June 4, 2019

Association of changes to Hospital Readmission Reduction Program with changes in penalties

By: Judy Mathias
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Editor’s Note

Stratification of hospitals in Medicare’s Hospital Readmission Reduction Program (HRRP) was associated with a significant shift in hospital penalties for excess readmissions, this study finds.

Beginning in FY 2019, Medicare is stratifying hospitals into five peer groups based on the proportions of each hospital’s patient population that is dually enrolled in Medicare and Medicaid.

The study sample included 3,049 hospitals. The proportion of dually enrolled patients ranged from 9.5% in the lowest quintile to 44.7% in the highest quintile. Hospitals in the lowest quintile saw an increase of $12.3 million in penalties, and those in the highest quintile saw a decrease of $24.4 million.

Large hospitals, teaching hospitals, hospitals in the most disadvantaged neighborhoods, and hospitals with the highest proportion of patients with disabilities were much more likely to see a reduction in penalties as were those in states with higher Medicaid eligibility cutoffs.

Policymakers should monitor the association of this change with readmission rate and hospital financial performance as the policy is fully implemented the researchers conclude.

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