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Aiming for Fewer Hospital U-turns: The Medicare Hospital Readmission Reduction Program

Issue Brief
  1. Jencks, S. F. et al., “Hospitalizations among Patients in the Medicare Fee-for-Service Program,” New England Journal of Medicine Vol. 360, No. 14: 1418-1428, 2009.; Epstein, A. M. et al., “The Relationship between Hospital Admission Rates and Rehospitalizations,” New England Journal of Medicine Vol. 365, No. 24: 2287-2295, 2011.

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  2. Ahmad, F. S. et al., “Identifying Hospital Organizational Strategies to Reduce Readmissions,” American Journal of Medical Quality Vol. 28, No. 4: 278-285, 2013.; Silow-Carroll, S. et al., “Reducing Hospital Readmissions: Lessons from Top-Performing Hospitals,” Commonwealth Fund Synthesis Report, New York: Commonwealth Fund, 2011.; Jack, B. W. et al., “A Reengineered Hospital Discharge Program to Decrease Hospitalization: A Randomized Trial,” Annals of Internal Medicine Vol. 50, No. 3: 178-187, 2009.; and Kanaan, S. B., “Homeward Bound: Nine Patient-Centered Programs Cut Readmissions,” Oakland, CA: California HealthCare Foundation, 2009.

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  3. Other examples include several of the payment delivery system reforms launched by the CMS Innovation Center, including Pioneer Accountable Care Organizations (ACOs), bundled-payment initiatives, and the Independence at Home demonstration, all of which include provider incentives to lower hospital admission and readmission rates, either directly or indirectly.  Additionally, the Community-based Care Transitions Program, also enacted by the ACA, is designed to assess ways that community-based organizations might partner with hospitals to improve patients’ transitions to other settings, such as skilled nursing facilities or the patients’ home.

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  4. Maryland hospitals have a longstanding Medicare waiver that exempt them from the IPPS and allows Maryland to set all-payer rates for its hospital services.

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  5. Hospitals’ excess readmission ratios are also weighted by Medicare’s cost for admissions with the given initial diagnosis.

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  6. Penalties assessed as reductions in base payments on all Medicare inpatient admissions, and do not apply to added payment adjustments, such as graduate medical education payments.

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  7. Sheingold, S., R. Zuckerman, and A. Shartzer, “Understanding Medicare Hospital Readmission Rates and Differing Penalties Between Safety-net and Other Hospitals,” Health Affairs, 35, No.1, January 2016; Kahn, C., T. Ault, L. Potetz, T. Walke, J. Chambers, and S. Burch, “Assessing Medicare's Hospital Pay-For-Performance Programs And Whether They Are Achieving Their Goals,” Health Affairs, 34, No.8, August 2015; Joynt, K. and A. Jha, “A Path Forward on Medicare Readmissions” New England Journal of Medicine Vol. 368, No. 13, 2013; Medicare Payment Advisory Commission, “Chapter 4: Refining the Hospital Readmissions Reduction Program,” Report to the Congress: Medicare and the Health Care Delivery System, June 2013.

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  8. Research using quarterly data shows declines occurred for some measures earlier. See Zuckerman, R. S. Sheingold, J. Orav, J. Ruhter, and A. Epstein, “Readmissions, Observations, and the Hospital Readmissions Reduction Program,” New England Journal of Medicine, Vol. 374, No.16, 2016;

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  9. Obama, B., “United States Health Care Reform: Progress to Date and Next Steps,” Journal of American Medicine (July 11 2016).

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  10. Medicare Payment Advisory Commission, “Chapter 4: Refining the Hospital Readmissions Reduction Program,” Report to the Congress: Medicare and the Health Care Delivery System, June 2013; National Quality Forum, “Risk Adjustment for Socioeconomic Status or Other Sociodemographic Factors,” Technical Report, August 15, 2014.

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  11. Final Rule for 42 CFR Parts 405, 412, 413, and 489—scheduled to be published in the Federal Register on August 22, 2016. Federal Register Vol. 79, No. 163: 49659-50536, 2014.

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  12. This issue and other complexities with the penalty formula are discussed in Medicare Payment Advisory Commission, “Chapter 4: Refining the Hospital Readmissions Reduction Program,” Report to the Congress: Medicare and the Health Care Delivery System, June 2013; Lynn, Joanne and Steve Jencks, “A Dangerous Malfunction in the Measure of Readmission Reduction,” MediCaring.org, August 26, 2014. More recently, MedPAC submitted relevant comments to CMS on the IPPS proposed rule http://medpac.gov/-documents-/comment-letters

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  13. See studies listed in endnote 2.

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  14. While hospital readmission rates among Medicare patients has declined, some other types of hospital rates have increased, including outpatient emergency room visits and observation stays.  Medicare claims analysis by Gerhardt et al (2014) suggests that reductions in readmissions in 2012 were largely independent from these other types of hospital uses. (Gerhardt, G., A. Yemane, K. Apostle, A. Oelschlaeger, E. Rollins, and N. Brennan. 2014. "Evaluating Whether Changes in Utilization of Hospital Outpatient Services Contributed to Lower Medicare Readmission Rate." Medicare & Medicaid Research Review 4(1), E1-E13.)

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  15. Medicare Payment Advisory Commission, “Chapter 4: Refining the Hospital Readmissions Reduction Program,” Report to the Congress: Medicare and the Health Care Delivery System, June 2013; National Quality Forum, “Risk Adjustment for Socioeconomic Status or Other Sociodemographic Factors,” Technical Report, August 15, 2014. Sheingold, S., R. Zuckerman, and A. Shartzer, “Understanding Medicare Hospital Readmission Rates and Differing Penalties Between Safety-net and Other Hospitals,” Health Affairs, 35, No.1, January 2016; Kahn, C., T. Ault, L. Potetz, T. Walke, J. Chambers, and S. Burch, “Assessing Medicare's Hospital Pay-For-Performance Programs And Whether They Are Achieving Their Goals,” Health Affairs, 34, No.8, August 2015; Joynt, K. and A. Jha, “A Path Forward on Medicare Readmissions” New England Journal of Medicine Vol. 368, No. 13, 2013;

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  16. Watts, M., E. Cornachione, M. Musumeci, “Medicaid Financial Eligibility for Seniors and People with Disabilities in 2015. Kaiser Family Foundation (March 2016)  http://kff.org/medicaid/report/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-in-2015/

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  17. For further information on Medicaid reform proposals, such as block grants and per capita caps, see: Rudowitz, Robin, “5 Key Questions: Medicaid Block Grants & Per Capita Caps,” Kaiser Family Foundation, January 31, 2017. http://kff.org/medicaid/issue-brief/5-key-questions-medicaid-block-grants-per-capita-caps/

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  18. In general, beneficiaries are not responsible for an inpatient deductible if admitted to a hospital within 60 days of a prior hospitalization.

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  19. Based on a subset of participating CBCT organizations, preliminary results find that a small number of organizations were able to achieve reductions in readmissions. Further analysis is expected to highlight both successful and unsuccessful strategies and techniques. (Econometrica, Inc, “Evaluation of the Community-based Care Transitions Program,” submitted to CMS (May 2014).

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