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Hospital Readmissions Reduction Program's Impact Downgraded

January 07, 2019

The reduction in readmission rates is about half as large as previously reported, researchers say.

Gains from Medicare's most prominent readmissions reduction initiative have been overstated, recent research indicates.

Since October 2012, the Hospital Readmissions Reduction Program (HRRP) has financially penalized hospitals for high readmissions rates. HRRP started with three targeted conditions—acute myocardial infarction, heart failure, and pneumonia. In 2012, the penalty was a maximum 1% of Medicare reimbursements and that figure was raised to 2% in 2015.

The recent research in Health Affairs claims the positive impact of HRRP has been overstated.

"HRRP has been credited with lowering risk-adjusted readmission rates for targeted conditions at general acute care hospitals. However, these reductions appear to be illusory or overstated," the researchers wrote.

The researchers contend that declines in risk-adjusted readmission rates for targeted conditions are 48% lower than previously reported.

The primary mechanism for the discrepancy is a change in the electronic transaction standards that hospitals use to submit claims to Medicare, the researchers say.

  • In 2011, the Centers for Medicare & Medicaid Services (CMS) allowed an increased number of diagnosis codes for Medicare claims.
  • Before 2011, healthcare providers could not have more than nine or 10 diagnosis codes for a Medicare claim.
  • After January 2011, healthcare providers could submit claims with as many as 25 diagnosis codes. "We document that around January 2011 the share of inpatient claims with nine or ten diagnoses plummeted and the share with eleven or more rose sharply," the researchers wrote.
  • Allowing hospitals to file a larger number of diagnoses per claim reduced risk-adjusted patient readmission rates.

"By coincidence, the HRRP was implemented just before a change in electronic transaction standards that increased diagnostic coding and therefore created the illusion that risk-adjusted readmission rates had decreased," the researchers wrote.

Readmission reduction skepticism

The study findings should raise concern among hospital leaders, the lead author of the research told HealthLeaders recently.

"The efforts to reduce readmission have been much less successful than were previously believed. As a result, I would urge renewed skepticism about whether processes to reduce readmissions are in fact working," said Christopher Ody, PhD, a research assistant professor at Northwestern University's Kellogg School of Management in Illinois.

The research also raises concerns related to clinical care, he said. "The evidence that readmissions have fallen was flawed; and as a result, practitioners should be re-examining that evidence and any subsequent knowledge that was based on this flawed evidence."

Forecasting fate of HRRP

HRRP is a value-based program that should probably continue, Ody said. "The goal with these programs isn't to pay good hospitals more and bad hospitals less; it is to create incentives for hospitals with worse outcomes to improve."

CMS has addressed the worst flaws in HRRP, he said. "Some of the most troubling aspects of the HRRP have been reformed since its inception."

The reforms have included fixing a risk adjustment problem that unfairly penalized safety net hospitals for having a difficult case mix.

HRRP should continue within bounds, Ody said.

"These programs deserve more time to be tweaked. But for HRRP to make sense in the longer term, benefits from lower readmissions will need to be big, compared to the downside of exposing providers to a lot of risk."


The Hospital Readmissions Reduction Program penalizes readmissions for several targeted conditions such as pneumonia.

A change to electronic transaction standards that hospitals use to submit Medicare claims overstated HRRP's impact on readmissions.

Hospitals should confirm the effectiveness of their readmission reduction efforts.

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