Highlight on Missouri: hospital challenges readmission formula, says socioeconomics should factor in

Missouri-based Christian Hospital is challenging the way that Medicare calculates penalties for hospital readmissions. With the backing of the Missouri Hospital Association, the hospital asserts that Medicare’s Hospital Readmissions Reduction Program (HRRP) does not adequately account for the socioeconomic status of the patients that a hospital treats. The hospital and the hospital association argue that the methodology unfairly penalizes safety-net hospitals.

HRRP

The HRRP, created by Section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), requires CMS to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions. CMS defines readmission as “an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.” CMS was obligated, under the program, to develop a formula to calculate an excessive readmission ratio based upon a national average of hospital performance. Medicare bases readmission penalties on the care of Medicare patients who were originally hospitalized for one of five conditions—heart attacks, heart failure, pneumonia, chronic lung problems, and elective hip or knee replacements. In 2015, the fourth year of the program, 2,592 hospitals were penalized due to high rates of readmissions. Overall, hospitals were penalized a total of $420 million last year.

Socioeconomics

Under current reimbursement rules, Christian Hospital is expecting to lose $600,000 in reimbursement due to what CMS deems “excessive readmissions.” However, the hospital believes the reimbursement penalty is improper because the formula used to derive the $600,000 figure does not factor in relevant socioeconomic disadvantages of certain patients. For example, the hospital believes that high numbers of patients with low-incomes, poor health habits, and chronic illnesses increased its readmission numbers. If CMS used readmission criteria that factored in those socioeconomic factors, Christian Hospital says its HRRP penalty would have been $140,000.

Missouri Hospital Association

The Missouri Hospital Association is putting its support behind Christian Hospital. The organization revamped its consumer-focused website, Focus on Hospitals, to include readmissions statistics that conform to the methodology Christian Hospital is asking CMS to use. The Focus on Hospitals website adjusts hospital readmission statistics in accordance with patients’ Medicaid status and neighborhood poverty rates. In support of its readmission statistic methodology, the hospital association says there is research that suggests “poverty and other community factors” increase the likelihood readmission to a hospital. The alternative data arises from a study commissioned by the Missouri Hospital Association. That study found that hospital readmission rates improved by between 44 and 88 percent when patients’ poverty levels were factored in.

Legislation

In addition to avoiding penalties, together with the Missouri Hospital Association, Christian Hospital is hoping that its efforts will lead to changes in Medicare law. Specifically, Christina Hospital is seeking the kind of change envisioned by a piece of legislation known as “The Helping Hospitals Improve Patient Care Act.” The bill would alter the way socioeconomic status is considered under the HRRP. Specifically, the legislation would require a transitional risk-adjustment methodology to serve as a proxy of socio-economic status until a more refined methodology can be developed.

Balance

The concerns over the methodology echo similar complaints that hospitals have made about Medicare’s five-star rating system. Whether the issue is readmissions or ratings, interests are in conflict—CMS struggles to find a way to incentivize quality care while hospitals worry that they may be unfairly punished or penalized for treating certain populations. From the perspective of Christian Hospital in Missouri, the current balance is unfavorable.  But the question isn’t whether someone should be held accountable for unnecessary readmissions. The question is whether the scales are tipped unfairly.