News & Commentary

Safety Net Hospitals and Readmissions

Broadening the Hospital Readmissions Reduction Program (HRRP) so that it is hospital-wide and not just focused on the five conditions currently included in the program would mean that safety net hospitals would be hit with higher penalties than other hospitals, according to a study published in the New England Journal of Medicine. Safety net hospitals treat a larger proportion of low-income patients than other hospitals.

It would “increase the disparity between safety net and other hospitals: The mean penalty as a percentage of base DRG payments would be 0.41 percentage points ($198,000) higher among safety net hospitals,” the study states.

The study looked at Medicare claims from 2011 through 2013 and included about 6.7 million readmissions under a hospital-wide measure and about 4.3 million readmissions under a condition-specific measure. Of the 3,443 hospitals included in the study, 688 were safety net hospitals.

When HRRP’s effectiveness became clear to most observers, experts began considering how it might be expanded. Groups such as the Medicare Payment Advisory Commission support a hospital-wide system.

Beginning in 2012, HRRP began penalizing hospitals for higher-than-normal 30-day readmission rates for Medicare beneficiaries suffering from heart failure, myocardial infarction, and pneumonia. In 2015, total hip and knee replacement and chronic obstructive pulmonary disease were added to the list.

The HRRP penalty is total payments for excessive readmissions divided by the total Medicare payments for all admissions.

The authors of the study, which was published October 19, say that there may be ways to level the playing field between the safety net hospitals and other hospitals, such as “assigning penalties within DSH [Disproportionate Share Hospital] index strata so that safety-net hospitals are not compared with other hospitals….”

The researchers work for HHS, the Harvard T. H. Chan School of Public Health, and the University of Michigan Institute for Healthcare Policy and Innovation.

Although a hospital-wide penalty system would not be good for safety net hospitals, it would address other problems, the researchers say. For instance, “it would allow the use of a single year of admissions for the determination of penalties (thereby shortening the time between performance and penalty), increase the number of clinical conditions evaluated, and modestly increase the number of hospitals meeting the volume threshold for penalty assessment.”

Also, as the study notes, a hospital-wide readmission system would “broaden hospital eligibility and provide incentives for improvement across conditions.”

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