More on CMS’s ill-advised Hospital Readmissions Reduction Program

Patient Characteristics and Differences in Hospital Readmission Rates

By Michael L. Barnett, MD; John Hsu, MD, MBA, MSCE; J. Michael McWilliams, MD, PhD
JAMA Internal Medicine, September 14, 2015

The Medicare Hospital Readmissions Reduction Program (HRRP) financially penalizes hospitals with higher than expected 30-day readmission rates for Medicare patients by reducing annual reimbursements by up to 3%. In 2014, the second year of the program, 2610 hospitals were fined a total of $428 million for excess readmissions. In setting an expected readmission rate for each hospital, the Centers for Medicare and Medicaid Services (CMS) adjusts only for patients’ age, sex, discharge diagnosis, and diagnoses present in claims during the 12 months prior to admission. This limited adjustment has raised concerns that hospitals may be penalized because they disproportionately serve patients with clinical and social characteristics that predispose them to hospitalization or rehospitalization.

From the Results

Our study sample included 33 158 index admissions from 2000 to 2012 for 8767 Medicare beneficiaries in the HRS (Health and Retirement Study) and 8067 index admissions from 2009 to 2012 for 3470 beneficiaries in the HRS. In unadjusted analyses of the 2000-2012 sample, the proportion of admissions followed by readmission significantly differed across categories for 27 of the 29 patient characteristics not included in CMS adjustments (P ≤ .02 for all comparisons). Of these characteristics, 22 remained significantly predictive of readmission after standard CMS adjustments (P ≤ .04).

Of the 22 characteristics significantly predictive of readmission after standard CMS adjustments, 17 were distributed differently between the highest and lowest quintiles (P ≤ .04), with almost all of these differences (16 of 17) indicating that participants admitted to hospitals in the highest quintile of readmission rates were more likely to have characteristics associated with a higher probability of readmission. For example, participants admitted to hospitals in the highest quintile had higher HCC (hierarchical condition category) scores, more chronic conditions, less education, fewer assets, worse self-reported health status, more depressive symptoms, worse cognition, worse physical functioning, and more difficulties with ADLs (activities of daily living) and IADLs (instrumental ADLs) than participants admitted to hospitals in the lowest quintile.

From the Discussion

The higher prevalence of clinical and social predictors of readmission among patients admitted to hospitals with higher readmission rates is likely driven by factors largely outside of a hospital’s influence. Our findings therefore call into question the extent to which variation in hospital readmission rates reflects quality of care and, by extension, the extent to which this variation should serve as the basis for financial penalties. The differences in patient characteristics between hospitals with high vs low readmission rates also suggest that the HRRP imposes substantially greater costs on hospitals disproportionately serving patients more likely to be readmitted. Hospitals serving healthier, more socially advantaged patients may not have to devote any resources to achieving a penalty-free readmission rate, whereas hospitals serving sicker, more socially disadvantaged patients may have to devote considerable resources to avoid a penalty. By selectively increasing costs or lowering revenue for hospitals serving patients at greater risk of readmission, the HRRP therefore threatens to deplete hospital resources available to improve overall quality for populations at high risk of poor outcomes.


Accounting for a comprehensive array of clinical and social characteristics substantially decreased the difference in patients’ probability of readmission between hospitals with higher vs lower readmission rates. This finding suggests that Medicare is penalizing hospitals to a large extent based on the patients they serve.



By Don McCanne, MD

This important study adds to the data that show that the Centers for Medicare and Medicaid Services (CMS) is using its Medicare Hospital Readmissions Reduction Program (HRRP) to penalize hospitals that care for a disproportionate share of sicker, more socially disadvantaged patients - penalties that arise from characteristics of the patient population rather than from characteristics of the hospitals serving them.

Obviously this injustice must end. More importantly, CMS needs to stop getting bogged down with poorly designed programs that supposedly would pay for quality rather than volume - more of a wish than a realistic goal. Instead, they need to move ahead with advocacy for policies that most assuredly would improve quality and access while reducing waste - policies that would characterize an Improved Medicare for All. Yes, that would require communicating the need to Congress. But isn’t that the way it works? Congress gives the administration the tools that it needs to ensure that all of us have the health care that we need. At least it works that way in other countries.