Association of Stratification by Dual Enrollment Status With Financial Penalties in the Hospital Readmissions Reduction Program

Abstract

Beginning in fiscal year 2019, Medicare's Hospital Readmissions Reduction Program (HRRP) stratifies hospitals into 5 peer groups based on the proportion of each hospital's patient population that is dually enrolled in Medicare and Medicaid. The effect of this policy change is largely unknown. OBJECTIVE To identify hospital and state characteristics associated with changes in HRRP-related performance and penalties after stratification. DESIGN, SETTING, AND PARTICIPANTS A cross-sectional analysis was performed of all 3049 hospitals participating in the HRRP in fiscal years 2018 and 2019, using publicly available data on hospital penalties, merged with information on hospital characteristics and state Medicaid eligibility cutoffs. EXPOSURES The HRRP, under the 2018 traditional method and the 2019 stratification method. MAIN OUTCOMES AND MEASURES Performance on readmissions, as measured by the excess readmissions ratio, and penalties under the HRRP both in relative percentage change and in absolute dollars. RESULTS The study sample included 3049 hospitals. The mean proportion of dually enrolled beneficiaries ranged from 9.5% in the lowest quintile to 44.7% in the highest quintile. At the hospital level, changes in penalties ranged from an increase of $225 000 to a decrease of more than $436 000 after stratification. In total, hospitals in the lowest quintile of dual enrollment saw an increase of $12 330 157 in penalties, while those in the highest quintile of dual enrollment saw a decrease of $22 445 644. Teaching hospitals (odds ratio [OR], 2.13; 95% CI, 1.76-2.57; P < .001) and large hospitals (OR, 1.51; 95% CI, 1.22-1.86; P < .001) had higher odds of receiving a reduced penalty. Not-for-profit hospitals (OR, 0.64; 95% CI, 0.52-0.80; P < .001) were less likely to have a penalty reduction than for-profit hospitals, and hospitals in the Midwest (OR, 0.44; 95% CI, 0.34-0.57; P < .001) and South (OR, 0.42; 95% CI, 0.30-0.57; P < .001) were less likely to do so than hospitals in the Northeast. Hospitals with patients from the most disadvantaged neighborhoods (OR, 2.62; 95% CI, 2.03-3.38; P < .001) and those with the highest proportion of beneficiaries with disabilities (OR, 3.12; 95% CI, 2.50-3.90; P < .001) were markedly more likely to see a reduction in penalties, as were hospitals in states with the highest Medicaid eligibility cutoffs (OR, 1.79; 95% CI, 1.50-2.14; P < .001). CONCLUSIONS AND RELEVANCE Stratification of the hospitals under the HRRP was associated with a significant shift in penalties for excess readmissions. Policymakers should monitor the association of this change with readmission rates as well as hospital financial performance as the policy is fully implemented.

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“…Under HRRP in 2019, hospital performance was stratified into quintiles based on patient socioeconomic status and the proportion enrolled in Medicare and Medicaid. The cost of readmission penalties to hospitals and subsequently physician reimbursements were cut in half for hospital’s in the most deprived quintile as demonstrated by Joynt Maddox et al [ 78 ]. The importance of accounting for SES in evaluation of health care quality has also been demonstrated outside of the United States [ 79 ].…”

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“…Hospitals in states with more generous Medicaid eligibility and a larger share of patients with full Medicaid were less likely to be penalized for hospital readmissions than hospitals in states with more restrictive Medicaid eligibility. 10 A hospital in a restrictive state does not receive any consideration for treating patients with partial Medicaid, even if these patients would qualify for full Medicaid in other states and would change the hospital's comparison group.…”

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“…28 Directed by legislation passed by Congress, the Medicare programme intentionally addressed this equity problem in the HRRP in 2019 by stratifying hospitals by proportion of patients dually enrolled in Medicare and Medicaid, so that a given hospital's clinical performance would be compared with that of hospitals with a similar prevalence of poverty when calculating financial rewards and penalties. 29 (2) Focusing exclusively on cultural humility or implicit bias training and avoiding looking for systemic, structural drivers of inequities. Many organisations institute cultural humility or implicit bias training as their equity intervention.…”