A study published in JAMA Network Open suggests that not incorporating Medicare Advantage data into the calculation of hospital readmissions results in an unwarranted redistribution of $284 to $297 million a year in readmission penalties across hospitals nationwide.
That’s more than half the total amount of readmissions penalties incurred each year across all hospitals, according to study authors from the University of Michigan.
The federal Hospital Readmissions Reduction Program will reduce Medicare reimbursements to hospitals that have higher than expected rates of readmissions for people with certain conditions. But study authors find that the financial penalties have hit some hospitals harder than they should even when those same hospitals have kept people with heart failure, pneumonia, and other serious conditions from ending up back in the hospital within a month of discharge. They pay inflated readmission penalties because they serve higher percentages of older patients who are enrolled in Medicare Advantage plans.
Currently, the federal government only grades hospitals on their readmission performance for older adults with traditional Medicare. Data from Medicare Advantage is not included in the calculations. This is a problem, notes Michigan Medicine, because Medicare Advantage enrollees tend to be healthier than traditional Medicare beneficiaries,
But the readmission penalty program’s risk-adjustment is unable to capture these differences. As a result, hospital performance looks worse for hospitals treating fewer traditional Medicare beneficiaries and more Medicare Advantage enrollees, even if those hospitals take the same actions to prevent readmissions as other hospitals.
The retrospective cohort study included 3,200 hospitals serving Medicare beneficiaries from 2019 to 2022 and six targeted conditions in the readmission reduction program: acute myocardial infarction, chronic obstructive pulmonary disease, heart failure, pneumonia, coronary artery bypass graft surgery, and elective primary total hip or knee arthroplasty.
The hospitals were divided into five groups based on the Medicare Advantage enrollment levels in 1,486 counties. The hospitals in the areas with the highest Medicare Advantage enrollment were much more likely to be larger, nonprofit, teaching-oriented and in urban areas than hospitals in the areas with the lowest levels of Medicare Advantage enrollment.
Even when the researchers considered an aspect of the readmission penalty program that only judges hospitals against groups of their peer hospitals, they still found that the Medicare Advantage enrollment rate mattered.
When the Hospital Readmission Reduction Program started calculating readmission rates in 2012, only 29 percent of older adults and people with disabilities chose Medicare Advantage plans. Enrollment was 54 percent at the time of the study.
The Centers for Medicare & Medicaid Services (CMS) has finalized a new rule to incorporate Medicare Advantage member to all six Hospital Readmission Reduction Program measures but it will not affect hospital penalties until fiscal year 2027. In addition to the rule, study authors propose that CMS could consider factoring the percentage of Medicare Advantage enrollees in a hospital’s area or patient base into the calculations for its readmission rate and potential penalty.