SES Adjustment for Readmission Penalty

CMS started implementing the Hospital Readmissions Reduction Program (HRRP) on October 1, 2013, penalizing hospitals with higher readmission rates. While readmission rates were adjusted for several factors, socioeconomic status (SES) was missing leading to protests and lobbying by hospitals caring for poor people. Hence, in 2016 the US Congress directed the CMS to to adjust for low SES. In response, CMS has made following adjustments to HRRP.

1. Make five peer groups of hospitals based on SES. SES will be determined by the proportion of “dual eligible” Medicare beneficiaries (those who are also eligible for full Medicaid benefits).
2. Calculate the median excess readmission ratios (ERRs) within each peer group to adjust for penalties
3. Scale penalties using the budget neutrality factor.

Fuller and colleagues analyzed the effect of SES adjustments (as outlined above) and examined the effect on the number and distribution of penalized hospitals. An interesting read!