AHA Rejects Proposed Readmission Penalties

The American Hospital Association (“AHA”) expressed staunch opposition in a 62-page letter to the Centers for Medicare & Medicaid Services (“CMS”) regarding CMS’s proposed rules levying a penalty up to 1% of reimbursement for higher readmission rates. Part of the reasoning behind the AHA’s opposition is the fact that the proposed rule does not exclude all planned and unrelated readmissions from being counted against the hospitals affected by the penalty rule.

 Additionally, the formula can be analyzed as being discriminatory against hospitals with higher percentage of non-white patients, and a higher percentage of “dual eligibles” that are covered by both Medicaid and Medicare.

Also, the AHA states that the rule places hospitals that receive disproportionate share funding or DSH payments at a disadvantage because these facilities have more underinsured and uninsured patients. The AHA states that these are readmissions among such patient populations that are “beyond the hospitals’ control.” Another AHA concern is a 1.9% negative payment adjustment to account for case-mix coding between 2007 to 2009, which CMS indicates made it appear that certain patients were more expensive to care for than they actually were. 

On the proposed rule’s language on readmissions, the AHA has urged CMS to make calculation changes to (1) properly adjust for patient characteristics (dual-eligible status and race/ethnicity); (2) differentiate between planned and unplanned readmissions; (3) differentiate between related and unrelated readmissions; and (4) exclude extreme circumstances (transplant, end-stage renal disease, burn, trauma, psychosis and substance abuse.)

Section 3025 of the Patient Protection and Affordable Care Act specifically calls for negative payment adjustments for higher rates of readmissions take into consideration “exclusions for readmissions that are unrelated to the prior discharge (such as a planned readmission or transfer to another applicable hospital).”

The AHA further states that the measures that gauge whether a hospital has high rates of readmissions are unreliable for a majority of hospitals.  The AHA also wants CMS to allow hospitals to designate during the discharge process which admissions would include a planned readmission.

The AHA’s discussion of dual-eligibles in the letter includes two charts showing large differences in readmission rates between hospitals that serve more dually-eligible patients compared with non-dually eligible patients, with the hospitals with more dual eligibles having higher readmission rates. The charts also show the difference between hospitals stratified by white versus non-white beneficiaries for each of three disease categories covered under the readmission penalty: heart attack, pneumonia and heart failure.