Readmissions revisited: A response from the authors

The following is a guest post from Steven H Sheingold, Director, Division of Health Financing Policy, Office of Health Policy, Office of the Assistant Secretary for Planning and Evaluation, Department of Health and Human Services; Rachael Zuckerman, Economist, Office of Health Policy, Office of the Assistant Secretary for Planning and Evaluation, Department of Health and Human Services; and Adele Shartzer, Research Associate, Health Policy Center, The Urban Institute.

On January 27, Garret Johnson and Zoe Lyon, research assistants to Dr. Ashish Jha, provided a guest post titled Readmissions Revisited concerning our recent Health Affairs paper. We thank them for their excellent summary of the article and also want to recognize Professor Jha’s contributions to our understanding of readmission differences among hospitals.

There has been concern since the implementation of Medicare’s Hospital Readmission reduction program (HRRP) that safety net hospitals would be unfairly penalized. Whether or not to account for socioeconomic factors is an important and controversial policy issue for the HRRP and for all other health care payment systems that are based on quality indicators. Therefore we thought it useful to clarify a few issues raised by Johnson and Lyon.

First, they raise the issue that our analyses compared the safety net hospitals (the top 20% of hospitals based on their disproportionate share ratios) to all other hospitals rather than to the bottom 20% of hospitals. While the latter might be an interesting comparison, it is not fully relevant to the purposes of our paper. The HRRP penalties are not based on differences between the best and worst performers. Instead, the measure used to determine the HRRP’s penalties — called excess readmission ratio — compares each hospital to an adjusted national average.

Second, Johnson and Lyon were concerned about clustering of patients within hospitals which would make the model look like it has more data than it truly does, meaning that the standard errors are smaller than they should be. While we did not make this explicit in the paper, all of the models were estimated using generalized linear models (GEE) with exchangeable correlation structures. These models do account for correlation within hospitals.

Johnson and Lyon seem to infer that our objective was to slow and refocus the policy debate on this issue. In contrast, our paper provides some answers to move the discussion forward, albeit not as quickly as Johnson and Lyon would prefer. Our recommendations are in line with the evidence driven approach the Congress took under the IMPACT Act of 2014 by mandating and funding extensive research on the relationships between socioeconomic factors, quality and payment. This research, which is now well underway with the Department of Health and Human Services, will better inform policy development in the near future.

Johnson and Lyon advocate immediate implementation of an adjustment using the socioeconomic factors we already have in administrative data since our research shows these factors explain 25% of the difference in readmission rates between safety net and other hospitals, after accounting for the HRRP’s risk adjustment factors. This position misses some key issues policy makers might consider.

First, it presumes that the active debate over whether to adjust quality indicators for socioeconomic factors in payment systems has been resolved in that direction. We do not believe it has.

Second, they presume that the differences in readmission rates translate directly to penalties. In fact, as we noted in comparing penalties between the safety net and other hospitals, the current method of calculating excess readmissions has already eliminated a substantial share of the differential. Therefore, simply adding readily available socioeconomic factors to the current risk adjustor would not affect existing penalties appreciably — even after accounting for the more vulnerable financial position of safety net hospitals. Thus, additional consideration might be given to the costs of the regulatory and systems changes needed to implement such payment modification relative to the potentially very small impact they would have.

We share Johnson and Lyon’s concern for safety net hospitals. Our paper is clear that the plight of providers that treat the most vulnerable patients must be carefully evaluated as we move forward with a greater number of quality based payment mechanisms. In addition to the results of our statistical models, we simply point out what the data show — safety net and other providers have about the same size penalties despite the wide difference in raw readmission rates. At this point, we have not judged this result as fair or unfair as Johnson and Lyon suggest — policy makers must make that call after they are well informed with research and policy analysis.

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