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Commonwealth Fund: Safety-net hospitals face disproportionate impact on reimbursements


By: 
Kelsey Brimmer

Many safety-net hospitals that treat a higher number of lower-income patients than other hospitals are worried that the Hospital Readmissions Reduction Program (HRRP) will have a disproportionate impact on their reimbursements due to their traditionally higher readmission rates. A new Commonwealth Fund analysis confirms those fears.

The Commonwealth Fund study used publicly reported 30-day hospital readmission rate data for 2,200 facilities to examine whether safety-net hospitals are more likely to have higher readmission rates than other hospitals and found that safety nets are 30 percent more likely to have 30-day readmission rates above the national average. Due to these higher rates, safety-net hospitals will therefore be disproportionately impacted by the HRRP, the analysis concluded.

While the Medicare readmission rate penalties are capped at 1 percent of the total amount a hospital would normally receive in Medicare payments for the year (increasing to 3 percent in 2015) many safety nets are already struggling financially, according to the report.

“This concerns us because safety nets deal with a particularly vulnerable population,” said Anthony Shih, executive vice president for programs at The Commonwealth Fund and co-author of the report. “And they generally don’t have the resources to help reduce the readmission rates.”

In the report, Shih and his co-authors suggest three main ways healthcare policy makers can help this situation for safety-net hospitals. Shih said that policy makers can help by targeting quality improvement initiatives to these hospitals, ensuring that broader delivery system improvements involve safety-net hospitals and care delivery systems and incentivizing improvements in care coordination and quality through bundled payment models that feature higher reimbursement levels for organizations caring for vulnerable populations.

“While we don’t believe that the actual readmission rate should be risk adjusted for the social determinates of health – which is why a lot of the rates are higher in safety-net populations – we believe that the payments themselves should be adjusted for these hospitals,” said Shih. “We do want to acknowledge that it costs more resources to take care of these patients with disproportionate needs, which is why you risk adjust the payments for these institutes that take care of these patients.”

Shih added that the resources available through the Affordable Care Act, such as quality improvement programs and payment delivery system reforms, “really need to target and reach the safety-net providers.”


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