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Table 1.  
Trends in Mean Percentage of CMS Payment Adjustments to Hospitals From the Hospital Readmission Reduction Program and Value-Based Purchasing Programa,b
Trends in Mean Percentage of CMS Payment Adjustments to Hospitals From the Hospital Readmission Reduction Program and Value-Based Purchasing Programa,b
Table 2.  
Trends in CMS Mean Excess Readmission Ratios by Condition and Hospital Safety-Net Status, Fiscal Years 2013-2016a
Trends in CMS Mean Excess Readmission Ratios by Condition and Hospital Safety-Net Status, Fiscal Years 2013-2016a
1.
 Patient Protection and Affordable Care Act. http://legcounsel.house.gov/Comps/Patient%20Protection%20And%20Affordable%20Care%20Act.pdf. Accessed June 13, 2016.
2.
Gilman  M, Adams  EK, Hockenberry  JM, Milstein  AS, Wilson  IB, Becker  ER.  Safety-net hospitals more likely than other hospitals to fare poorly under Medicare’s value-based purchasing.  Health Aff (Millwood). 2015;34(3):398-405.PubMedGoogle ScholarCrossref
3.
Gu  Q, Koenig  L, Faerberg  J, Steinberg  CR, Vaz  C, Wheatley  MP.  The Medicare Hospital Readmissions Reduction Program: potential unintended consequences for hospitals serving vulnerable populations.  Health Serv Res. 2014;49(3):818-837.PubMedGoogle ScholarCrossref
4.
Gilman  M, Hockenberry  JM, Adams  EK, Milstein  AS, Wilson  IB, Becker  ER.  The financial effect of Value-Based Purchasing and the Hospital Readmissions Reduction Program on safety-net hospitals in 2014: a cohort study.  Ann Intern Med. 2015;163(6):427-436.PubMedGoogle ScholarCrossref
5.
Gilman  M, Adams  EK, Hockenberry  JM, Wilson  IB, Milstein  AS, Becker  ER.  California safety-net hospitals likely to be penalized by ACA value, readmission, and meaningful-use programs.  Health Aff (Millwood). 2014;33(8):1314-1322.PubMedGoogle ScholarCrossref
6.
Carey  K, Lin  M-Y.  Hospital Readmissions Reduction Program: safety-net hospitals show improvement, modifications to penalty formula still needed.  Health Aff (Millwood). 2016;35(10):1918-1923.PubMedGoogle ScholarCrossref
Research Letter
April 18, 2017

Comparative Trends in Payment Adjustments Between Safety-Net and Other Hospitals Since the Introduction of the Hospital Readmission Reduction Program and Value-Based Purchasing

Author Affiliations
  • 1Robert Wood Johnson Foundation Clinical Scholar, University of California, Los Angeles
  • 2Department of Health Management and Policy, Emory University, Atlanta, Georgia
  • 3Department of Medicine, University of California, Los Angeles
JAMA. 2017;317(15):1578-1580. doi:10.1001/jama.2017.1469

The Hospital Readmission Reduction Program (HRRP) penalizes hospitals with higher than expected 30-day readmission rates for select conditions, and Value-Based Purchasing (VBP) adjusts Medicare’s payment rate to hospitals based on a set of defined process, outcome, and experience of care measures thereby redistributing dollars collected in penalties to higher performers as bonuses.1 Because safety-net hospitals historically have higher readmission rates and lower performance on process of care and patient experience measures, there has been concern that these programs put safety-net hospitals at a financial disadvantage.2,3 Several studies have found that safety-net hospitals are more likely to be penalized under both the HRRP and VBP4,5 despite improvements in their readmission rates.6 To assess the current status of these issues, we examined trends in Medicare payment adjustments made to hospitals under these programs since fiscal year (FY) 2013, and underlying changes within different clinical condition categories in the HRRP, with a focus on hospital safety-net status.

Methods

The study analyzed public Centers for Medicare & Medicaid Services (CMS) program data and did not require institutional review board approval. We used each participating hospital’s payment adjustments in the HRRP and VBP, publicly available from the CMS, matched with each hospital’s disproportionate share payment percentage from the Medicare Impact File. The HRRP and VBP payment adjustments are assessed as a percentage of all Medicare payments a hospital receives. HRRP is based on excess readmission ratios calculated by CMS for specific conditions. Ratios greater than 1 represent worse than expected performance. VBP adjustments are based on an algorithm that CMS periodically updates.1

Safety-net hospitals were defined as those in the top quartile of the disproportionate share percentage in FY 2013. This percentage is the score that CMS has used to compensate hospitals for the portion of socially disadvantaged patients treated.

Trends were compared in HRRP penalties, in VBP payment adjustments, and in underlying excess readmission ratios from FY 2013 through FY 2016 by safety-net status. If a hospital was included in 1 program but not the other in a year, that hospital was assigned no payment adjustment for that program in that year. Similarly, if the volume of patients for a given HRRP condition was not sufficient to calculate excess readmission, we assigned the hospital a 1. Analyses were performed in Stata (StataCorp), version 14. A 2-sided P value less than .05 was considered significant.

Results

The study included 3179 US hospitals. Safety-net hospitals (n = 795) had larger mean penalties (−0.36%) than non–safety-net hospitals (−0.27%) under the HRRP in FY 2013 (difference, 0.09% [95% CI, −0.12% to −0.07%]) but this gap was 0 by FY 2016 (Table 1). Under VBP in FY 2013, safety-net hospitals incurred a mean penalty of −0.06% whereas non–safety-net hospitals received a bonus of 0.03% (difference, −0.09% [95% CI, −0.11% to −0.06%]). This gap grew to −0.13% (95% CI, −0.17% to −0.09%) by FY 2016 (Table 1) as non–safety-net hospitals received larger bonuses. Mean excess readmission ratios were above 1 for safety-net hospitals for all conditions in all years (Table 2). For non–safety-net hospitals, only knee and hip arthroplasty mean excess readmission ratios exceeded 1, and did so for both FY 2015 and FY 2016.

Discussion

The performance of safety-net hospitals on the HRRP has improved between FY 2013 and FY 2016 as reflected in the penalties. This does not appear to be driven by meaningful reductions in the excess readmission rates at safety-net hospitals but may have been driven by the design of the program and addition of arthroplasty readmission to the program in FY 2015, with mean excess readmission ratios above 1 for both types of hospitals in 2015 and 2016. The changes in the VBP adjustments reflect both improved performance and CMS changes to the weighting applied to the VBP measures.5 A limitation of this study is that hospitals may have been classified differently under an alternative safety-net criterion.

Hospital operating margins are generally under 5%, so a 0.3% reduction in total Medicare revenue is meaningful, especially for safety-net hospitals that receive a larger portion of their revenue from Medicare.

Section Editor: Jody W. Zylke, MD, Deputy Editor.
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Article Information

Corresponding Author: Jason M. Hockenberry, PhD, Department of Health Policy and Management, Emory University, 1518 Clifton Rd, GCR 622, Atlanta, GA 30322 (jason.hockenberry@emory.edu).

Retraction and Replacement: This article was retracted and replaced on September 19, 2017, to fix errors in the text and tables (see the Supplement for the retracted article with corrections shown).

Author Contributions: Dr Hockenberry had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: Favini, Hockenberry, Gilman, Adams, Becker.

Acquisition, analysis, or interpretation of data: Favini, Hockenberry, Gilman, Jain, Ong, Becker.

Drafting of the manuscript: Favini, Hockenberry, Jain.

Critical revision of the manuscript for important intellectual content: Favini, Hockenberry, Gilman, Ong, Adams, Becker.

Statistical analysis: Hockenberry, Adams, Becker.

Administrative, technical, or material support: Favini, Gilman, Jain.

Supervision: Hockenberry.

Conflict of Interest Disclosures: All authors have completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and none were reported.

Funding/Support: Dr Favini was supported by the Robert Wood Johnson Foundation Clinical Scholars program during the course of the study.

Role of the Funder/Sponsor: The funder had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

References
1.
 Patient Protection and Affordable Care Act. http://legcounsel.house.gov/Comps/Patient%20Protection%20And%20Affordable%20Care%20Act.pdf. Accessed June 13, 2016.
2.
Gilman  M, Adams  EK, Hockenberry  JM, Milstein  AS, Wilson  IB, Becker  ER.  Safety-net hospitals more likely than other hospitals to fare poorly under Medicare’s value-based purchasing.  Health Aff (Millwood). 2015;34(3):398-405.PubMedGoogle ScholarCrossref
3.
Gu  Q, Koenig  L, Faerberg  J, Steinberg  CR, Vaz  C, Wheatley  MP.  The Medicare Hospital Readmissions Reduction Program: potential unintended consequences for hospitals serving vulnerable populations.  Health Serv Res. 2014;49(3):818-837.PubMedGoogle ScholarCrossref
4.
Gilman  M, Hockenberry  JM, Adams  EK, Milstein  AS, Wilson  IB, Becker  ER.  The financial effect of Value-Based Purchasing and the Hospital Readmissions Reduction Program on safety-net hospitals in 2014: a cohort study.  Ann Intern Med. 2015;163(6):427-436.PubMedGoogle ScholarCrossref
5.
Gilman  M, Adams  EK, Hockenberry  JM, Wilson  IB, Milstein  AS, Becker  ER.  California safety-net hospitals likely to be penalized by ACA value, readmission, and meaningful-use programs.  Health Aff (Millwood). 2014;33(8):1314-1322.PubMedGoogle ScholarCrossref
6.
Carey  K, Lin  M-Y.  Hospital Readmissions Reduction Program: safety-net hospitals show improvement, modifications to penalty formula still needed.  Health Aff (Millwood). 2016;35(10):1918-1923.PubMedGoogle ScholarCrossref
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