Have Readmissions Penalties Jumped the Shark?

New research suggests that CMS may no longer be able to squeeze any significant savings from its Hospital Readmissions Reduction Program.

Have readmissions penalties jumped the shark?

A new study in Health Affairs finds that 30-day hospital readmissions for hip and knee replacements began to decline rapidly when the federal government announced that it would penalize hospitals for certain readmissions.

In recent years, however, that decline appears to have levelled off, to the point where readmissions reductions are the same as they were before the penalties were initiated, according to researchers from the University of Michigan.    

The findings have led researchers to suggested that the Centers for Medicare & Medicaid Services may no longer be able to squeeze any significant savings from its Hospital Readmissions Reduction Program.

Readmissions penalties for pneumonia, heart failure, and acute myocardial infarction were announced in March 2010, and took effect in 2012. Readmissions penalties for hip and knee replacements took effect in 2013.

Using Medicare claims data from 2008 to 2016 for hip and knee replacements, the Michigan researchers evaluated the before-and-after effects of penalty announcements on risk-adjusted readmissions, episode payments, observational status and lengths of stay for the two surgical procedures.

They found that the readmission rates for both surgical procedures fell from 7.6% in 2008 to 5.5% in 2016.

Readmissions rates for the two procedures had already been dropping even before the HRRP was announced for pneumonia, heart failure, and acute myocardial infarction in March 2010. However, the pace of the decline in readmissions for the two procedures doubled after that, even though the procedures—at that point— were not subject to penalties, the researchers found.  

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The study authors speculate that the efforts hospitals undertook to prevent readmissions of medical patients, such as patient education and post-discharge care coordination, extended to surgical patients.   

After hip and knee replacement readmissions penalties were added in mid-2013, however, readmissions for those surgical procedures continued to drop, but slowed to the same rate as before any penalties were announced in 2010, the study found.

Study lead author Karan Chhabra, MD, said in accompanying remarks that the findings "raise the question of whether we're about to reach the floor in our ability to reduce readmissions for these patients."

In the last few years, HRRP has expanded to include other conditions, including heart bypass surgery and sepsis-related pneumonia, with penalties of up to 3% of Medicare earnings.

Chhabra says expanding HRRP will accomplish little.  

"Based on the experience so far, it's hard to believe that adding on penalties for more conditions will further bend the curve of readmission," he says.  

In fact, related research has identified potential harm to patients in the push to reduce readmissions, as well as concerns that safety net hospitals are adversely penalized because of their generally older, poorer, and sicker patient mix.

"We may be approaching the point for these surgical patients where the unintended consequences of readmissions reduction efforts begin to dominate," Chhabra says. "When you’ve squeezed the possible benefits out, all you have left are harms."

Instead of expanding HRRP penalties, Chhabra says expanding the use of bundled payments could produce better results because hospitals would be incentivized to focus on the entire episode of care, and not just on a relatively narrow metric such as readmissions.