Hospital Readmission Reduction Program Causes Operating Payment Changes

by Judith L. Kares, JD

In the course of preparing for HCPro's Revenue Integrity Symposium (RIS), as well as generally reviewing the IPPS changes for FY 2017, I spent considerable time reviewing the various quality adjustments that might apply to the operating portion of the IPPS Medicare Severity (MS)-DRG payment under the Hospital Readmission Reduction Program (HRRP). In addition, in a recent HCPro MBC-H class, certain questions were raised on the measure, and applicability of, HRRP adjustments to a hospital’s operaing MS-DRG payment.

In this week’s note, we will attempt to clarify the general purpose of the HRRP (sometimes referred to as the Excess Readmissions Program), as well as the potential impact to the operating payment of a hospital subject to a reduction for excess readmissions.

Purpose of the HRRP   

In the FY 2017 IPPS final rule (81 FR 56973), CMS directs providers to go to the FY 2016 IPPS final rule (80 FR 49530-49531) for a detailed explanation of the statutory history of the HRRP. The HRRP became effective for inpatient discharges on and after October 1, 2012, the beginning of FY 2013. It was designed to identify cases with selected principal discharge diagnoses, followed by subsequent readmission to the same or another hospital for the same principal diagnosis within 30 days of the initial discharge. Only one readmission during the 30-day period following a discharge is counted for purposes of calculating potential excess readmissions. Readmissions are considered excessive when the number and ratio of unplanned readmssions for specific selected conditions is significantly higher than would normally be expected.

Calculation of the HRRP adjustment

Whether a hospital is subject to a reduction to its MS-DRG base operating payments for FYs beginning with FY 2013 will depend upon the number of excess readmissions for CMS-selected conditions during the applicable three-year performance period for that FY. For example, a hospital’s HRRP adjustment to its operating MS-DRG payments during FY 2016 will be based upon readmissions for selected conditions during the three-year period from July 1, 2011, through June 30, 2014. For FY 2017, a hospital’s HRRP adjustment will be based upon readmissions for selected conditions during the three-year performance period from July 1, 2012, through June 30, 2015.

To determine whether a hospital has excess readmissions for a specific three-year performance period, CMS counts only readmissions for those conditions selected for measurement during that performance period. For example, for FY 2016, CMS identified five conditions to be measured during the applicable performance period (July 1, 2011, through June 30, 2014): acute myocardial infarction (AMI), heart failure (HF), pneumonia (PN), elective total hip arthroplasty (THA) or total knee arthroplasty (TKA), and chronic obstructive pulmonary disease (COPD). For FY 2017, CMS has identified six conditions to be measured during the applicable performance period (July 1, 2012, through June 30, 2015): the five conditions from FY 2016 (AMI, HF, PN, THA/TKA and COPD) and one new condition—a hospital-level, 30-day, all-cause, unplanned readmission following coronary artery bypass graft surgery (CABG).

To read the complete, detailed artcile that appeared on Medicare Compliance Watch, click here.