Reducing Excess Readmissions: Promising Effect of Hospital Readmissions Reduction Program in US Hospitals

Ning Lu; Kuo-Cherh Huang; James A. Johnson


Int J Qual Health Care. 2016;28(1):53-58. 

In This Article

Abstract and Introduction


Objective: To evaluate the financial penalty effect of the Hospital Readmissions Reduction Program (HRRP) on 30-day inpatient readmissions for pneumonia (PN), acute myocardial infarction (AMI) and heart failure (HF) among hospitals identified as having excess readmissions.

Setting: Short-term, acute care hospitals in the USA.

Design: Secondary data analysis of publicly available HRRP Supplemental Data to examine the effect of HRRP on reducing excess hospital readmissions by utilizing repeated-measures analysis of variance models.

Participants: A total of 3395 nonfederal, short-term acute care hospitals under the Inpatient Prospective Payment System that are subject to the HRRP program and that reported discharges data for PN, AMI and HF for the calculation of readmission ratios for the fiscal years 2013, 2014 and 2015.

Intervention: Implementation of the HRRP in October 2012 by the Centers for Medicare and Medicaid Services (CMS) to reduce Medicare payments to hospitals with excess readmissions.

Main Outcome Measures: Thirty-day hospital readmission ratios for PN, AMI and HF.

Results: There was a significant decrease in excess readmissions for PN, AMI and HF between FY 2013 and FY 2015. The reduction in excess readmission ratios was 0.035 for PN (P < 0.001), 0.082 for AMI (P < 0.001) and 0.034 for HF (P < 0.001). The effect of HRRP on excess readmissions was greater for small hospitals, public hospitals and hospitals located in rural areas.

Conclusions: HRRP to reduce payments to hospitals with excess readmissions had a significant effect on the inpatient readmissions for PN, AMI and HF in US Hospitals.


Pay for performance programs have been a widely used strategy to improve healthcare quality and patient outcomes.[1–5] The intention of these programs is to encourage behavioral changes of healthcare providers by financially rewarding excellent performance and improved patient outcomes.[2,6] Despite their intentions, the effect of these programs with their reliance on financial compensation is inconsistent with some studies suggesting modest quality improvement and others showing little or no evidence of significant gains.[5–8]

On 1 October 2012, mandated by Section 3025 of the Affordable Care Act to establish the Medicare Hospital Readmissions Reduction Program (HRRP), the Centers for Medicare and Medicaid Services (CMS) implemented a strategy of linking quality to payment that relies on financial penalties to improve inpatient care quality and reduce cost. Hospitals subject to the HRRP program receive reduced Medicare payment if their hospital readmissions are deemed excessive. For Fiscal Year (FY) 2013, a hospital with excess readmissions received up to 1% reduction of Medicare base payment. The amount of the reduction is up to 2% of Medicare base payment for FY 2014, up to 3% for FY 2015 and each year thereafter.[9]

High readmission rates to a hospital are considered an important indicator of inadequate quality of care and account for billions of dollars in annual Medicare spending.[10–11] There are many factors contributing to hospital readmissions, including complications from the inpatient treatment during the hospital stay, inadequate quality of care or care coordination, lack of follow-up care after the discharge from the hospital and patients' unexpected worsening conditions of the disease after discharge from the hospital.[11] Not all hospital readmissions are preventable, but studies have shown that quality improvement efforts to improve inpatient care and the coordination of transitional care can prevent many unnecessary hospital readmissions.[10–12] The intention of the HRRP is to urge hospitals to improve their performance and reduce preventable readmissions. All short-term acute care hospitals paid under the Medicare Inpatient Prospective Payment System (IPPS) are subject to the HRRP program.[9,13] Starting FY 2013, the HRRP policy applied to conditions of acute myocardial infarction (AMI), heart failure (HF) and pneumonia (PN). Starting FY 2015, the applicable conditions targeted by the HRRP are expanded to include patients admitted for an acute exacerbation of chronic obstructive pulmonary disease (COPD), elective total hip arthroplasty (THA) and total knee arthroplasty (TKA).[9]

The HRRP defines a readmission as a patient being readmitted to a hospital within 30 days of discharge. CMS chose to measure readmissions within 30 days instead of over longer time periods, because readmissions over longer periods may be impacted by factors outside the hospitals' control, such as other complicating illnesses, patients' own behaviors and care provided to patients after discharge.[9] To determine whether a hospital's readmission is excessive, the HRRP calculated the readmission ratios for each eligible US hospital using a hospital's readmission rates divided by the national average readmission rates for each of the CMS targeted conditions. A ratio >1 indicates excess readmissions.[9] To make the comparisons fair, a hospital's readmission ratios are risk adjusted for clinically relevant factors that may make a readmission more likely, such as patient demographic characteristics, patient frailty and comorbidities that patients had when they arrived at the hospital. Data used in the calculation of readmission ratios came from discharge data of an applicable period of 3 years.[9]

To examine the effect of HRRP on reducing excess hospital readmissions, we used the publicly available HRRP Supplemental Data[14] to answer the following two primary questions: (i) Did the HRRP result in a downward trend in hospital readmissions for PN, AMI and HF and (ii) did the effect of HRRP differ according to hospital characteristics? For example, did the HRRP have a greater effect on readmissions for hospitals that might be more motivated to prevent readmissions, such as hospitals with a higher proportion of Medicare patients, or safety-net hospitals that are more vulnerable to the CMS payment cuts?