.
Horwitz said that most of the reductions occurred before the actual penalties went into effect in October 2012. Once the law was announced in March 2010, hospitals determined whether they were likely to be financially penalized and created strategies to reduce readmissions, she added.
The greatest reductions thus happened between 2010 and 2012 before tapering off, suggesting that this policy signal was able to improve quality even before the specific program was implemented, according to Dharmarajan. The methods through which certain hospitals succeeded in reducing readmission rates and the identification of remaining opportunities for improvement remain unclear, Desai added.
Determining this would aid hospitals and providers in developing strategies to further reduce readmissions and provide payers and policymakers with crucial information to guide future payment and policy programs, he added.
Through the five-year grant by the AHRQ to explore factors affecting readmissions in general, the researchers hope to continue to investigate various aspects of readmissions, including hospital processes, community factors, financial structures, and policies like the HRRP, said Horwitz.
“Hospitals really did respond very strategically to the way in which the policy was designed. We see bigger declines for the hospitals that knew they were going to get penalized,” Horwitz said. “We see bigger declines for the target conditions that are triggering the penalty. So, this does suggest that there might be other ways to structure a policy like this that might have broader impacts.”
According to the Centers for Medicare & Medicaid Services, more than half of the nation’s hospitals — a total of 2,597 — were penalized through the HRRP in 2015, resulting in $528 million in withheld Medicare payments.