By Sarianne Gruber
Twitter: @subtleimpact
In October 2012, the Patient Protection and Affordable Care Act created the Hospital Readmissions Reduction Program (Section 3025), and required the Centers for Medicare & Medicaid Services (CMS) to penalize IPPS (Inpatient Prospective Payment System) hospitals with high readmission rates. The Readmission Reductions program’s purpose is to improve quality and lower costs for Medicare patients. It is intends for hospital discharge patients to be prepared for going home or going to another facility. The incentives for the program are incremental penalty deductions from all of the hospitals’ Medicare case payments. At the inception of the program, the penalty rate was up to 1% of every Medicare payment, and now in 2015, the maximum penalty rate is 3%,
Readmission Definition and Disease Entities
CMS defines a readmission as “an admission to a subsection (d) hospital within 30 days of discharge from the same or another subsection (d) hospital.” Subsection (d) hospitals, per the Social Security Act, include short term inpatient acute care hospitals (excluding critical access, psychiatric, long term care, children’s, and cancer hospitals. About 20% of Medicare patients are readmitted to a hospital within one month of discharge. And to CMS this figure is considerably high and is an indicator of lack of quality care. In fiscal year (FY) FY2013 and FY2014, penalties were based on hospital readmissions rates (excluding planned admissions) within 30 days for Acute Myocardial Infarction (AMI), Heart Failure (HF) and Pneumonia. Note, the federal fiscal year starts October 1 and goes through September 30 of the following year. In 2015, CMS is adding readmissions for Chronic Obstructive Pulmonary Disease (COPD) as well as elective Total Hip Arthroplasty (THA) and Total Knee Arthroplasty (TKA). There are no additions for 2016. In 2017, 30 day readmissions for Coronary Artery Bypass Graft (CABG) surgery will be added.
Identifying unnecessary hospital admission
The initial hospital inpatient admission for AMI, HF, or pneumonia, is termed the “index” admission. The hospital inpatient readmission (within the 30 days post the index admission) can be for any cause, and it does not have to be for the same cause as the index admission. There are two exceptions from a readmission penalty: (1) a planned readmission during the index hospital inpatient admission and (2) same day hospital inpatient readmissions for the same condition to the same hospital. Any readmission penalty is applied against the hospital where the index hospital inpatient admission occurred, and the “index” inpatient admitting hospital is liable for the penalty.
“Excess Readmissions”
The penalty for the Readmission Reduction Program affects the base DRG for discharges. To account for “excess readmissions”, DRG payment rates will be based on a hospital’s ratio of actual to expected readmissions. The reduction does not include IME, DSH or outlier payments. In FY2013, the maximum payment reduction is 1%, 2% in FY2014, and capped at 3% for FY2015 and upcoming years. A hospital’s excess readmission ratio for each condition is a measure of a hospital’s readmission performance compared to the national average for the hospital’s set of patients with that applicable condition. The calculation uses the risk adjustment methodology endorsed by the National Quality Forum (NQF). The principal diagnosis at discharge must have appropriate exclusions for readmissions that are unrelated to prior discharges such as planned admissions or transfers to another hospital. The risk adjustment methodology also includes adjustment factors that are clinically relevant including patient demographic characteristics, comorbidities, and patient frailty. CMS plans to look at other potential exclusions from the readmission penalty calculation.
Calculator
For how the calculator works, visit the CMS page about the Readmissions Reduction Program.
Affected Payments and Payment Penalties
Only CMS payments for hospital services are directly affected at this time. All Medicare payments to an “affected” hospital will be reduced. A hospital’s readmission rate and the percent penalty, if applicable were determined based the frequency of Medicare 30 day readmissions that were discharged 2008 through 2011. At the inception of the program, the penalty rate was up to 1% of every Medicare payment. And now in 2015 the maximum penalty rate is 3%.