On Oct. 1, 2012, the Hospital Readmissions Reduction Program (HRRP) was added to the Social Security Act by the Affordable Care Act (Section 3025). This program reduces the payments made to IPPS hospitals that have excessive readmissions, and up to 3 percent of regular reimbursements can be withheld from hospitals that are penalized.
Hospitals Penalized in 2018
In the 2018 fiscal year, new data released by CMS shows that 2,573 hospitals will be penalized. And while the percentages withheld for hospital readmission penalties may seem small, approximately $564 million in payments with be withheld in the 2018 fiscal year, a number that’s even higher than the amount withheld in the 2017 fiscal year. On average, the penalty on hospitals was approximately 0.73 percent, while 48 of the 2,573 hospitals saw the maximum 3 percent penalty withheld for this fiscal year.
HRRP penalizes hospitals specifically based upon readmissions for six specific conditions, including:
- Heart attacks
- Chronic lung disease
- Knee and hip replacements
- Coronary artery bypass graft surgery
- Heart failure
Who is Exempt?
Some hospitals are exempt from this program for the 2018 fiscal year. In fact, more than 1,500 hospitals are exempt from hospital readmission penalties, including critical access hospitals, psychiatric hospitals, children’s hospitals, and veterans’ hospitals. Since the state of Maryland has a federal waiver on how Medicare funding is distributed, hospitals in this state are also exempt from HRRP penalties.
Changes in How Penalties are Calculated
For the 2018 fiscal year, there will some changes to how the penalties for hospitals will be calculated. Since the program’s methods are unforgiving, hospitals can be penalized even if they only have high readmission rates for just one of the targeted six conditions.
This has led to major academic medical centers and safety-net hospitals being penalized because they often deal with low-income patients who are more likely to be readmitted to the hospital because they’re often unable to afford the right diet or medications, or because they don’t have access to a primary care physician.
Starting in October 2018, when the 2019 fiscal year begins, Medicare will start basing hospital readmission payments on how hospitals compare to peer hospitals that have a similar number of patients who are dually eligible for Medicaid and Medicare. With the new risk-adjusted formula being used by the Centers for Medicare and Medicaid Services, better hospitals that see more complex patients aren’t being hit as hard with penalties.
Are Penalties Reducing Hospital Readmissions?
According to recent studies, such as one published in the New England Journal of Medicine, readmissions for the six specific conditions included in HRRP have fallen within the past few years. Other studies have found that readmissions are falling even faster in hospitals that can be penalized by HRRP. Overall, it seems like these penalties have resulted in reduced readmissions, as well as meaningful changes in the healthcare landscape.
Many hospitals have found that readmissions are often based upon social determinants, and they are working with patients, specifically in the first 24-48 hours after discharge, to make sure they have the medications they need, education to manage their own health and transportation they need to get to medical appointments.
Can Hospitals Continue to Improve?
While initial studies showed that hospital readmissions did decrease initially, other research shows that there’s been little improvement seen since 2012. Other recurring quality incentives Medicare plans to release, while they may not reduce readmissions, may offer a further boost to quality of care, with penalties being charged to hospitals that have high rates of infections and patient injuries.
Some experts have hypothesized that perhaps there’s limited potential for making further improvements that reduce readmissions. However, there’s increasing amounts of evidence to the contrary among hospitals that use psychographic segmentation and digital communications to manage discharged patients based on their own unique motivations and attitudes related to health and wellness.
For example, one prestigious New England hospital system experienced just one readmission for a form of spine surgery and reduced nurse FTEs dedicated to patient follow-up by more than 75 percent after using PatientBond to establish a proactive, personalized patient engagement workflow.
By pairing psychographic segmentation with an automated communications platform such as PatientBond, hospitals can support successful post-discharge recovery with personalized educational materials, recovery tracking, appointment reminders and medication adherence surveys.
What steps will your hospital be taking to reduce readmissions in 2018 — and the penalties that go along with them?