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Addressing Flaws Within CMS’ Hospital Readmissions Reduction Program

By Sean Clements

Incorporated in the Affordable Care Act (“ACA”) in 2012, the Hospital Readmissions Reduction Program (HRRP) is a Medicare value-based purchasing program that aims to reduce payments to hospitals with excess readmissions. The program supports the national goal of improving healthcare by linking payment to the quality of hospital care.

HRRP focuses on three serious ailments with typical high readmission rates: heart failure, heart attacks and pneumonia. Hospitals with higher-than-expected readmission rates risk being docked up to 30% of their normal reimbursement.

Medicare’s HRRP has long been credited with lowering risk-adjusted readmission rates for targeted conditions at general acute care hospitals. However, these reductions appear to be grossly overstated. In fact, a number of healthcare and hospital professionals are beginning to question the program’s accuracy and validity of the underlying architecture of which HRRP was originally built on, exposing fundamental flaws with not just the HRRP itself but the Centers for Medicare & Medicaid Services’ (CMS) measure-designing process, including those found on Hospital Compare and part of the CMS’ value-based purchasing programs.

Heightened HRRP Scrutiny

Two recently published studies shed new light on potential flaws within the CMS’ HRRP.

The first study, published in late December in JAMA, found that the HRRP was associated with a 0.49% increase in 30-day post-discharge mortality in heart failure patients between 2007-2010 and 2010-2012, and a 0.52% jump from 2010-2012 to 2012-2015. There was no change seen in heart attack patients, the report concluded, but it did find a significant increase in pneumonia patients following announcement and implementation of the program.

The other, published in January 2019 in Health Affairs, determined that reductions in readmissions rates may be related to coding changes the CMS made around the time the HRRP was implemented, concluding, “Either the HRRP had no effect on readmissions, or it led to a systemwide reduction in readmissions that was roughly half as large as prior estimates have suggested.” 

The Solution: Complete Documentation

These readmission flaws can often reflect negatively on hospital reputations and, ultimately, their bottom lines. Today, there is no public road map toward accurate clinical documentation, which creates a host of challenges and doesn’t encourage a level playing field.

Documentation is often incomplete for the following reasons: omission of chronic conditions, missing diagnostic laboratory tests and vitals and evolving documentation policies. Accurately reflecting outcomes requires fully recording patient and treatment data, including any complications or comorbidities and/or major complications or comorbidities.

Improved coding leads to more accurate patient classification and risk adjustment, while optimizing quality reporting and reimbursement. As an added benefit, determining the correct Medicare diagnostic related groupings can help maximize revenue per encounter.


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Sean ClementsManaging Partner

Sean Clements is the Managing Partner of Dacarba LLC, an Opportune LLP company. Sean has 20 years of experience guiding clients through complex financial and operational situations. As Managing Partner, Sean is responsible for Dacarba’s professional services and software development functions. Prior to joining Opportune, Sean worked as a Manager in the Dispute and Investigation practices of Navigant Consulting Inc, Deloitte & Touche, US and Deloitte & Touche, UK.