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


Although the HRRP has been implemented for only a few years, we have found its effect to be promising in reducing the excess 30-day hospital readmissions for PN, AMI, and HF. Hospitals that were identified by the CMS as having excess readmissions and faced reduced Medicare payments in FY 2013 showed a significant downward trend of readmissions for all three targeted conditions from FY 2013 to FY 2015. We also found the HRRP had a stronger effect on readmissions for rural hospitals, small hospitals, safety-net hospitals and public hospitals than that for their counterpart hospitals. There might be an explanation for this differential effect of the HRRP on hospitals. Due to their remote geographic locations and small sizes, rural hospitals often have low-patient volumes and subsequently have the financial challenge to manage the high costs associated with operating a hospital. Thus, they are particularly vulnerable to Medicare and Medicaid payment cuts. Public hospitals and safety-net hospitals also rely heavily on Medicare and Medicaid payments. These hospitals therefore might be more motivated by the HRRP program to avert readmissions and reduce excess readmissions.

As policymakers anticipated, the HRRP has changed the traditional Medicare hospital payment practice of not motivating hospitals to preventing or reducing readmissions. Under Medicare Inpatient Prospective Payment System, hospitals received a fixed average amount per admission based on patient diagnosis regardless of if an admission was a 30-day readmission. There was no financial deterrence for hospitals to avert unnecessary readmissions, unless they were at full capacity. The implementation of the HRRP has discouraged hospitals from using inpatient readmissions as a hospital revenue scheme. Although not all readmissions can be prevented, the financial penalty policy of the HRRP has motivated hospitals to reduce the excessive readmissions.

Our study has several limitations. First, the study did not control for the effect of other policies or programs that may have contributed to the reduction in excess readmissions. For example, in 2009, CMS began public reporting of hospital readmission rates on the Hospital Compare website to provide a reputational incentive for hospitals to reduce readmissions.[17] CMS intended it to increase the transparency of hospital care, help consumers choose a care venue and provide a benchmark for hospitals in their efforts to improve their performance. We were unable to demonstrate whether any of the effect of the HRRP on reducing excess readmissions found in our study might be associated with the effect of the public reporting of readmission rates. Research findings about the effect of public reporting on the quality of care are mixed with some studies suggesting a beneficial effect and others reporting a marginal or no effect on inpatient care quality.[18–21] A recent study has showed a positive effect of public reporting on reducing healthcare-associated infections, such as central catheter-associated bloodstream infections, catheter-associated urinary tract infections and ventilator-associated pneumonia.[22] Another study suggested that the public reporting on hospital process measures had been associated with the improved patient outcomes.[23] Depending on what measures are publically reported, their effects may or may not be evident on improving the quality of care. As to the effect of public reporting on preventing unnecessary hospital readmissions, studies suggested a weak or none-existing relationship.[24]

Second, our definition of safety-net hospitals is based on the quartile of the disproportionate share hospital index that qualifies care provided to the low-income and medically vulnerable populations by CMS. There are other definitions or methods to determine whether a hospital is a safety-net hospital. Different definitions might have resulted in a different conclusion as to the effect of safety-net hospitals on the HRRP effect of reducing excess readmissions. Nonetheless, our definition to identify safety-net hospitals has been widely used.[16,24]

Third, we did not examine other potentially important hospital characteristics that may have the interaction effect with the effect of HRRP on reducing excess readmissions, such as the percentage of Medicare payments of a hospital's total critical revenue, and the health insurance status of patients with readmissions. These are important details that were beyond the scope of our study. Finally, the reduction in readmissions found in our study was among hospitals identified as having excess readmissions in FY 2013. Whether or not the same reduction would realize among hospitals with excess readmissions in FY 2014 and FY 2015 was not determined in our study. For the purpose of the study, we restricted our sample to hospitals that were identified as having excess readmissions. Due to the fact that hospitals with excess readmissions are more likely to be large hospitals, safety-net hospitals and hospitals located in the metropolitan areas, our sample contained a higher proportion of these hospitals than that of a general hospital population targeted by the HRRP. For this reason, caution should be exercised when extrapolating and generalizing the study findings. In addition, whether the HRRP has a long-lasting effect remains to be seen.

In summary, our study has demonstrated the promising effect of the financial penalty on reducing preventable or excess readmissions for PN, AMI and HF. We also found the HRRP may have differential effects for different hospitals. The current penalty of up to 3% cuts in Medicare base payment may have prompted considerable financial shortfalls for hospitals operating with marginal profits (such as small hospitals, rural hospitals and safety-net hospitals) while mild financial setbacks for others. As CMS expands the HRRP to include patients admitted for an acute exacerbation of COPD, elective THA and TKA, more studies are needed to evaluate the effect of HRRP and its consequences, positive and negative, expected and unexpected. It is worth noting that even though our study demonstrated the effect of HRRP on reducing hospital readmissions, the mechanism by which the readmissions are reduced is not clear. Further studies are needed to determine whether reduced readmissions are the result of quality improvement measures motivated by the financial effect of HRRP. It is most likely that hospitals will continue to experiment with various interventions to reduce readmissions.[25–26] Studies to determine and demonstrate those that are most effective will be beneficial to policymakers, hospitals, patients and the overall quality of our health care.