Abstract 4: Impact of Financial Penalties in Medicare’s Hospital Readmissions Reductions Program

Abstract

Background: The Affordable Care Act (ACA) created financial penalties applied to reimbursements after October 1, 2012 for US hospitals for excess risk-standardized readmission rates (RSRRs) for specific conditions. In that context, we sought to determine the effects of health reform financial penalties on hospital readmission rates. Methods: We used a quasi-experimental interrupted time series design with a control group (no penalty hospitals) to analyze the Medicare FFS datafiles. We divided hospitals by initial penalty category. We fitted a piecewise linear model with a change point at passage of the ACA in March 2010 to hospital-specific RSSRs for every quarter from January 2000 to December 2013. We evaluated (1) if RSRRs were declining before and after the law, (2) if any decline accelerated post-law compared to pre-law, and (3) whether the penalized hospitals experienced a faster acceleration in improvement post-law than hospitals with no penalty (control group). Results: In the initial phase of penalties (October 2012-October 2013), 30.1% of hospitals received no penalty, 44.0% received a low penalty (less than half maximum), 16.8% received a high penalty (more than half maximum), and 9.0% received the maximum penalty. Compared to no penalty hospitals, hospitals with the maximum penalty were more likely to be major teaching hospitals (11.2% vs. 6.1%, p < 0.001) and were less likely to be in rural settings (22.9% vs. 29.9%, p < 0.001). Pre-law, combined-condition RSRRs were declining in the no penalty group (p < 0.0001) and increasing for the high penalty and maximum penalty groups (p < 0.0001). Post-law, combined-condition RSRRs declined for all penalty groups (p < 0.0001 for all). Rates of decline accelerated post-law for all penalty groups (p < 0.001 for all), with the greatest acceleration occurring in hospitals sustaining the highest penalties (p < 0.0001 for all comparisons of higher vs. lower penalty groups). Conclusions and Relevance: After health reform, hospital risk-standardized 30-day readmission rates for myocardial infarction, heart failure and pneumonia declined nationally faster than before health reform. Improvement in readmission rates was most marked for hospitals incurring the highest financial penalties.