Value-Based Purchasing and the Decline in Hospital Readmission Rates

A new analysis of the decline in hospital readmission rates suggests ties to a drop in hospital admissions all together, rather than a Centers for Medicare and Medicaid Services (CMS) value-based purchasing program as previously credited.

The Medicare Hospital Readmissions Reduction Program (HRRP) is a value-based purchasing program, established as part of the Affordable Care Act in 2010, that lowered payments to Inpatient Prospective Payment System (IPPS) hospitals with an excess in readmissions. It was an attempt to improve quality of care by rewarding providers with incentive payments.

The program penalizes hospitals with higher than expected readmission rates because high readmissions suggests inadequate patient followup.

Since the program’s launch, hospital readmission rates declined progressively by 11.4 percent from 2009 to 2014. The decline is widely thought to be a result of the HRRP, however a Harvard Medical School study recently published in Health Affairs reached a different conclusion.

“The decline in readmission rates looked like the silver lining of pay-for-performance, but it seems to have lost its luster,” study lead author J. Michael McWilliams, the Warren Alpert Foundation Professor of Health Care Policy in the Blavatnik Institute at Harvard, said in a news release.

“Our study makes a strong case that what looked like achievements of the program may have been a byproduct of factors driving a broader decrease in hospitalizations across the board,” McWilliams added.

According to the study, researchers began by calculating shifts in per capita readmission rates during the five-year period and removed random admission samples from 2009 claims data to match national trends. Readmission rates were then recalculated and a new lower, total hospital admission rate was predicted based on the assumption that as readmissions fell admission rates would also decrease.

Through a simulation analysis, a link was uncovered between a decline in readmission rates and falling admission rates.

Study authors wrote,

We found that because the probability of an admission occurring soon after another is lower when there are fewer admissions per patient, the reduction in admission rates may explain much of the reduction in readmission rates.

In an interview with HealthLeaders, McWilliams said “The best use of the findings is to take a step back and to really have a new conversation where we start thinking about ways to improve quality that is not by linking incentives to performance measures, but just thinking about what interventions and strategies help improve quality.”

Check out Health Affairs for the full study, also take a look at the accompanying news release.

For more on the study, visit Revcycle Intelligence and Becker’s Hospital Review.

And check out HealthLeaders for more commentary from the study’s lead author.

Read more about the HRRP at the CMS site.