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

Key Points 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
This cohort study assesses the association of incentives from Medicare’s Hospital Readmissions Reduction Program with hospital readmission performance from 2016 to 2019.