Despite cutting readmissions, HRRP penalties hit some hospitals more

Since its implementation in 2010, evidence shows the Hospital Readmission Reduction Program cut reduced hospital readmissions for certain conditions, as was the program's intent. A new Health Affairs study, however, indicates the current penalty structure leads some hospitals to be penalized persistently, leading to a financial burden.

That burden has resulted in the program becoming controversial to some, despite its purported success. Teaching hospitals, large hospitals, and hospitals treating a high proportion of low-income or dual-eligible patients were more likely than other hospitals to be penalized under the HRRP.

Also, evidence suggests that hospitals penalized under the program are more likely to be penalized by other pay-for-performance programs, such as the Centers for Medicare and Medicaid Services' Value-Based Purchasing and Hospital-Acquired Condition Reduction Programs.

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Because of this, some hospital leaders have expressed concerns about the HRRP -- in particular, its lack of adjustments for socioeconomic factors, not to mention the size of the penalties themselves.

Some experts also worry that the disproportionate allocation of financial penalties might have unintended consequences, such as widening disparities in care. Reducing readmissions requires a multifaceted approach that requires time and resources; the cumulative effects of HRRP penalties and other programs could hinder hospitals' ability to invest in approaches that could reduce those readmissions. That's especially true for hospitals with limited resources, or those serving low-income patients.

Indeed, the Health Affairs analysis showed that hospitals treating higher proportions of socioeconomically disadvantaged patients, such as safety-net hospitals, shouldered a substantial penalty burden during the first five years of the HRRP. Readmissions were found to be tightly linked to socioeconomic factors that aren't captured in administrative claims, and those factors have been shown to explain differences in readmission rate performance.

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Further, while safety-net hospitals have seen greater reductions in readmission rates compared to non-safety-net facilities, they haven't been able to improve as much as non-safety-net hospitals that had similar baseline rates.

It's a solvable problem. One potential means of addressing it is already set to take effect: The 21st Century Cures Act, approved by Congress and signed by President Barack Obama in December, included a section that allowed the HRRP to make adjustments for socioeconomic status in fiscal year 2019.

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Another possible solution that has received support is to penalize hospitals for failing to achieve predetermined benchmarks, or improvement from prior performance, as opposed to relative hospital comparisons.

Among other findings in the study: From fiscal years 2013 to 2017, the growth in average penalties was modest, doubling from 0.29 percent to 0.60 percent, despite more opportunities for penalization.

Twitter: @JELagasse