Hospitals and Health Systems Are Facing Increased Penalties for Readmission Performance
The ever-changing healthcare landscape focuses more on value-based care metrics and less on the amount of service. To further support that shift, the Centers for Medicare & Medicaid Services (CMS) issued system changes for the fiscal year 2023. The new rules increase inpatient payments but also improve accountability guidelines to minimize avoidable hospital readmissions. For example, the Hospital Readmission Reduction Program (HRRP) penalizes hospitals with higher readmission rates. Avoiding these penalizations through steps such as Remote Patient Monitoring and virtual health programs can save the hospital money and improve patient outcomes.
According to a bulletin from CMS, the goal is to support the agency's push toward improved healthcare for Medicare beneficiaries by enhancing their value-based system. The Affordable Care Act (ACA) initially established the Hospital Readmission Reduction Program in 2012, partly because studies indicated that hospital readmissions were associated with poor patient outcomes and skyrocketing financial costs.
The penalty system's authors envisioned it as a mechanism to offset hospitals' economic gain from readmitted patients under Medicare's fee-for-service payment model since they would otherwise be compensated for two stays instead of just one.
CMS breaks down the proposed updates to HRRP:
The new rules add a covariate adjustment for patients with a history of COVID-19 within a year of the index admission starting in the fiscal year 2024. This will modify the current six condition/procedure specified readmission measures which include:
CMS will continue calculating the payment reduction based on the hospital's performance during a rolling period. These adjustments will apply to all Medicare fee-for-service group payments during the fiscal year.
Since its inception, there has been some concern about how HRRP impacts hospitals in at-risk populations. As a result, the new rule also seeks public commentary on health equity.
According to Health Affairs research, implementing stratification inside the Medicare Hospital Readmissions Reduction Program helps enhance health equality by lowering penalty rates for safety-net hospitals, rural hospitals, and health systems that care for racial minorities.
This program monitors the excess readmission ratio (ERR) rates in general acute-care hospitals for the specified conditions. ERR is the ratio of the predicted to expected readmission rates and focuses on the six established conditions/procedures with the covariate adjustment of patients with a history of COVID-19.
CMS will review ERR data that includes readmissions within 30 days of discharge. If the hospital meets the criteria, it could face a payment adjustment and less revenue from CMS. The Kaiser Family Foundation (KFF) estimates the average penalty in 2022 was 0.64%. However, they also report that 39 hospitals did see a payment reduction of up to three percent.
The Kaiser Family Foundation points out that rehospitalization has been a persistent financial concern in this country that costs Medicare millions of dollars each year. According to KFF:
HRRP has resulted in fewer hospital readmissions. KFF estimates that reduction saved Medicare approximately 521 million dollars in fiscal 2021.
Of the numerous strategies hospitals have for reducing rehospitalizations, improved aftercare may be among the most effective. Clinicians and hospital care team members benefit from a system for follow-up care in place to prevent rehospitalizations, according to a 2020 study published in Global Journal on Quality and Safety in Healthcare. The study found that patients who received this intervention stayed out of the hospital more often than those who did not. Clinicians and care teams must be aware of what is happening with their patients to provide appropriate interventions and outreach as they travel through the healthcare system during or after a health-related incident.
Virtual health programs such as remote monitoring make this follow-up even easier. For example, an interactive voice response system for post-discharge monitoring decreases 30-day readmission rates. The results are improved care coordination, better patient outcomes, and fewer hospitalizations.
A follow-up system and remote monitoring program also improve patient medication adherence. A 2017 study, published in Patient Prefer Adherence, looked at medication-related hospitalizations. Researchers discovered that medication nonadherence accounts for 33% to 69% of rehospitalization, implying that a patient quits taking their medicine or fails to complete their prescription in the first place. Medication adherence assistance may minimize the incidence of hospital readmission.
Regarding HRRP, virtual health programs offer many benefits for payers and patients alike. Read a case study about post-discharge monitoring systems to better understand the benefits.