Medicare’s Hospital Readmission Reduction Program

Established as part of the Affordable Care Act (ACA), Medicare’s Hospital Readmission Reduction Program (HRRP) attempts to create an incentive for hospitals to cut down the number of readmissions they have for various types of acute care. As of 2017, these types of care include:

  • Heart attack
  • Heart failure
  • Pneumonia
  • Chronic obstructive pulmonary disease (COPD)
  • Hip replacement
  • Knee replacement
  • Coronary artery bypass grafting (CABG)

The HRRP penalizes hospitals that exhibit readmission rates higher than the national average with lower Medicare reimbursements across all admissions. The penalty amount depends on the hospital’s rate of “excess” readmissions after certain demographic adjustments are factored in.

As hospitals reduce their readmission rates, they can reduce their penalties if they get them near or below the national average.

High Hospital Readmissions

Prior to the HRRP, the typical rate for Medicare readmissions within 30 days was around 20%, but research found that about 12% of those could be prevented. In addition, the rates weren’t consistent—some hospitals had much higher readmission rates than others, further indicating that some readmissions could be prevented.

The program has had an impact. In 2015 alone, hospitals reduced their avoidable readmissions by roughly 100,000, though the government estimates the total number of Medicare readmissions can still be reduced by far more.

Penalized Hospitals

The HRRP was implemented over a five-year period, with maximum penalties beginning at 1% in 2013 for the period of 2008 to 2011 and reaching 3% in 2017. The penalties applied this year are projected to reach over $500 million.

It should be noted that not all hospitals are at risk of penalties. Most acute care facilities are affected, but the following are exempt from the HRRP:

  • Rehabilitation clinics
  • Psychiatric hospitals
  • Long-term care providers
  • Children’s hospitals
  • Cancer care centers
  • Critical access hospitals

Any hospital that provides acute care, however, will face a penalty if Centers for Medicare and Medicaid Services (CMS) determines they have an excessive rate of readmissions.

Reducing Readmissions

There are a few ways hospitals can reduce excess readmissions to potentially avoid the penalty. One way is through the policies governing record keeping, reporting, communication, and patient engagement. In some cases, legal assistance is necessary when drafting policies since other regulations may come into play.  An experienced health law attorney should be consulted for help creating policies that will be most effective in avoiding HRRP penalties.

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