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Hospital Responses to Readmission Penalties

By May 11, 2016Commentary

Hospitals have faced significant penalties for what is viewed as excessive hospital readmissions for Medicare patients.  One would expect that hospitals would take steps to avoid readmissions, including improving quality of care, where that quality may impact the likelihood of a readmission, which in all honesty it rarely does.  A New England Journal of Medicine article explores hospital reactions to the Medicare readmissions penalty program.   (NEJM Article)    The authors used data from October 2007, well before the implementation of the penalties, and May 2015, some time after its implementation and compared readmission rates for the three conditions targeted by the program with rates for other conditions and also looked at the rates of observation stays, as use of observation status may be a way to avoid readmissions.  During the time period of the study, there was very little change in the characteristics of patients hospitalized for either targeted or untargeted conditions in the readmission program.  During the study period readmissions for the targeted conditions declined from 21.5% to 17.8% and for untargeted conditions from 15.3% to 13.1%.  Readmission rates for the targeted conditions were already declining before implementation of the penalties, the decline accelerated slightly after implementation and then the decline slowed. Rates for nontargeted conditions showed a similar pattern, although they did not fall as rapidly as the targeted condition rates.

Observation stays for both targeted and nontargeted conditions increased during the same time period, at a slightly faster pace for targeted conditions.  There was no significant correlation at individual hospitals between the decline in readmission rates and the increase in observation stays.  We have many times stated our belief that the readmissions program, as constructed by CMS is illogical and unfair.  It undoubtedly is leading to a variety of behaviors, some of which may not be consistent with better care for patients.  It also may only be responsible for a small part of the change in readmissions.  But it does not appear that hospitals are extensively using observation stays to avoid readmission penalties.

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