Hospital Readmission Reduction Program
By: Kathy Ruggieri, Director, Revenue Cycle Services 

The Patient Protection and Affordable Care Act of 2010 (Section 3025 of the Affordable Care Act added section 1886(q)) mandates that Centers for Medicare and Medicaid Services (CMS) implement a program in which hospitals with higher-than-expected readmission rates for certain designated conditions will experience reductions in their Medicare payments. The initial focus will be on readmissions related to heart failure, heart attack and pneumonia. The implementation of this program and these reductions commences for fiscal year 2013 discharges. It is expected that the Federal Fiscal Year (FFY) 2013 financial impact of the Readmission Reduction Program totals $300 million nationally.  Hospitals can also expect up to a 2% reduction in base DRG rates in 2014 and up to a 3% reduction in base DRG rates in 2015. CMS will expand the program to include COPD, CABG, PTCA and other vascular procedures. It is estimated the readmission payment reductions will total $7.1 billion over ten years. There are very few hospitals nationally that will not experience a payment reduction.

In the 2013 IPPS Proposed Rule, the CMS have given hospitals 30 days to review and submit corrections on information used to calculate their excess readmission ratios in conjunction with the Hospital Readmission Reduction Program. On June 20, 2012, hospitals received access to their hospital specific readmission reports and have until July 19, 2012 to review their data and report any errors by emailing CMS at: CMS_readmission_reduction@mathematica-mpr.com.

The FY 2013 Hospital Readmissions Reduction Program implementation timeline is as follows:

• June 20, 2012 – Hospitals receive hospital specific reports and discharge level data with results for the FY 2013 program for review, as proposed in the FY 2013 IPPS Proposed Rule
• July 19, 2012 – Deadline for hospitals to notify CMS of any concerns about their excess readmission ratio calculation
• August 1, 2012 – CMS publishes excess readmission ratio results in FY 2013 IPPS Final Rule
• October 1, 2012 – FY 2013 readmission adjustment goes into effect
• October 11, 2012 – CMS reports FY 2013 excess readmission ratio results on Hospital Compare

There is a strong disagreement to the manner in which CMS implemented their readmission program. The statute mandates that CMS adjust the readmission measures to account for readmissions that are planned and unrelated to the initial admission. For FY 2013, CMS previously finalized that it will use the three existing 30 day readmission measures for heart attack, heart failure, and pneumonia patients. However, CMS has not excluded all planned and unrelated readmissions from these measures, despite ongoing feedback from AHA and other advocacy groups. Several advocacy groups have communicated their concerns regarding the inclusion of planned and related admissions and have memorialized these concerns during the 2013 final rule comment period.

BESLER Consulting believes that hospitals should analyze their readmission reports by validating their data. It is unknown whether a change will be made related to planned and unrelated readmissions once the 2013 IPPS rule is finalized. Hospitals need to gain a detailed understanding of their readmission trends in order to prepare for these reduced payments. Although the Readmission Program initiative begins with a 1% reduction for 2013, further reductions are anticipated for 2014 and 2015. There is also the potential of an expansion to the current program over and above the three core measures. BESLER CONSULTING also recommends that hospitals identify all planned and unrelated readmissions and identify these cases as errors during the 30 day comment period. It is unclear what appeal rights may apply outside of this 30 day review period, so hospitals should take the opportunity to raise any concerns now. Hospitals focused on the reduction of readmissions are best positioned to limit the financial impact of this program.

BESLER Consulting has been monitoring the readmission reduction program and we are prepared to assist you in the analysis and validation of your data. If you need assistance or have questions in general, please contact Kathy Ruggieri at (732) 392-8227 or kruggieri@besler.com.