Association Between Financial Incentives in Medicare's Hospital Readmissions Reduction Program and Hospital Readmission Performance | Health Care Economics, Insurance, Payment | JAMA Network Open | JAMA Network
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    1 Comment for this article
    Hospital Readmisssions
    Karl Stecher, MD | retired neurosurgical res
    Physicians taking care of patients want to do and try to do the best they can for them. They are advocates for their patients against insurance companies, and, sadly, also against hospital administrations. And regulations imposed by the government, often imposed with no solid knowledge of what good medical care is.
    One obstruction, which the physician must now consider, is whether I/he/she will violate this arbitrary 30 day rule when considering whether or not to readmit a patient.
    This should never happen. It is a consideration which does nothing to help the patient, and is just one
    of the excessive barriers to proper care. The rule is not a good measure of hospital use and proper care, is an unnecessary game, and should be abandoned.
    Original Investigation
    Health Policy
    April 3, 2020

    Association Between Financial Incentives in Medicare's Hospital Readmissions Reduction Program and Hospital Readmission Performance

    Author Affiliations
    • 1Department of Systems, Populations and Leadership, University of Michigan School of Nursing, Ann Arbor
    • 2Institute for Healthcare Policy and Innovation, University of Michigan, Ann Arbor
    JAMA Netw Open. 2020;3(4):e202044. doi:10.1001/jamanetworkopen.2020.2044
    Key Points español 中文 (chinese)

    Question  Are financial incentives from Medicare’s Hospital Readmissions Reduction Program associated with hospital readmission performance?

    Findings  This cohort study using Medicare performance data from 2823 hospitals from 2016 to 2019 found that hospitals with greater incentives for readmission avoidance had larger decreases in excess readmission, whereas hospitals with no incentives had increases in excess readmissions across Hospital Readmissions Reduction Program–targeted conditions.

    Meaning  The findings suggest that the penalty incentives in the readmissions program were associated with improvements in readmission avoidance.


    Importance  The strongest evidence for the effectiveness of Medicare's Hospital Readmissions Reduction Program (HRRP) involves greater reductions in readmissions for hospitals receiving penalties compared with those not receiving penalties. However, the HRRP penalty is an imperfect measure of hospitals' marginal incentive to avoid a readmission for HRRP-targeted diagnoses.

    Objectives  To assess the association between hospitals’ condition-specific incentives and readmission performance and to examine the responsiveness of hospitals to condition-specific incentives compared with aggregate penalty amounts.

    Design, Setting, and Participants  This retrospective cohort analysis used Medicare readmissions data from 2823 US short-term acute care hospitals participating in HRRP to compare 3-year (fiscal years 2016-2019) follow-up readmission performance according to tertiles of hospitals' baseline (2016) marginal incentives for each of 5 HRRP-targeted conditions (acute myocardial infarction, heart failure, chronic obstructive pulmonary disease, pneumonia, and hip and/or knee surgery).

    Main Outcomes and Measures  Linear regression models were used to estimate mean change in follow-up readmission performance, measured using the excess readmissions ratio, with baseline condition-specific incentives and aggregate penalty amounts.

    Results  Of 2823 hospitals that participated in the HRRP from baseline to follow-up, 2280 (81%) had more than 1 excess readmission for 1 or more applicable condition and 543 (19%) did not have any excess readmissions. The mean (SD) financial incentive to reduce readmissions for incentivized hospitals ranged from $8762 ($3699) to $58 158 ($26 198) per 1 avoided readmission. Hospitals with greater incentives for readmission avoidance had greater decreases in readmissions compared with hospitals with smaller incentives (45% greater for pneumonia, 172% greater for acute myocardial infarction, 40% greater for hip and/or knee surgery, 32% greater for chronic obstructive pulmonary disease, and 13% greater for heart failure), whereas hospitals with no incentives had increases in excess readmissions of 4% to 7% (median, 4% [percentage change for nonincentivized hospitals was 3.7% for pneumonia, 4.2% for acute myocardial infarction, 7.1% for hip and/or knee surgery, 3.7% for chronic obstructive pulmonary disease, and 3.7% for heart failure]; P < .001). During the study period, each additional $5000 in the incentive amount was associated with a 0.6– to 1.3–percentage point decrease, or up to a 26% decrease, in excess readmissions (P < .001). Regression to the mean explained approximately one-third of the results depending on the condition examined.

    Conclusions and Relevance  The findings suggest that improvements in readmission avoidance are more strongly associated with incentives from the HRRP than with aggregate penalty amounts, suggesting that the program has elicited sizeable changes. Worsened performance among hospitals with small or no incentives may indicate the need for reconsideration of the program's lack of financial rewards for high-performing hospitals.