Financial Penalties Appear to Curb Excess Readmissions

Diana Swift

December 30, 2016

Penalties imposed under the Affordable Care Act's Hospital Readmission Reduction Program (HRRP) are associated with lower readmission rates at penalized hospitals vs nonpenalized hospitals, according to a study of hospitalizations among Medicare beneficiaries published in the December 27, 2016, issue of JAMA.

In addition, the researchers found that reductions in readmissions were greater at penalized institutions for three targeted conditions than for nontargeted conditions.

Announced in March 2010, the HRRP mandated reduced reimbursement as of October 2012 for hospitals with high readmission rates for acute myocardial infarction (AMI), congestive heart failure, and pneumonia in fee-for-service Medicare recipients. So far, almost $1 billion in penalties have been imposed on thousands of US hospitals, according to an analysis by the Kaiser Family Foundation.

In the current study, Nihar R. Desai, MD, MPH, assistant professor of medicine in the cardiovascular medicine section at Yale School of Medicine in New Haven, Connecticut, and colleagues looked at beneficiaries older than 64 years who had been discharged between January 1, 2008, and June 30, 2015, from 2214 HRRP-penalized hospitals and 1238 nonpenalized hospitals. Penalized institutions tended to be larger and to be teaching hospitals with more Medicaid patients.

The study included 48,137,102 hospitalizations of 20,351,161 Medicare recipients. Between January 2008 and March 2010, when HRRP was announced, readmission rates tended to be stable across US hospitals, but afterward, they differed notably by penalty status.

In January 2008, for example, the mean readmission rates at penalized institutions were 21.9% for AMI, 27.5% for heart failure, 20.1% for pneumonia, and 18.4% for nontarget conditions. At their nonpenalized counterparts, the corresponding rates were 18.7%, 24.2%, 17.4%, and 15.7%, respectively.

After the program's announcement in March 2010, however, rehospitalization rates for target and nontarget conditions declined significantly faster at hospitals later subject to financial penalties vs those at nonpenalized hospitals.

For AMI discharges at penalty institutions, the authors found an additional decrease of −1.24 (95% confidence interval [CI], −1.84 to −0.65) percentage points per year vs nonpenalty discharges. For heart failure, the decrease was −1.25 (95% CI, −1.64 to −0.86), and for pneumonia, the decline was −1.37 (95% CI, −1.80 to −0.95).

For nontarget conditions, there was an additional decrease of −0.27 (95% CI, −0.38 to −0.17; P <.001 for all).

Moreover, at penalized hospitals, annual readmission rates for target conditions declined significantly faster compared with the decline in readmissions for nontarget conditions. In AMI, for example, there was an additional decline of −0.49 (95% CI, −0.81 to −0.16) percentage points per year vs nontarget conditions (P = .004). The additional decline for heart failure was −0.90 (95% CI, −1.18 to −0.62; P < .001), and for pneumonia, it was −0.57 (95% CI, −0.92 to −0.23; P < .001).

This finding "suggests that these hospitals specifically focused efforts to improve readmission outcomes for patients admitted for these target conditions," the authors write.

Among nonpenalized hospitals, readmissions for target conditions declined comparably or even more slowly vs nontarget conditions, with AMI rehospitalizations actually showing an additional increase of 0.48 (95% CI, 0.01 - 0.95) percentage points per year (P = .05).

Changes in rehospitalization rates for heart failure and pneumonia were 0.08 (95% CI, −0.30 to 0.46; P= .67) and 0.53 (95% CI, 0.13 - 0.93; P = .01) compared with nontarget conditions.

Dr Desai and coauthors state that in hospitals not subject to reduced reimbursement, "broader, system-wide readmission reduction strategies were more likely to have been used as opposed to strategies focusing solely on the target conditions."

After initial announcement of the program, readmission rates for nontarget conditions showed a modest but statistically significant decline at hospitals of either status: for penalty hospitals, the decrease was −0.81 percentage points per year (95% CI, −1.23 to −0.39); for nonpenalty hospitals, it was −0.54 (95% CI, −0.85 to −0.23; P < .001).

After implementation in October 2012, the rate of change flattened, with the greatest change seen in penalty hospitals.

"These findings may have implications for future policy programs aimed at reducing readmissions and may provide insight into the effect of external incentives," the authors write.

"This analysis may help elucidate the mechanism by which financial penalties in the HRRP were effective," they continue.

Further, they note their results are in line with a study published earlier this year in which 66% of hospital leaders surveyed thought the HRRP had a "major impact" on system efforts to reduce readmission rates.

"As additional longitudinal data become available, analyses of the effects of changing financial penalties over time to further define the association of the HRRP on readmission rates should be undertaken," Dr Desai and colleagues write.

The authors received funding from the Agency for Healthcare Research and Quality, the National Institute on Aging, the American Federation for Aging Research, and the Yale Claude D. Pepper Older Americans Independence Center. Three coauthors disclosed financial relationships with the private sector.

JAMA. 2016;316:2647-2656. Abstract

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