Readmissions Penalties Still Don't Account for Patient Demographics

Hospitals serving a large volume of low income patients are 2.67 times more likely to be penalized for higher readmissions, America's Essential Hospitals' data shows.

I have long believed that the Centers for Medicare & Medicaid Services must weigh the socio-economics of a hospital's patient mix before slapping them with penalties for high readmission rates.

Several studies in the past few years have added empirical data to the common sense notion that hospitals serving a poorer, sicker, older patient mix aren't necessarily providing inferior care, but are nonetheless penalized unfairly because they're caring for society's most vulnerable people. 

That's exactly what's been happening for the past several years since the implementation of the Patient Protection and Affordable Care Act's Hospital Readmissions Reduction Program. The most recent round of readmissions penalties announced last fall imposed $420 million in penalties for nearly 2,600 hospitals.

A data brief from America's Essential Hospitals examined the HRRP and found that hospitals serving a large volume of low income patients are 2.67 times more likely to be penalized for higher readmissions. Further, hospitals that receive higher penalties as a percentage of their Medicare payments also showed the most improvement on readmissions between 2013 and 2016.

A study out this week in the Journal for Healthcare Quality used a new measure to examine more than 15 million discharge abstracts from 611 hospitals that accounted for socio-demographics in a hospital's inpatient population mix and allowed for evaluation of readmissions rates relative to national benchmarks. 

Not surprisingly, the study found that while clinical conditions were the strongest predictors for readmissions, "factors such as age and accompanying comorbid conditions were also important. Socioeconomic factors, such as race, income, and payer status, also showed strong statistical significance in predicting readmissions."

For example, the study found that overall African-Americans were 10% more likely to be readmitted than whites. For all patients, regardless of race, the odds for readmissions were 24% higher for Medicare heart attack patients when compared with heart attack patients using commercial insurance.

That should be obvious, because Medicare patients are older, and likely have more health complications. Nonetheless, hospitals serving higher proportions of African-Americans and/or a Medicare patient mix get hit with more readmissions penalties for the very thing they cannot control—their patient mix.

Study co-author John Martin, vice president of research operations at Premier, Inc., says the study shows that risk-adjusted readmissions rates can be tracked in a dynamic database, and that payment models that use these comparisons could result in more equitable payments and improve transparency on socio-demographic disparities.

"We feel like at least including the socio-economic factors, you are going to improve the ability to predict readmissions outcomes, whereas if you leave them out you are losing some of that predictive capability," Martin says. "None of the readmission models that have come out to-date have a really hard predictive capability of some of the other quality measures, such as mortality. 

Unintended Consequences of a Legitimate Concern
CMS has opposed using socio-economic and demographic measures for hospitals serving lower-income patients. They don't want to create an expectation that somehow lower-income patients should expect a lower level of care. That's a legitimate concern, but the unintended consequences of the HRPP have hurt most the hospitals that are serving these vulnerable populations.

"We're not advocating an inferior or superior standard," Martin says. "We are saying there are measures for quality and there are measures for payment. The problem comes in with the payment related to that. Yes, we don't want to marginalize any segment of the population in the quality measurement, but if you are simply going to use the measure for paying the hospital you don't want to penalize a hospital that is treating patients who are going to be much sicker than others. We want to make sure that if we are going to use the payment penalty, that it is not going to take away from the hospitals that need the money more than other hospitals."

There is a bipartisan bill now before Congress. The Establishing Beneficiary Equity in Establishing Beneficiary Equity in the Hospital Readmission Program Act of 2015 would require CMS to account for the socioeconomic status of hospital patients when calculating the HRRP penalties.

The bill's sponsors say it will "help ensure that the program does not disproportionately penalize certain at-risk communities and exert additional financial burdens to already stressed local healthcare systems."

Unfortunately, there is no telling what will happen to this bill during a presidential election year, or when or if this do-nothing Congress will act on it. Hospitals that are relying upon the swift action of Congress to stay afloat should start lowering the lifeboats.