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Medicare's Hospital Readmissions Reduction Program in Surgery May Disproportionately Affect Minority-serving Hospitals

Shih, Terry MD*; Ryan, Andrew M. PhD; Gonzalez, Andrew A. MD, JD, MPH*; Dimick, Justin B. MD, MPH*

doi: 10.1097/SLA.0000000000000778

Objective: To project readmission penalties for hospitals performing cardiac surgery and examine how these penalties will affect minority-serving hospitals.

Background: The Hospital Readmissions Reduction Program will potentially expand penalties for higher-than-predicted readmission rates to cardiac procedures in the near future. The impact of these penalties on minority-serving hospitals is unknown.

Methods: We examined national Medicare beneficiaries undergoing coronary artery bypass grafting in 2008 to 2010 (N = 255,250 patients, 1186 hospitals). Using hierarchical logistic regression, we calculated hospital observed-to-expected readmission ratios. Hospital penalties were projected according to the Hospital Readmissions Reduction Program formula using only coronary artery bypass grafting readmissions with a 3% maximum penalty of total Medicare revenue. Hospitals were classified into quintiles according to proportion of black patients treated. Minority-serving hospitals were defined as hospitals in the top quintile whereas non–minority-serving hospitals were those in the bottom quintile. Projected readmission penalties were compared across quintiles.

Results: Forty-seven percent of hospitals (559 of 1186) were projected to be assessed a penalty. Twenty-eight percent of hospitals (330 of 1186) would be penalized less than 1% of total Medicare revenue whereas 5% of hospitals (55 of 1186) would receive the maximum 3% penalty. Minority-serving hospitals were almost twice as likely to be penalized than non–minority-serving hospitals (61% vs 32%) and were projected almost triple the reductions in reimbursement ($112 million vs $41 million).

Conclusions: Minority-serving hospitals would disproportionately bear the burden of readmission penalties if expanded to include cardiac surgery. Given these hospitals' narrow profit margins, readmission penalties may have a profound impact on these hospitals' ability to care for disadvantaged patients.

We evaluate national Medicare data for isolated coronary artery bypass grafting patients from 2008 to 2010 to project financial penalties for when the Hospital Readmission Reduction Program is expanded to surgery. Minority-serving hospitals were almost twice as likely to be penalized than non–minority-serving hospitals with triple the amount of penalties collected.

*Center for Healthcare Outcomes & Policy, University of Michigan, Ann Arbor, MI

Division of Outcomes and Effectiveness Research, Department of Public Health, Weill Cornell Medical College, New York, NY.

Reprints: Terry Shih, MD, Center for Healthcare Outcomes & Policy, University of Michigan, 2800 Plymouth Rd, Bldg 16, Office 100N-07, Ann Arbor, MI 48109. E-mail:

Disclosure: Supported by grants to Dr Shih and Dr Gonzalez from the National Institutes of Health (5T32HL07612309 and 5T32HL07612308), Dr Ryan from the Agency for Healthcare Research and Quality (K01HS018546-01), and Dr Dimick from the National Institute of Aging (R01AG039434). The views expressed herein do not necessarily represent the views of the United States Government. Dr Dimick is a consultant and equity owner in ArborMetrix, Inc, which provides software and analytics for measuring hospital quality and efficiency. The company had no role in the study herein.

The other authors declare no conflicts of interest.

Copyright © 2015 Wolters Kluwer Health, Inc. All rights reserved.