CMS touts nationwide drop in avoidable hospital readmissions

Thanks to the Hospital Readmissions Reduction Program (HRRP) and other initiatives, CMS stated that Medicare beneficiaries were spared approximately 100,000 readmissions in 2015, while the HHS Assistant Secretary for Planning and Evaluation (ASPE) estimates that they have avoided 565,000 readmissions since 2010. Potentially avoidable hospital readmissions occurring within 30 days of discharge account for $17 billion in Medicare spending each year, according to CMS. Initiatives like the HRRP and the Partnership for Patients improve patient care by, for example, encouraging hospitals to ensure that patients are discharged with appropriate medications and instructions for follow-up care and schedule follow-up appointments.


The HRRP was established pursuant to section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). It provides hospitals with monetary incentives for reducing avoidable readmissions by penalizing those with excessive readmissions for targeted clinical conditions. In fiscal years (FYs) 2013 and 2014, the targeted conditions were acute myocardial infarction, heart failure, and pneumonia. FY 2015 also included readmissions for chronic obstructive pulmonary disease (COPD) and total hip and knee replacements. FY 2017 will include readmissions for coronary artery bypass graft surgery. CMS assessed more than $420 million in penalties against hospitals in FY 2016 (see Medicare readmission penalties exceed $500M for FY 2017, Health Reform WK-EDGE, August 10, 2016). In addition to reducing avoidable readmissions, the Partnership for Patients aims to specifically improve transitions of patients among care settings.


Readmissions fell by 8 percent nationwide from 2010 to 2015. Forty-nine states and the District of Columbia experienced decreased readmission rates; the readmission rate in Vermont increased by only one-tenth of a percent, or the equivalent of 21 readmissions. Rates decreased by more than 5 percent in 43 states and by more than 10 percent in 11 states.

Medicare readmission penalties exceed $500M for FY 2017

A Kaiser Health News (KHN) analysis of CMS data indicates that Medicare plans to apply reimbursement penalties of $528 million to a total of 2,597 U.S. hospitals during fiscal year (FY) 2017 (October 1, 2016, through September 30, 2017) based on the readmission rate for patients with six common conditions. KHN reports that this aggregate penalty is about $108 million more than the $420 million assessed against hospitals in FY 2016, due to the addition of coronary bypass graft surgery to the list of common conditions for FY 2017.

Section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program (HRRP), which requires CMS to reduce payments to inpatient prospective payment system (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012. The HRRP is designed to support the national goals of improving the quality of care and saving taxpayer dollars by incentivizing hospitals to reduce excess readmissions. The HRRP program began in FY 2013. FY 2017 is the fifth year of the program.

In FY 2013-2014, the HRRP measured readmissions for three conditions, acute myocardial infarction (heart attacks), heart failure, and pneumonia. In FY 2015, the HRRP added the measurement of readmissions for chronic obstructive pulmonary disease (COPD) and total hip and knee replacements. For 2017, the HRRP has added readmissions for coronary artery bypass graft surgery.

As finalized in the FY 2013 IPPS Final rule (77 FR 53397, August 31, 2012), readmissions for the following hospitals and hospital units are exempt from the HRRP:

  • long-term care hospitals;
  • critical access hospitals;
  • rehabilitation hospitals and units;
  • psychiatric hospitals and units;
  • children’s hospitals; and
  • PPS-exempt cancer hospitals.

According to KHN, the maximum reimbursement reduction for FY 2017 is 3 percent and it does not affect special Medicare payments for hospitals that treat large numbers of low-income patients or train residents. Forty-nine hospitals received the maximum fine, according to KHN. The average penalty was 0.73 percent of each Medicare payment, which is the highest to date. In 2016, KHN reported that the average penalty was 0.61 percent.

Hospitals will receive information on their FY 2017 HRRP results from Medicare in their Hospital-Specific Reports (HSRs). The HSRs will include a summary of the hospital’s results along with national observed readmission rates, detailed discharge-level data, and risk factor information. CMS will provide hospitals with their HSRs via QualityNet secure portal accounts at the beginning of the Review and Corrections period.

Hospitals will have 30 days to review their HSR data to ensure that excess readmission ratios were calculated correctly. CMS will notify hospitals of the exact dates of this Review and Corrections period, and will post these dates on QualityNet once they are finalized. Hospitals are cautioned that the Review and Corrections period is a time for them to review their HSR data and submit questions about their result calculations, as needed. The Review and Corrections process is not designed to allow hospitals to submit additional corrections related to the underlying claims data or to add new claims to the data extract used to calculate the rates.

A KHN chart lists the hospitals penalized in FY 2017. The chart notes that in addition to exempt hospitals and hospital units, Maryland hospitals were not penalized because the state has federal permission to set its own Medicare payment rules. CMS also did not levy penalties against hospitals that had too few cases to be fairly evaluated.

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.


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.


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.


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.


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.

CMS creates new Hospital Improvement and Innovation Networks to improve safety and reduce readmissions

CMS is planning to further strengthen patient safety, improve hospital care quality and reduce readmissions by creating a series of Hospital Improvement and Innovation Networks (HIINs), according to a blog post by CMS Chief Medical Officer Patrick Conway, M.D. The HIINs will continue the work of the Hospital Engagement Networks (HENs), which are part of the Partnership for Patients under the umbrella of the Quality Improvement Organization (QIO) program.


According to Conway, HIINs will “tap into the deep experience, capabilities and impact of QIOs, hospital associations, hospital systems, and national hospital affinity organizations with extensive experience in hospital quality improvement.” The networks will work to engage and support hospitals, patients, and their caregivers to implement and spread best practices to hospitals at a national scale. The goal of HIINs is that through 2019, new HIINs will work to achieve a 20 percent decrease in overall patient harm and a 12 percent reduction in 30-day hospital readmissions as a population-based measure (readmissions per 1,000 people) from the 2014 baseline.

Section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) included provisions to help hospitals reduce readmissions and keep patients safe. To date, there has been success in reaching this goal. Conway emphasized the findings of a recent Agency for Healthcare Research and Quality (AHRQ) report, which found “an unprecedented 39 percent reduction in preventable patient harm in U.S. hospitals compared to the 2010 baseline,” and that CMS’ current efforts have “resulted in 2.1 million fewer patients harmed, 87,000 lives saved, and nearly $20 billion in cost-savings from 2010 to 2014” (see Thousands of lives, billions of dollars saved by Affordable Care Act, December 2, 2015). Conway also pointed out substantial progress has also been made in reducing 30-day hospital readmissions. In light of so much success, CMS is looking to further its reach.

Request for Proposals

CMS issued a request for proposals (RFP) for HIINs, which is open to all organizations, including those who operated under the HEN banner in Partnership for Patients’ first and second rounds. Conway noted that CMS is encouraging all interested parties to submit a proposal for a “full and open competition” that “will continue to build on the successes achieved so far.”