Every year, the Centers for Medicare & Medicare Services (CMS) publishes in the Federal Register a draft regulation describing how it proposes paying hospitals for the inpatient care they provide to their Medicare patients in the coming fiscal year.  The proposed inpatient prospective payment system regulation for FY 2015 was published on May 15, and as always, CMS invited interested parties to submit written comments.

The National Association of Urban Hospitals has always found CMS to be receptive and even responsive to its comments and therefore takes the opportunity to submit detailed comments and suggestions about the agency’s annual proposal.

NAUH is presenting excerpts from its comment letter to CMS.  The subjects and the dates they will be published are:

June 26 – the size of the Medicare DSH pool

June 27 – the manner in which CMS uses CBO estimates of changes in insurance status

June 30 – the methodology for distributing Medicare DSH funds

Today – the need for appropriate risk adjustment in the hospital readmissions reduction program

July 2 – a much-needed adjustment to the methodology employed by the hospital readmissions reduction program

July 3 – hospital inpatient rates

July 7 – short hospital stays (two-midnight rule)

NAUH’s complete comment letter to CMS can be found here.

The Need for Appropriate Risk Adjustment in the Hospital Readmissions Reduction Program

NAUH supports CMS’s effort to find ways to reduce avoidable hospital readmissions, but as we have written to CMS for the past three years, we believe the Medicare hospital readmissions reduction program, as currently constituted, continues to lack adequate risk adjustment and therefore is unfair to private urban safety-net hospitals and is harming them.  Increasing the hospital readmissions reduction program’s maximum penalty from two to three percent while also adding new medical conditions to the program, as proposed in this regulation, will only increase that harm.

Many of the Medicare patients served by urban safety-net hospitals are low-income individuals and have been for much of their adult lives.  Often, they have had only periodic and episodic contact with the health care system, and when they turn to us for care, they have numerous medical problems that need to be addressed that fall outside of the primary diagnosis for their cases.  In addition, these patients frequently pose challenges that go well beyond their immediate medical condition.  Often, urban safety-net hospitals serve low-income patients who lack the resources needed to follow their discharge instructions.  Together, these factors – the medical problems and the social challenges – require both additional treatment and additional outreach; in many cases, they also require fundamental behavioral change by the patient.  They cannot all be addressed overnight, and yes, at times they require further hospitalization.

NAUH is not alone in observing the problems the hospital readmissions reduction program poses in its current form ­– and the likelihood that it treats safety-net hospitals unfairly.

The article “A Path Forward on Medicare Readmissions,” published on March 28, 2013 in the New England Journal of Medicine, concluded that

…there is now convincing evidence that safety-net institutions, as well as large teaching hospitals, which provide a substantial proportion of the care for patients with complex medical problems, are far more likely to be penalized under the HRRP [hospital readmissions reduction program].  Left unchecked, the HRRP has the potential to exacerbate disparities in care and create disincentives to providing care for patients who are particularly ill or who have complex medical needs.

The article recommends, among other measures, addressing this problem through more refined risk adjustment, noting that

…insofar as data on readmission rates primarily capture the socioeconomic and health status of patients rather than hospital quality, adjusting for socioeconomic status would ensure that if a safety-net hospital can achieve similar readmission rates as non-safety-net hospitals for its poor patients, having an additional number of poor patients would not, in and of itself, lead to penalties, as it does now.

MedPAC has expressed similar concern.  As reported in a March 7, 2013 CQ HealthBeat article,

…the socioeconomic status of patients served may affect readmission rates, MedPAC staff said.  Admission rates may be higher at hospitals that treat many low-income patients who have less access to adequate health care outside the hospital.  Such patients arrive sicker and may wind up in the hospital again a short time after discharge.

MedPAC reiterated this concern in its June 2013 report to Congress, writing that

…there is now convincing evidence that safety-net institutions, as well as large teaching hospitals, are far more likely to be penalized under the HRRP [hospital readmissions reduction program].  Left unchecked, the HRRP has the potential to exacerbate disparities in care and create disincentives to providing care for patients who are particularly ill or who have complex medical needs.

In recent months, other respected voices have added theirs to the chorus of those calling for reconsideration of the readmissions reduction program, including the journal Health Affairs (“Adding Socioeconomic Data to Hospital Readmissions Calculations May Produce More Useful Results,” May 2014, and “Socioeconomic Status and Readmissions:  Evidence From An Urban Teaching Hospital,” also May 2014, and the Agency for Healthcare Research and Quality, “Conditions With the Largest Number of Adult Hospital Readmissions by Payer,” April 2014)

Finally, it is worth noting that the National Quality Forum (NQF), the organization that develops and certifies the measures used in the readmissions reduction program, has convened a panel to address this very issue.  While the panel has not issued its final recommendations, the vast majority of those who have submitted comments on the issue – 143 out of 148 parties – have expressed support for additional risk adjustment for socio-economic factors, as have the majority of NQF members (56 out of 68).

In response to this concern, MedPAC has recommended that CMS modify the readmissions reduction program so that hospitals’ readmissions are compared only to the readmissions of comparable hospitals.  NAUH has long maintained that it is inappropriate to compare dissimilar hospitals, and under the MedPAC recommendation, the readmissions reduction program would compare the readmissions of urban safety-net hospitals to those of other urban safety-net hospitals.  In this manner, the program would remain an effective tool in combating avoidable readmissions and would do an even better job of identifying hospitals whose performance does not measure up to their peers.  NAUH supports the MedPAC recommendation to compare hospitals’ Medicare readmissions only to those of similar hospitals and urges CMS to incorporate this, or some other form of socio-economic risk adjustment, into the readmissions reduction program.

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Tomorrow – a much-needed adjustment of the methodology employed by the hospital readmissions reduction program

NAUH’s complete comment letter to CMS can be found here.