Including socioeconomic status reduces readmission penalties to safety-net hospitals

Medicare’s Hospital Readmissions Reduction Program (HRRP) financially penalizes “excessive” postoperative readmissions. Concerned with creating a double standard for institutions treating a high percentage of economically vulnerable patients, Medicare elected to exclude socioeconomic status (SES) from its risk-adjustment model. However, recent evidence suggests that safety-net hospitals (SNHs) caring for many low-SES patients are disproportionately penalized under the HRRP. We sought to simulate the impact of including SES-sensitive models on HRRP penalties for hospitals performing lower extremity revascularization (LER). This is a retrospective, cross-sectional analysis of national data on Medicare patients undergoing open or endovascular LER procedures between 2007 and 2009. We used hierarchical logistic regression to generate hospital risk-standardized 30-day readmission rates under Medicare’s current model (adjusting for age, sex, comorbidities, and procedure type) compared with models that also adjust for SES. We estimated the likelihood of a penalty and penalty size for SNHs compared with non-SNHs under the current Medicare model and these SES-sensitive models. Our study population comprised 1708 hospitals performing 284,724 LER operations with an overall unadjusted readmission rate of 14.4% (standard deviation: 5.3%). Compared with the Centers for Medicare and Medicaid Services model, adjusting for SES would not change the proportion of SNHs penalized for excess readmissions (55.1% vs 53.4%, P = .101) but would reduce penalty amounts for 38% of SNHs compared with only 17% of non-SNHs, P < .001. For LER, changing national Medicare policy to including SES in readmission risk-adjustment models would reduce penalty amounts to SNHs, especially for those that are also teaching institutions. Making further strides toward reducing the national disparity between SNHs and non-SHNs on readmissions, performance measures require strategies beyond simply altering the risk-adjustment model to include SES.