MedPAC urges changes to hospital readmissions reduction program

January 12th, 2015

Healthcare providers who argue that the Centers for Medicare & Medicaid Services’ 30-day readmissions penalties disproportionately hurt hospitals that care for poorer patients just got a powerful and perhaps unexpected ally – MedPAC.

In its new and wide-ranging 281-page report to Congress, MedPAC devotes an entire chapter to recommending legislative changes to “refine” the Centers for Medicare & Medicaid Services’ Hospital Readmission Reduction Program (HRRP). That’s significant for a number of reasons, not least of which is MedPAC’s historical support for the program, dating back to at least two years before it was enacted.

In its new report, MedPAC lists what it considers to be “four issues with the current policy”:

• Aggregate penalties remain constant when national readmission rates decline.
• Single-condition readmission rates face significant random variation due to small numbers of observations.
• Heart failure readmission rates are inversely related to heart failure mortality rates.
• Hospital readmission rates and penalties are positively correlated with their low-income patient share.

These are the four ways MedPAC proposes addressing those issues:

• Have a fixed target for readmission rates. Penalties would go down when industry performance improves.
• Use an all-condition readmission measure to increase the number of observations and reduce random variation.
• Use an all-condition readmission measure to limit the concerns regarding the inverse relationship between heart failure mortality rates and readmission rates. In the longer term, we could pursue a joint readmission-mortality measure.
• Evaluate hospital readmission rates against a group of peers with a similar share of poor Medicare beneficiaries as a way to adjust readmission penalties for socioeconomic status.

That last item is the one getting the most attention, as witnessed by Jordan Rau’s piece about it in The Washington Post. In it, he notes that “the federal Centers for Medicare and Medicaid Services has disagreed that the readmissions penalty program needs revisions. Officials have noted that after years of holding steady, the national hospital readmission rate last year dipped below 18 percent.”

That may be true, but MedPAC has some pretty compelling data of its own to support adjusting for the effect of socioeconomic status, noting that it found “that hospitals with high shares of poor patients (as indicated by their share of Medicare patients on SSI [Supplemental Security Income]) tended to have higher readmission rates and thus higher penalties under the HRRP.”

MedPAC’s done some good, careful work on this topic, and its conclusions are reasonable. Unfortunately, as the report notes, the actions it recommends “would require legislative changes because the current formula used to compute the readmissions penalty is set in law.” So don’t get your hopes up just yet.