Hospital Readmissions Rates Down for Medicare


December 12, 2015

When the Affordable Care Act became law in 2012, one of its goals was to make Medicare more efficient and more financially stable for future generations. According to data released by the Department of Health and Human Services or HHS, the ACA is accomplishing this goal by reducing hospital readmission rates via the Hospital Readmissions Reduction Program. Under the HRRP, Medicare can penalize hospitals up to 3 percent by withholding Medicare reimbursement funding if the hospitals report higher-than-average readmission rates for three targeted conditions, namely pneumonia, heart attack and heart failure.

What is Hospital Readmission?

Why is hospital readmission such a problem? Hospital readmission creates a problem for Medicare in terms of billing and efficiency. It costs more to treat the same conditions over and over instead of addressing the problem thoroughly in the first place. While there are some legitimate and necessary reasons to readmit a patient to the hospital, research has found that some hospitals use readmission as a way to generate more

Medicare income or to provide less rigorous care. In the past, hospitals were not required to report or keep up with their readmission rates, which resulted in little financial motivation to streamline the process.

Aside from these issues, patients may not actually benefit from multiple admissions to the hospital within short time frames. Medicare uses broad parameters when defining hospital readmission rates. If a patient gets admitted to the hospital, leaves and comes back within 30 days to any hospital for any reason, then that incident counts as a readmission. With the exception of planned hospitalizations for necessary follow-up procedures, Medicare counts all readmissions toward a hospital’s readmission rate.

Hospital Workarounds

Unfortunately, hospitals can find workarounds to high readmission rates. For starters, they might require patients to come back in for the same or similar treatments outside of the 30-day window. This reduces the readmission rate while allowing doctors to treat patients for the same conditions. Fortunately, the HHS report did not find any increase in this practice as a result of the new rate reduction program. The study did, however, discover an increase in the practice of observation status. This practice enables doctors to place patients in an observation status, meaning that they can be monitored without being officially admitted to the hospital. It’s a no-win situation for patients and Medicare, and it needs to be addressed.

Reducing the Nation’s Burden

In spite of hospital workarounds and criticisms from organizations like the American Heart Association, the HRRP continues to make Medicare more efficient by reducing the number of unnecessary hospital readmissions for certain conditions. Last year, more than 2,600 hospitals got penalized by Medicare for high readmission rates. Since 2012, Medicare has kept back about $935 million from hospitals that failed to keep their readmission rates in check. Readmissions for the three targeted conditions have fallen by about 1.3 percent since 2008. Non-targeted conditions have also seen a drop in readmission rates as a side effect of more efficient hospital practices and a more aggressive approach to preventive medicine.