Time to rethink financial penalties for readmissions, mortality?

Since fiscal year 2013, the Centers for Medicare & Medicaid Services (CMS) has penalized hospitals who have too many risk-standardized 30-day readmissions for Medicare patients with heart failure, pneumonia and acute MI.

The initiative, known as the Hospital Readmissions Reduction Program, was launched to improve care, keep people out of the hospital and reduce costs. Another initiative, known as the Hospital Value-Based Purchasing Program, began in fiscal year 2014 to penalize hospitals with higher than expected risk–standardized 30-day mortality for the same diagnoses in Medicare patients.

The incentives in those programs, though, may have led to unintended consequences, according to a study published Oct. 26 in JAMA Cardiology.

Lead researcher Ahmad A. Abdul-Aziz, MD, and his colleagues noted that financial penalties for readmissions are more than 10 times greater than for mortality. For instance, hospitals in fiscal year 2016 can have a maximum 0.2 percent of their diagnosis-related group (DRG) payments reduced for high 30-day mortality rates. Meanwhile, there is a 3 percent maximum DRG penalty for excess 30-day readmissions.

“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.”

Hospitals seem to be taking the 30-day readmissions penalties seriously. Nearly 90 percent of hospitals have created quality improvement programs to reduce heart failure rehospitalizations, which the researchers said have often led to patients receiving improved coordination of care. Although 30-day readmissions have slightly decreased in the past few years, the researchers noted that there are other issues.

“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?,” they wrote. “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.”

This analysis showed that readmission penalties in fiscal year 2014 were closely related to actual excess readmissions, although they were inversely associated with excess mortality. If the penalties for 30-day readmissions and mortality were equal, one-third of the hospitals’ penalties would have been significantly different, according to the researchers.

“Under most circumstances, hospitalized patients would much rather avoid death than readmission,” they 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.”