Senate bill seeks to make patient socioeconomic status a factor in assessing readmission penalties

If enacted, the bi-partisan Senate bill would change Medicare’s Hospital Readmissions Reduction Program to avoid possibly unfairly penalizing hospitals that treat a greater percentage of poor, Medicare and Medicaid dual-eligible patients.

The bill introduced by Sen. Joe Manchin (D-W.Va.) with co-sponsors Sens. Bill Nelson (D-Fla.), Roger Wicker (R-Miss.) and Mark Kirk (R-Ill.) is similar to but somewhat less specific than a House bill introduced March 11 by Rep. James Renacci (R-Ohio). That bill has racked up more than 80 co-sponsors so far representing both parties, but is stuck in the Ways and Means Committee for the time being.

The American Hospital Association (AHA) has endorsed both the as yet un-numbered Senate bill and Rep. Renacci’s Beneficiary Equity in the Hospital Readmission Program Act (H.R. 4188) for attempting to address what the association says is a serious problem with the Hospital Readmissions Reduction Program. While the program uses risk adjustment to avoid penalizing hospitals that treat the sickest Medicare beneficiaries, the U.S. Department of Health and Human Services (HHS) has said that it does not have the legal leeway to also introduce a risk adjustment factor based on a socioeconomic indicator such as percentage of Medicare and Medicaid dual eligible beneficiaries treated.

According to the AHA, holding hospitals that treat more poor and disabled patients to the same readmissions standard that hospitals that have an overall wealthier patient population is unfair because the patients with low socioeconomic status are much more likely to have low health literacy, poor community support, inadequate housing, problems covering the cost of their post-discharge medications, and other factors that increase readmission risk but which hospitals have little control over. Research backs them up. In April, a study published in Health Services Research found that more than half (58 percent) of the national variation in hospital readmission rates could be explained by the demographic and socioeconomic makeup of the county where the hospital was located.

To fix this, H.R. 4188 would specifically instruct HHS to create a risk factor based on the percentage of dual eligible treated by the hospital. That risk factor would then be factored in to calculating readmission penalties. In addition, the bill would require excluding from the readmission improvement program’s calculations readmissions for patients whose original hospital stays were related to transplants, end-stage renal disease (ESRD), burns, trauma, psychosis or substance abuse. Managing the individual readmission risk of these complex patients may be quite hard or even impossible through the types of system changes, like better care coordination, that hospitals have control over. Finally, the bill would require HHS to study the 30-day readmission threshold for assessing penalties to ensure it is not just an arbitrary measure and actually has clinical validity.

Because the readmission payment penalty is set to increase to 3 percent from the current 2, there is urgency to get something done to avoid further damaging finances at hospitals that treat more patients with low socioeconomic status. However, moving a bill through Congress is very difficult.

Last week, Rep. Renacci and 33 of H.R. 4188’s co-sponsors wrote to incoming HHS Secretary Sylvia Burwell and Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner, to formally ask them to work with Congress to make sure the effort to increase focus on lowering readmission rates at all hospitals doesn’t end up harming the hospitals that treat more low-income and disabled seniors. A regulatory fix, if possible, could be faster than a legislative one.