Reducing Avoidable Hospital Readmissions to Create a Better, Safer Health Care System

The unfortunate circumstance of a friend or family member having to return to the hospital after recently being treated is all too common. Potentially avoidable hospital readmissions within 30 days of discharge are estimated to account for more than $17 billion in Medicare expenditures annually.¹ Not only are readmissions costly, but they can be a sign of poor quality care. Many readmissions can be avoided through changes in hospital care, including improving discharge planning and making sure that patients have follow up appointments.

To address this problem, the Affordable Care Act created the Hospital Readmissions Reduction Program, which adjusts payments for hospitals with higher than expected 30-day readmission rates for targeted clinical conditions such as heart attacks, heart failure, and pneumonia. The Centers for Medicare & Medicaid Services has also undertaken several major quality improvement initiatives, such as the Partnership for Patients, all targeted at improving the quality of care for individuals as they move from one health care setting to another and reducing unnecessary hospitalizations.

And the data show it’s working. Between April 2010 and May 2015, we estimate that approximately 565,000 readmissions were prevented across all conditions, compared to the readmission rate in the year prior to the passage of the Affordable Care Act (April 2009 to March 2010). That’s 565,000 times that a patient didn’t have to experience an extra hospital stay.

A new study by Department of Health and Human Services researchers published today in the New England Journal of Medicine shows that readmissions fell sharply following enactment of the Affordable Care Act². The study found that, as shown in Figure 1, readmission rates fell more sharply for conditions that were targeted by the Hospital Readmissions Reduction Program, including heart attack, heart failure, and pneumonia, than for other conditions requiring hospitalizations, such as surgeries and diabetes. Conditions that weren’t targeted by the Hospital Readmissions Reduction Program probably saw spillover benefits from actions hospitals took in response to new incentives. For both the targeted conditions and other hospitalizations, the drop in readmissions mostly occurred during the period between the enactment of the Affordable Care Act in March 2010 and the start of the Hospital Readmissions Reduction Program in October 2012, when hospitals would have taken action to avoid facing penalties. Although penalties began in October 2012, hospitals had incentives to improve their performance well before the payment adjustment occurred. 

Figure 1. Medicare readmission rates for targeted and non-targeted conditions

Several recent articles have questioned whether hospitals are avoiding readmission penalties by changing the way those who return to the hospital are classified instead of actually taking steps to improve care and reduce avoidable readmissions.^{3, 4, 5} Specifically, they have claimed that hospitals are now classifying more return visits to the hospital as “observation stays,” short-term visits that are meant to be opportunities for hospitals to monitor and care for patients in outpatient status and that don’t count against the Affordable Care Act’s readmissions penalties.

The new research shows that this isn’t the case. The number of observation stays are very small compared to readmissions and have increased steadily since at least 2008, with no acceleration after the Affordable Care Act was enacted. More importantly, as Figure 2 shows, total returns to the hospital within 30 days – a measure that includes both readmissions and observation stays – have shown a similar downward trend as readmissions alone.

Figure 2. Rates of any return to the hospital (readmission or observation stay) for targeted and non-targeted conditions before and after the passage of the Affordable Care Act

The Hospital Readmissions Reduction Program is just one part of the Administration’s broader strategy to promote better care, smarter spending and healthier people by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality. Other initiatives include Accountable Care Organizations, as well as efforts by Quality Improvement Organizations and Hospital Engagement Networks, which funded quality improvement expert consultants to work with over 230 communities of providers, including 3200 hospitals, between 2010 and 2013 and will continue to provide assistance through 2019.