How to Reduce Costly Hospital Readmissions in 2016

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CMS to Administer Penalties for Excess Readmissions 

Revenue Cycle News

Once patients are discharged from the hospital, they have no desire to return. Hospitals also would prefer patients not be readmitted due to medical issues associated with their hospital stay.

CMS to Administer Penalties for Excess Readmissions 

Revenue Cycle News

Once patients are discharged from the hospital, they have no desire to return. Hospitals also would prefer patients not be readmitted due to medical issues associated with their hospital stay.

Patient readmissions are a major problem plaguing the U.S. healthcare system and policymakers are taking steps to reduce them.  The efforts to reduce re-hospitalizations begin at the hospital and end with the transition of patients to their home and their community. But while improving a patient’s transition from hospital to home is important, it is just one factor in preventing readmissions.

The typical cause of a readmission is often the swift deterioration in the patient’s condition, related to the patient’s primary diagnosis and/or comorbidities.  Readmissions can also be attributed to the disintegration and fragmentation of our healthcare system that begins when a patient meets their primary care-provider and continues after discharge.  Readmissions may result from inadequate treatment or sub-par care of the primary issue or may be caused by poor coordination of services at the time of discharge and afterward.

The hospital can affect treatments provided in-house; however, they have no control over the patient and how diligent they are following their treatment plan post-discharge.

Hospital readmissions have become a watershed issue for health providers because of the increasingly important impact they have on a hospital’s financial position.  Providers must be prepared to make the adjustments required to ascertain the root causes for readmissions and develop plans to reduce them.  With a concentrated and proactive effort it is clear that readmissions can be significantly reduced.1

New tools are becoming available to hospitals to manage their readmissions.  The Agency for Healthcare Research and Quality (AHRQ) has introduced a national database for hospital readmissions which will assist hospitals in measuring and benchmarking their results against similar hospitals or healthcare systems.

Readmission Measurements and Standards

Section 3025 of the Affordable Care Act added section 1886(q) to the Social Security Act2 which established the Hospital Readmissions Reduction Program.  This requires Centers for Medicare and Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment Systems (IPPS) hospitals with excess readmissions, effective for discharges beginning October 1, 2012.  The regulations that implement this provision are in subpart I of 42 Code of Federal Regulations (CFR) part 412 (§412.150 through §412.154).

CMS recently released the Fiscal Year 2016 IPPS for Acute Care Hospitals and the Long Term Care Hospital (LTCH) Prospective Payment System Policy Changes for 2016.  CMS outlined the following policies with regard to the readmission measures under the Hospital Readmissions Reduction Program:

  • Readmission is defined as an admission to a subsection (d)3 hospital within 30 days of a discharge from the same or another subsection (d) hospital;
  • Adopted readmission measures for the applicable conditions of acute myocardial infarction (AMI), heart failure (HF) and pneumonia (PN).
  • Established a methodology to calculate the excess readmission ratio for each applicable condition, which is used, in part, to calculate the readmission payment adjustment.  A hospital’s excess readmission ratio is a measure of a hospital’s readmission performance compared to the national average for the hospital’s set of patients with that applicable condition.
  • Established a policy of using the risk adjustment methodology endorsed by the National Quality Forum (NQF) for the readmissions measures to calculate the excess readmission ratios, which includes adjustment for factors that are clinically relevant including certain patient demographic characteristics, comorbidities and patient frailty.
  • Established an applicable period of three years of discharge data and the use of a minimum of 25 cases to calculate a hospital’s excess readmission ratio for each applicable condition.

Readmission Trends for 2009-2013

Developing national data benchmarks for hospital readmissions helps to identify those patient segments with comparatively high readmission rates for targeted improvement efforts.  Monitoring variations in these benchmarks over time allows officials to track and report on advancements made toward reducing readmissions.

As of October 1, 2012 and under the Hospital Readmissions Reduction Program, CMS is required to reduce payments to IPPS hospitals with excess readmissions.  Monitoring readmission trending is more important today than ever.  While there are severe financial repercussions for increased readmissions, they are becoming a key factor in assessing the overarching performance of the entire healthcare system.

Hospitals have taken various measures to reduce hospital readmissions.  For example, Partnership for Patients, a national initiative sponsored by the Department of Health and Human Services, is tracking changes in all-cause 30-day hospital readmissions.4  Reduction efforts range from re-engineering discharge practices and improving care transition to building community-wide partnerships for addressing health and social service needs.5

The most recently tracked readmission trends include:

  • Readmissions among all patients covered by Medicare declined from 18.1 per 100 admissions in 2011 to 17.3 per 100 in 2013.
  • Readmission rates among patients who were covered by private insurance or Medicaid did not change appreciably from 2011 to 2013.
  • The 30-day all-cause readmission rate was consistently highest among patients covered by Medicare.
  • Among uninsured individuals, both the number and rate of readmissions increased between 2009 and 2013 (10.6 percent increase in readmission count and 8.9 percent increase in readmission rate).
  • The readmission rate among nonmaternal patients aged 1 – 20 years increased substantially between 2009 and 2013: 22 percent increase for uninsured patients, 15 percent increase for those with private insurance and eight percent increase for Medicaid patients.
  • The overall readmission rate for all expected payers combined did not change appreciably.  From 2009 to 2013, the readmission rate for all payers combined stayed at about 14.0 per 100 admissions.
  • The average cost of a readmission was higher than the average cost of an index admission for all types of payers:
    • Five percent higher for patients covered by Medicare;
    • 11 percent higher for uninsured patients; and
    • 30 percent higher for patients covered by Medicaid or private insurance.

The readmission trends outlined above provide a macro overview of the segments of the population that are affected by readmissions.  However, without actionable data hospitals cannot improve readmissions if they don’t know the underlying cause of the problem.

Until now, hospitals did not have a database in which to evaluate their readmission statistics against similar hospitals.  In 2016, AHRQ introduced a national database tracking hospital readmissions.  The data is available through 2013 and it comprises information on 97 percent of all U.S. hospital discharges.

The AHRQ National Readmission Database

The AHRQ Nationwide Readmissions Database (NRD) is the first all-payer database for monitoring hospital readmissions.  Hospital administrators, policymakers and clinicians are able to use the new database in their analyses and decision-making.

The NRD is part of the AHRQ-sponsored Healthcare Cost and Utilization Project (HCUP) and includes various administrative billing data drawn from the HCUP State Inpatient Databases.

The new database will be used to create estimates of national readmission rates for all payers and the uninsured.  The NRD was constructed from 21 states’ data with reliable and verified patient numbers.

The key features of the NRD include:

  • A large sample size, which provides sufficient data for analysis across hospital types and the study of readmissions for relatively uncommon disorders and procedures;
  • Discharge data from 21 geographically dispersed states, accounting for 49.3 percent of the total U.S. resident population and 49.1 percent of all U.S. hospitalizations;
  • Designed to be flexible to various types of analyses of readmissions in the U.S. for all types of payers and the uninsured;
  • Criteria to determine the relationship between multiple hospital admissions for an individual patient in a calendar year is left to the analyst using the NRD;
  • Outcomes of interest include national readmission rates, reasons for returning to the hospital for care and the hospital costs for discharges with and without readmissions; and
  • The NRD is designed to support national readmission analyses and cannot be used for regional, state or hospital-specific analyses.

Are Hospitals Prepared to Reduce Readmissions?

Hospitals now have the required data to evaluate readmissions, but are they prepared to act upon it?  According to an anonymous survey of 320 C-suite, senior-level and quality professionals from hospitals conducted by Q-Centrix,6 the percentage of hospitals penalized for readmissions has increased each year since CMS began imposing them, reaching a high of 78 percent in 2015.  The most recent survey results indicate that only 55 percent of those surveyed expected to be penalized in 2016.

Since 2009, great strides have been made to reduce 30-day all-cause hospital readmission rates for heart failure, pneumonia and myocardial infarction.  This year, CMS penalties will extend to acute COPD and elective hip and knee replacements.  Given the historical trend and the three additional diagnoses recently added, the percentage of hospitals penalized will likely be much higher than 55 percent.

The senior-level executives that responded to the survey indicated that:

  • Nearly three-quarters of hospitals describe themselves as “somewhat” or “extremely” confident in their ability to reduce readmissions;
  • 15 percent of quality and compliance professionals are extremely confident they will reduce readmissions; and
  • 23 percent of C-suite executives are extremely confident they will reduce readmissions.

On average, the respondents are employing:

  • 4.5 different reduction strategies;
  • 92 percent are initiating a medication reconciliation process;
  • 87 percent are educating patients and patient caregivers with better pre-discharge instructions; and
  • 84 percent are conducting phone calls or other communication to patients post-discharge.

Unfortunately, three percent of the survey respondents have no formal strategy at all.

Readmissions Reduction Strategies

Readmissions are typically characterized as planned or unplanned events and related or unrelated to the initial admission within a 30-day period.  In order to assist with readmission reduction efforts, the American Hospital Association (AHA) developed a framework to help policymakers and providers consider the different types of readmissions.7  They are:

  • A planned readmission related to the initial admission;
  • A planned readmission unrelated to the initial admission;
  • An unplanned readmission unrelated to the initial admission; and
  • An unplanned readmission related to the initial admission.

The most viable scenario for reducing readmissions is the unplanned readmission related to the initial admission.  That said, the AHA suggests that public policy efforts should be focused on this category of care to reduce readmissions.

Regardless of the care provided, re-hospitalizations for some patients are unavoidable.  Hospitals cannot influence the occurrence of unplanned, unrelated readmissions because they cannot be anticipated or prevented.  However, some readmissions may be prevented through proactive hospital practices, such as:

  • Readmissions clinically related to a prior admission are possibly preventable if one or more actions are taken;
  • Delivery of quality care in the initial hospitalization;
  • Adequate discharge planning;
  • Comprehensive post-discharge follow-up; and
  • Focused coordination from inpatient and outpatient providers.

What Can Patients Do to Avoid Readmissions?

No patient wants to be admitted into a hospital.  And they certainly want to recover from their illness as quickly as possible.  While the bulk of responsibility for care lies with the hospital or provider, patients can positively influence their own recovery and reduce the chances of being readmitted.  In April 2014, a Consumer Reports investigation titled How to Avoid Hospital Re-admissions outlined six steps patients can take to reduce the chance of being readmitted.  They are:

  1. See a discharge planner.  The patient and/or their primary care giver should discuss the steps that should be taken when they are released from the hospital.
  2. Determine if you’re really ready to go home.  Hospitals and insurance companies have strong financial incentives to discharge patients as soon as possible.  A patient should discuss an extension of their stay with their doctor if they don’t feel ready to go home.  If the doctor isn’t able to extend the stay, patients must appeal to the discharge planner or a hospital patient advocate.
  3. Get a discharge summary.  The patient should ask for a clear written statement of what they should do when they get home—for example, how to care for surgical wounds or a broken bone covered by a cast, how active they should be, and when they can shower, drive a car, return to work and resume a normal diet.
  4. Get a discharge list of medication.  Patients should ask about medications that they should continue after returning home, including their purpose and side effects, and if they should resume or eliminate drugs taken before admission.
  5. Get late test results.  Make sure the doctor releases test results to the patient while they are hospitalized, especially those administered 24-hours before leaving the hospital.
  6. Schedule a doctor’s appointment.  Patients should proactively seek to make a follow-up appointment with their doctor to review their progress.

There are additional efforts patients can take to improve their chances of a rapid recovery and lessen the possibility of readmission.  The most important post-discharge action a patient can take is to ensure that they have open, clear and timely communication with their doctor.  By doing so, it will greatly reduce the chance of a re-hospitalization or a trip to the emergency room.


Given the increasing governmental and public scrutiny to control healthcare costs, improve the quality of clinical outcomes and receive the largest financial incentives available, hospitals are acutely focused on readmission reduction strategies.  The effectiveness of reducing readmissions will depend on the integrity of the benchmarking data available, the validity of the methods used for analyzing the data and the steps taken by the hospital and the patient to lower readmission incidences.

Developing national benchmarks for hospital readmissions will help identify those patient populations with relatively high readmission rates for targeted improvement efforts.  Tracking the changes from benchmarking data over time will allow stakeholders to make the adjustments needed to reduce readmissions.

1Medicare Payment Advisory Commission (2007) Report to the Congress: promoting greater efficiency,http://arxiv.org/ftp/arxiv/papers/1402/1402.5991.pdf
2Section 3025 of the Affordable Care Act establishes the Readmission Reduction Program and adds paragraph (q) to Section 1886 of the Social Security Act https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM8067.pdf
3Hospitals are eligible to participate in the Medicare EHR Incentive Programs: “Subsection (d) hospitals” in the 50 states or DC that are paid under the Inpatient Prospective Payment System (IPPS) Critical Access Hospitals (CAHs),https://www.cms.gov/regulations-and-guidance/legislation/ehrincentiveprograms/eligible_hospital_information.html
4U.S. Department of Health and Human Services, National Quality Strategy. 2013 Annual Progress Report to Congress: National Strategy for Quality Improvement in Health Care. July 2013, Updated July 2014.http://www.ahrq.gov/workingforquality/reports/annualreports/nqs2013annlrpt.htm#tab1.  Accessed November 13, 2015.
5Agency for Healthcare Research and Quality. Hospital Guide to Reducing Medicaid Readmissions. August 2014. Rockville, MD: Agency for Healthcare Research and Quality.http://www.ahrq.gov/professionals/systems/hospital/medicaidreadmitguide/index.html.  Accessed November 13, 2015.
6Higher Stakes, Troubling Trends and New Ways to Take Control – Readmission Reduction, http://www.q-centrix.com/readmission-reduction
7Examining the Drivers of Readmissions and Reducing Unnecessary Readmissions for Better Patient Care, TrendWatch, September 2011, http://www.aha.org/research/policy/2011.shtml


Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog.  He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement for the company’s business process outsourcing and revenue cycle service lines.

Phil has over 25 years of experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with many of the industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation.  He is industry thought leader, strategist, author and featured speaker.  Phil can be reached at philcsolomon@gmail.com

The post How to Reduce Costly Hospital Readmissions in 2016 appeared first on REVENUE CYCLE NEWS.

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