Hospital Readmissions Reduction Program: Overview and FAQ

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Written by Katherine Zheng, PhD, BSN Content Writer, IntelyCare
A hospital worker admits a patient.

Excessive hospital readmissions can have numerous negative effects on care delivery, worsening patient outcomes and increasing costs for facilities. To combat high readmission rates among Medicare patients, the Centers for Medicare and Medicaid Services (CMS) established the Hospital Readmissions Reduction Program (HRRP) in 2012.

It’s important for facility leaders to stay on top of the program’s measures to avoid financial penalties and help improve quality of care. If you’re confused about the program’s intricate structure, we’ve got you covered. This overview will answer the most frequently asked questions about HRRP, from what this program is to how it impacts Medicare-participating facilities.

What Is the Hospital Readmissions Reduction Program?

The HRRP is a CMS initiative that encourages hospitals to improve care coordination and discharge planning to help reduce preventable readmissions. This is one of CMS’s value-based purchasing programs, meaning that Medicare reimbursements are calculated based on a facility’s ability to meet HRRP standards.

Why Was the Hospital Readmissions Reduction Program Established?

The HRRP was established to improve patient outcomes and reduce care costs by minimizing avoidable hospital readmissions. Before the program’s existence, facilities didn’t have any financial incentives to prevent patients from returning, despite the care-related benefits of reducing hospital readmissions. This became a priority issue for the U.S. healthcare system after a national report from CMS revealed that:

  • 20% of Medicare patients were readmitted to hospitals within 30 days
  • Nearly 12% of these Medicare readmissions were likely avoidable
  • Preventing 10% of readmissions could save Medicare up to $1 billion

How Does the Hospital Readmission Reduction Program Work?

The HRRP is administered based on a set of established CMS readmission rules. Under these rules, hospitals receive lower reimbursement rates from Medicare if they have higher-than-expected readmission rates for the following conditions or procedures:

  • Acute myocardial infarction
  • Chronic obstructive pulmonary disease
  • Heart failure
  • Pneumonia
  • Coronary artery bypass graft surgery
  • Elective primary total hip arthroplasty
  • Total knee arthroplasty

Each year, CMS sends a confidential HRRP report back to a participating facility. The facility will then have a 30-day period to review their data and submit any questions or requests for corrections.

How Does Medicare Adjust Reimbursements Based on Readmissions?

Medicare adjusts reimbursement rates based on a hospital’s performance measures related to readmissions. Standard readmission rates for HRRP conditions and procedures are calculated using a methodology established by a team of clinical and statistical experts.

If readmission rates are higher than these established standards (i.e., higher-than-expected), CMS calculates a Medicare payment reduction for hospitals throughout a rolling performance period. Payments can be reduced by up to 3% each fiscal year.

What Is the Medicare 30-day Readmission Rule?

One key CMS readmission rule that goes into calculating rates is the 30-day readmission rule. This establishes the following measures that count as a readmission under the HRRP:

  • Readmission within 30 days of a patient’s initial discharge date
  • Readmission to the same hospital or related acute care hospital, excluding certain pre-planned readmissions

Is the Hospital Readmission Reduction Program Effective?

Since the launch of the Hospital Readmission Reduction Program, pros and cons of its effects have been weighed heavily by health experts. In its first few years, HRRP data showed that readmission rates decreased by 1% without increasing deaths or length of stay. This, in addition to the program’s patient-centered quality measures, has shown promise for improving care delivery.

On the other hand, some experts have noted unintended consequences stemming from the HRRP. For example, hospitals that serve low-income and high-risk populations naturally face higher rates of readmissions. If these hospitals are being financially penalized, this could compromise care for underserved patients.

In light of the controversial opinions about this program, CMS has taken steps to improve upon their readmission measures each year. You can stay up to date with any amendments to the program through the CMS resource center.

How Can Facilities Reduce Readmission Rates?

If your facility participates in the HRRP, you may be wondering how to reduce hospital readmissions through your care delivery. Your process for improving care may depend on the types of patients you serve and the operations at your facility. However, these evidence-based strategies can help reduce the risk of readmissions:

  • Schedule outpatient appointments in a timely manner
  • Confirm patients’ understanding about their discharge instructions
  • Include patients in medication management planning throughout their stay
  • Follow up with patients by telephone after they’re discharged
  • Prioritize communication with outpatient providers and pharmacists

Keep Up With Other CMS Regulations Impacting Your Facility

Now that you’ve learned about the Hospital Readmission and Reduction Program, you may be looking for more ways to keep up with all the CMS-administered regulations affecting your facility’s operations. Sign up for IntelyCare’s free newsletter so you don’t miss out on the latest healthcare related policy updates delivered straight to your inbox.