A significant number of hospitals are set to benefit from changes in how CMS calculates penalties under the value-based Hospital Readmissions Reduction Program (HRRP), but the proposed rule won’t solve all their problems related to readmissions, says Bill Bithoney, MD, formerly CEO, CCO, and CMO at Sisters of Providence Health System in Springfield, MA, and now a managing director at BDO International consulting in New York City.

CMS has proposed a change that would have it consider a hospital’s proportion of dual-eligibles when determining penalties under Medicare’s Hospital Readmission Reduction Program (HRRP), a change welcomed by hospitals that have long argued dual-eligible patients are more expensive for hospitals and skewing readmissions figures for safety-net hospitals.

The proposed rule has a good chance of moving forward because it is budget neutral, Bithoney says. However, accounting for dual eligibles may not solve all the problems that safety net hospitals face with readmission penalties, Bithoney says.

“There are many other reasons that readmissions may be higher in hospitals caring for poorer people,” Bithoney says. “Some have suggested adjustments based on linguistic minorities that hospitals and health systems care for in disproportionate numbers, as well as other census data. It has been said that when it comes to your health, your ZIP code may be more important than your genetic code, and you can see that in increased mortality and increased readmissions.”

As defined by the proposed rule, a dual-eligible patient has full-benefit dual status in the State Medicare Modernization Act during the month he/she was discharged from the hospital. “The State MMA file is considered the most current and most accurate source of data for identifying dual-eligible beneficiaries since it is also used for operational purposes related to the administration of Part D benefits,” the rule explains.

The rule offers two ways to calculate a hospital’s proportion of dual-eligible patients. The first defines the proportion of full-benefit dual-eligible beneficiaries as the proportion of dual-eligible patients among all Medicare fee-for-service (FFS) and Medicare Advantage inpatient visits, which CMS calls the best comparison of social risk factors among hospitals. That method “represents the proportion of dual-eligible patients served by the hospital, particularly for hospitals in states with high managed care penetration rates,” the rule says.

The other option defines the proportion of full-benefit dual-eligibles as Medicare FFS hospital episodes of care, which CMS says it included because the HRRP payment adjustment applies only to Medicare FFS payments and is based on excess readmissions among only those cases.

CMS suggests using data from the Medicare Provider and Analysis Review (MedPAR) to identify total hospital stays, but says it also will consider using data from the CMS integrated data repository. CMS then proposes stratifying hospitals into five peer groups, broken down by their proportion of dual-eligible patients because quintiles create “peer groups that accurately reflect the relationship between the proportion of dual-eligibles in the hospital’s population without the disadvantage of establishing a larger number of peer groups.”

CMS also could correct for behavioral health diagnoses and patients with minimal social support, Bithoney says. He recalls being informed about a recent case in which a patient was discharged after having both legs amputated and had to climb four sets of stairs to his apartment.

“He was just learning to get around after his hospitalization, and he had little to no social support in the way of family and friends, or social services. You can easily predict that that patient is going to be readmitted soon,” Bithoney says. “The social aspects of recovery, and the effects of social isolation, are never taken into account.”

The cumulative effect of certain diseases also could be considered, Bithoney says. It is well known that some conditions combine to affect the situation far more than might be suggested by simply tallying up the effects of each disease, he says.

“With the triad of heart disease, diabetes mellitus, and renal failure, those diseases interact with each other in a way that predicts readmission much more frequently than you might expect from the summative score of having each of those diagnoses separately,” Bithoney says. “CMS could adjust for that patient population in considering readmissions, but currently that effect is not factored in to the evaluation.”

Hospitals that serve a higher proportion of dual-eligibles might need to rethink their financial risk management plans in light of the rule, he says. It may no longer be necessary to include CMS readmission penalties as a given, or at least not at the same level, he says.

Some hospital leaders would not be happy with the proposed rule leveling the playing field with regard to dual-eligibles, Bithoney says. Wealthier hospitals may have some trepidation about the change because it narrows the performance gap between them and safety net hospitals, he says.

“Hospitals that have fewer dual-eligibles might find themselves with penalties from CMS, whereas they did not have penalties previously,” Bithoney says.