Murtha Means More

More Tinkering with the Medicare Hospital Readmissions Reduction Program

May 28, 2013

The Centers for Medicare & Medicaid Services (CMS) want to tinker further with the Hospital Readmissions Reductions Program. In the May 10 Federal Register, CMS proposed adding further conditions and procedures under the Program and changing the methodology for calculating hospitals’ unplanned readmissions under the Program. CMS will accept comments on this Proposed Rule through June 25, 2013.

The Hospital Readmissions Reductions Program1 is aimed at increasing post-hospital coordination of care and improving patients’ medical outcomes by the simple tactic of reducing payments to IPPS hospitals with “excess” readmissions. It was effective for discharges beginning on October 1, 2012. Payment reductions under this Program are currently imposed only on readmissions following acute myocardial infarction (AMI), heart failure (HF) and pneumonia (PN) and are calculated based on a methodology set forth in the FY 2013 IPPS final rule.

In the Proposed Rule, CMS proposes two main changes to the Program, one good and one not so good for hospitals.

First, in calculating the readmissions payment adjustments (read “penalties”) in FY 2015, CMS proposes to expand the applicable conditions and procedures scrutinized by the Program to include: (i) patients admitted for acute exacerbations of chronic obstructive pulmonary disease (COPD); and (ii) patients admitted for elective total hip arthroplasty (THA) and total knee arthroplasty (TKA). CMS includes acute exacerbations of COPD based on MedPAC’s recommendations and elective THA and TKA because they are high-volume and high-expenditure procedures.

Secondly, CMS proposes a positive change to the algorithm used for calculating readmissions that would provide hospitals with some relief beginning in FY 2014. In commentary regarding the Proposed Rule, CMS noted comments from many stakeholders encouraging it to identify and not count as readmissions a broader range of planned readmissions. These stakeholders commented that readmission measures are intended to capture unplanned readmissions that arise from acute clinical events requiring urgent re-hospitalization within 30 days of discharge. Planned readmissions, they argued, do not generally signal poor quality of care. Apparently accepting the logic of this, CMS worked to broadly identify planned readmissions that should be excluded from the readmission scrutiny. 

To this end, CMS developed an expanded “planned readmission algorithm” and is proposing to apply the algorithm to the AMI, HF, and PN measures for FY 2014. The good news for hospitals is that if these changes were applied for FY 2013, the 30-day readmission rate (excluding planned readmissions) would decrease by 1 percentage point for AMI, 1.5 percentage points for HF, and 0.7 percentage point for PN. Thus, if adopted, this change should benefit hospitals’ bottom lines.

If you have any questions about the topic addressed here, or any other matters involving Health Care Law, please contact your usual Murtha Cullina attorney, Stephanie Sobkowiak at 203.772.7782/, or Kennedy Hudner at 860.240.6029/

1 The Program was created by Section 3025 of the Affordable Care Act, which added section 1886(q) to the Social Security Act.

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