CMS has higher penalties for readmissions than for deaths

If the Centers for Medicare & Medicaid Services (CMS) weighted 30-day readmissions and mortality equally, financial penalties in 2014 for U.S. hospitals would have substantially changed, according to an analysis of publicly available hospital data.

The researchers mentioned that financial penalties for readmissions under CMS’s programs are 10 times greater than they are for mortality.

Lead researcher Ahmad A. Abdul-Aziz, MD, of the University of Michigan Health System, and colleagues published their results online Oct. 26 in JAMA Cardiology.

“Under most circumstances, hospitalized patients would much rather avoid death than readmission,” the researchers wrote. “In the coming years, hospital financial penalties for readmissions will continue to overshadow those for mortality. If the goal of federal regulation is to align incentives and fairly reimburse hospitals for patient-centered outcomes, current CMS policy does not reflect these aims.”

The researchers noted that CMS implemented the Hospital Readmissions Reduction Program in 2013 and penalized hospitals for excess risk-standardized 30-day readmissions for Medicare patients with heart failure, pneumonia and acute MI. The next year, the Hospital Value-Based Purchasing Program began penalizing hospitals for higher than expected risk-standard 30-day mortality for those three diagnoses. The researchers added that patients who die within 30 days without hospitalization are not included in the readmission penalties.

For this analysis, the researchers obtained hospital-level data for 1,963 hospitals during fiscal year 2014 from Medicare.gov and Kaiser Health News. They had information on the excess readmission ratio, 30-day risk-standardized mortality rates for all three diagnoses and readmission penalties.

They found that readmission penalties closely tracked excessive readmissions, but they were minimally and inversely associated with excess mortality and modestly correlated with excess combined readmission and mortality.

Further, 17 percent of hospitals had an excess readmission ratio of greater than 1 and were penalized, yet they also had an excess combined outcome ratio of less than 1. Meanwhile, 16 percent of hospitals had an excess readmission ratio of less than 1 and were not penalized or received a small penalty, yet they had an excess combined outcome ratio of greater than 1. The researchers calculated the excess combined outcome ratio by averaging excess readmission and mortality.

If CMS’s penalties for death were five times more important than readmission, the researchers estimated that more than half of hospitals would have been misclassified for penalties.

For fiscal year 2016, the maximum penalty for high 30-day mortality rates is 0.2 percent of diagnosis-related group (DRG) payments, according to the researchers. Meanwhile, the maximum penalty for excess 30-day readmissions is 3.0 percent of DRG payments.

“Health care performance metrics are proliferating rapidly and are increasingly used to incentivize provider and system behavior,” the researchers wrote. “This is occurring without full consideration of misaligned incentives and the potential for unintended consequences.”

Since the Hospital Readmissions Reduction Program launched, nearly 90 percent of hospitals created quality improvement programs, according to the researchers.

“Some benefits have clearly accrued from this effort, as discharged patients now receive better coordination of care transitions, and 30-day readmissions have slightly decreased,” they wrote. “Yet relatively few readmissions are truly preventable, and less attention has been paid the other side of the equation: What if some readmissions are appropriate and necessary to prevent deaths? While the rates are not directly comparable, it is interesting to note that, after more than a decade of steady decline, age-adjusted mortality rates for US patients with [heart failure] have recently increased at the same time 30-day readmission rates decreased.”