GE Healthcare Camden Group Insights Blog

The Bottom Line Impact of Hospital Readmissions

Posted by Matthew Smith on Sep 18, 2015 10:03:14 AM

Yes, there is controversy surrounding the Hospital Readmissions Reduction Program (“HRRP”). Many hospitals feel that the costs to effectively manage readmissions are more than the penalty that is incurred, thus making readmission reduction efforts a net loss; and still others feel that the formula is flawed and disproportionately impacts certain facilities such as academic medical centers and those hospitals serving communities of lower socioeconomic status.

While either of these scenarios may be true, the reality is that reducing readmissions is in the best interest of all hospitals as an initial step in transitioning to a more population health-based delivery system. Potentially avoidable readmissions result in approximately $17 billion in excess spending by Medicare alone. Additionally, potentially avoidable readmissions are a reflection of the quality of care provided across the continuum. Understanding your hospital’s current performance, the performance of care providers in the delivery network, and identifying solutions to reduce readmissions are of significant importance. Acting now will prevent larger revenue impacts in the future and will position the hospital for success.

Although readmission rates have been declining overall, 75 percent of all hospitals eligible for the HRRP (i.e., 2,610 hospitals) are receiving a penalty this year, which is an increase of 433 hospitals receiving penalties over the previous year. The average penalty is .63 percent of their Medicare reimbursement for every Medicare stay, not just those readmitted. Overall, the hospitals receiving penalties will experience an estimated $428 million reduction in Medicare reimbursements, with the largest readmissions penalty to any hospital being approximately $13.3 million.

While the financial implications are important, hospitals need to be aware of the data collection and reporting periods that impact their penalty. This year brings the maximum penalty allowed by law (3 percent) as well as additional measures, but the data for this year’s penalty was collected July 1, 2010 through June 30, 2013. This means that hospitals cannot impact their penalty for 2016 at this point in time and have only four months remaining to make any impact for 2017, which will bring a new diagnosis (Coronary Artery Bypass Graft [“CABG”]). Of importance is taking action now to protect revenue in 2018 and beyond.


If a hospital is subject to a penalty and/or attempting to improve current performance, a detailed analysis stratifying readmitted patients by payer, diagnosis, and source of the readmission should be completed in order to identify priority areas. From there, hospitals should assess the internal organizational processes related to care delivery and care management. This not only includes assuring high quality care during the hospitalization, but incorporates the preparation, planning, and communication needed for a successful transition of care to a post-acute or home-based setting. 

Paths_ReadmissionsDetermination of process effectiveness includes incorporating patient goals into discharge planning and instructions, including medication reconciliation with easy to use patient tools, as well as other tailored patient and caregiver education and programs focused on certain medical conditions. Coordination with community physicians for follow-up visits is imperative. Qualitative factors such as short patient or caregiver interviews at the time of readmission may also shed light on non-obvious reasons for readmission. Additionally, the hospitalist program should be assessed from a coordination perspective with care management, discharge planning, and primary care physicians. Paths for controlling readmissions include: pre-discharge processes internal to the hospital, performance of the post-acute network, and factors associated with discharge to home. Assessing and improving these pathways is recommended.

As the U.S. healthcare system continues its transition from volume to value, readmissions penalties appear to be here to stay. The penalties will impact each hospital in a different manner, and the costs and benefits of reduction efforts must be weighed. However, controlling and reducing avoidable readmissions is a solid first step toward delivering more accountable care. Hospitals should be aware of the penalties, the impact to their facility, and the drivers of potentially avoidable readmissions. Deploying proactive and effective strategies for improvement is necessary for success in today’s healthcare marketplace.

The Camden Group, Hospital Readmissions, Readmissions Reduction

Topics: Hospital Readmissions, Readmissions Reduction, HRRP, Hospital Readmissions Reduction Program

Quality Outcome Achievement and the Impacts to Care Delivery

Posted by Matthew Smith on Apr 30, 2015 2:23:00 PM

The Affordable Care Act has changed the paradigm of our healthcare system moving from rewarding providers for the quantity of care they provide, to rewarding them for the quality of care provided. Frameworks such as the Triple Aim™ developed by the Institute for Healthcare Improvement and the National Quality Strategy from the Centers for Medicare and Medicaid (“CMS”) are two of the various models aimed at improving health system performance. While these approaches differ, each focuses on the accountability and improvement of care delivery across settings for all dimensions of health along with the associated costs. Through the use of quality measurement, CMS is driving healthcare transformation in collaboration with practitioners and patients.

Develop Patient-Centric Goals

As CMS and private payer reimbursement models move from volume-to-value payments and penalties, organizational leaders are recognizing the need to develop strategies which incorporate quality into all care delivery channels. First steps to approaching this landscape shift are through the development and implementation of proactive patient-centric goals. For example, engage patients as the stewards of their own care. This is a change from the “do as I say” approach of past generations. Truly listen to patients and their goals for their health. Discuss multiple options and assess the social determinants of health in terms of barriers to goal achievement. This is an approach which brings all disciplines together in the patient’s vision. Incorporate quality improvement strategies to support the long-term sustainability of an integrated care delivery model linked to outcome metrics. This will help drive a care delivery strategy and inform care redesign.

These organizational changes are of vital importance given the recent announcement by the Department of Health and Human Services (“HHS”) regarding the timeline for shifting Medicare payments toward alternative payment models such as Accountable Care Organizations or Bundled Payment Initiatives. Starting in 2016, the target for alternative payment model reimbursement is 30 percent—increasing to 50 percent in 2018. Private payers, such as Humana and United Health Group, are following the lead of HHS and tying reimbursement to value-based arrangements. Humana aims to align 75 percent of its Medicare Advantage membership to quality of care reimbursements and UnitedHealth Group will tie $65 billion of its reimbursement to value-based arrangements, each by 2017. The landscape is continuing to shift under our feet.

Reduce Readmissions

Strides continue to be made in the overall quality of care delivered in the U.S. New research released by the CMS 2015 National Impact Assessment of Quality Measures Report, finds that between 2006 and 2012 there was significant improvement in reported performance rates across seven quality reporting programs. Performance on over a one-third of the measures was considered “high performing,” exceeding 90 percent in the most recent three years of collected data. Additionally, health disparities across racial and ethnic groups have narrowed.

Hospital_Readmissions_Blog_Table-1.pngWhile the overall delivery of quality of care is improving, the Hospital Readmissions Reduction Program outcomes measures (see table) have shown limited improvements in readmission rates since 2013, the first program year. Outcome measures reported in the 2014 CMS Medicare Hospital Quality Chartbook (reporting period between July 2010 and June 2013), show variation in hospital performance continues along with the persistence of geographic variation by hospital referral region. Only two regions performed better than the national average on four or more of the condition-specific readmission measures.

Impact Quality and Care Delivery

In order to move to true value-based care, the overall health, safety, and well-being of a patient must be addressed. The delivery of coordinated, quality care needs to expand from the acute setting across the continuum with an equal focus on the social determinants of health—including access to care, caregiver support, behavioral health, socioeconomic status, and health literacy.

The identification of high-risk patients along with the development of strategies to address individual patient needs and barriers to achieving them will improve the success rate of transitioning care to the post-acute setting. Key components of a “wholeistic” approach include:

  • Patient/family engagement
  • Tools for effective self-management of chronic conditions,
  • An individualized comprehensive treatment and continuum-based care plan
  • Health education for disease and medication management
  • Primary care and care management follow-up
  • Improved clinician-to-clinician communication/handoffs--all supported with appropriate community-based resources.

Long-term sustainable success cannot be achieved without continuous performance improvement and continuum-based key performance indicators. Delivering quality care across the continuum with a multidisciplinary methodology will impact the usual way care is delivered. Real-time dashboards will foster the analysis of both financial and clinical data allowing for comprehensive, gap in care interventions and strategy development. Staffing skillsets will continue to change and new positions will continue to be created to meet the needs of the population. We are truly in the midst of the new age of healthcare.

The Camden Group, Hospital Readmissions, Readmissions Reduction

Topics: Readmissions, Readmissions Reduction, Quality Outcomes, Care Delivery

New White Paper Download: What is Your Plan for Avoiding Readmissions?

Posted by Matthew Smith on Mar 19, 2015 2:55:00 PM

As the U.S. healthcare system continues its transition from volume to value, readmissions penalties appear to be here to stay. The penalties will impact each hospital in a different manner, and the cost/benefit of reduction efforts must constantly be weighed. However, controlling and reducing avoidable readmissions is a solid first step toward delivering more accountable care.

The latest White Paper from GE Healthcare Camden Group, titled, What is Your Plan for Avoiding Readmissions? Understanding the Penalty and Solutions, examines:

  • Readmissions penalty history and trends
  • Distribution of HRRP penalties
  • Readmissions results vs. U.S. national rate
  • Readmissions measures and maximum penalty by fiscal year
  • States with the highest percentage of hospitals receiving penalties
  • Readmissions penalty calculations and projections (including CMS formula)
  • Solutions for controlling readmissions

To download the PDF White Paper, please click the button below:

The Camden Group, Hospital Readmissions, Readmissions Reduction

Topics: Readmissions, Hospital Readmissions, Readmissions Reduction, Hospital Readmissions Reduction Program

Subscribe to Email Updates

Value Model, Health Analytics

Recent Posts

Posts by Topic

Follow Me