CMS Dollars Part II: HRRP Made Simple - The Boomerang Effect

The Boomerang Effect

Hospital readmissions account for a huge portion of US healthcare costs. As clinicians, we are always trying to understand the root cause of why one of our patients might bounce back. In some circles, we refer to this as the boomerang effect. 

Over the years, in an effort to stem the rising costs of healthcare dollars spent on readmissions, CMS has created many programs to encourage hospitals to address this problem. One of these programs is the Hospital Readmission Reduction Program (HRRP). HRRP was established by the Affordable Care Act in 2012 and required CMS to reduce payments to hospitals with excess readmissions.

A readmission is simply defined as a repeat admission to a hospital within 30 days of the discharge date of the original hospital admission. This readmission may be at the same or different hospital, and it may be for any cause which may or may not be related to the condition for which the patient was first admitted.

In order to better understand why CMS created this program, it might be advantageous to take a few moments to consider the landscape of readmissions in 2011 – the year before this program was created. In 2011, $41.3B was spent on hospital readmissions for 3.3M patients.  CMS, at that time, looked back at historical data for 2004-2009 and found no significant change in 30-day hospital readmission rates. The 2011 heart failure readmission rate was 24.5%, with the price tag of $1.747B. Close behind heart failure was pneumonia, with a readmission rate of 17.9% and $1.1B in costs. 

Readmissions Measured & Applicable Hospitals

HRRP measures readmission rates not for all Medicare patients, but rather a specific subset of Medicare “fee-for-service” patients admitted to an applicable hospital with a principal discharge diagnosis for one of the following conditions below.

Effective program year 2013:

  • Acute myocardial infarction (AMI)
  • Heart failure (HF)
  • Pneumonia

Effective program year 2015:

  • Chronic obstructive pulmonary disease (COPD)
  • Elective primary total hip/total knee arthroplasty (THA/TKA)

Effective program year 2017:

  • Coronary Artery Bypass Graft (CABG) surgery 

Not all hospitals are included in the HRRP.  The program excludes long-term care hospitals, critical access hospitals, rehabilitation hospitals, psychiatric hospitals, children’s hospitals, and IPPS exempt cancer hospitals. In total, approximately 1400 hospitals are excluded from the program.

Readmission Measurement Period

Readmission measurement in this program follows a specific timeline. Readmission rates are measured for a period of 3 years, followed by a brief period of review, and calculation and application of payment adjustment in the following calendar year. For example, for calendar year 2017, readmission rates were measured from 2012-2015, data review occurred in 2016, and the readmission adjustment factors were applied to payments in calendar year 2017.

Calculating Your Hospitals Payment Adjustment

To calculate if your hospital will be subject to payment adjustment in the HRRP, Medicare calculates Excess Readmission Ratios (ERRs). ERRs are simply a ratio of your hospital’s adjusted actual readmissions to your hospital’s expected readmissions. 

If a hospital performs better than an average hospital that admitted similar patients (with similar risk factors & comorbidities), there is no adjustment to hospital payments. If a hospital performs worse than an average hospital, they can experience as much as a 3% reduction in hospital payments in 2017.

The 3% reduction in hospital payments are not just applied to the 6 conditions for which readmissions are measured.  This decrease in hospital payments is applied to ALL your hospital's payments for Medicare for the calendar year!

Readmission Penalties for 2017

Readmission penalties for 2017 are a little frightening! 2,597 hospitals will be facing readmission penalties and the average penalty will increase by a fifth! Medicare expects the penalties will total $528M, which is $108M more than last year.

Strategies to Reduce Readmissions

As hospitals consider how to reduce their readmission rates, frequently they will be implementing the many proven interventions known to decrease readmissions. Interventions aimed at care transitions represent one group and include (1) hospital discharge process (2) early post-discharge follow-up (3) home care visits during the immediate post-hospitalization period, (4) nurse-led care transition, and (5) remote monitoring strategies. 
A second group of interventions aims to reduce readmissions by bolstering patient education and self-management support.  A third approach is to use a multidisciplinary team management approach.

The Bottom Line

When considering how many hospitals that already implement these strategies are being penalized in the HRRP for 2017, one might wonder what we may be missing. Are we educating our patients at a level that is higher than their understanding? Are we challenged by language or cultural barriers? Do patients miss follow-up appointments because they have no means to get to the hospital? Are there financial or mobility barriers that prevent patients from getting to their pharmacy? Do they not have adequate social support? What other social determinants might impede their ability to follow their health plan and keep them from deteriorating and needing a readmission? 
As clinicians, we often wonder why the same readmission-prevention interventions work for most patients, yet there are others that defy the odds and bounce back.  More and more studies indicate that the “one size fits all’ approach is no longer adequate.  Each patient has unique health conditions that impact their ability to successfully transition home and stay well after a hospitalization.  Additionally, each patient has unique social, psychological, and cultural barriers that factor into their health outcomes. Forward thinking hospitals are already addressing these factors to significantly reduce the boomerang effect.  Programs like the HRRP are a step in the right direction, but the new era of medicine will require more personalized interventions to significantly reduce readmissions.