Association of Stratification by Dual Enrollment Status With Financial Penalties in the Hospital Readmissions Reduction Program

IMPORTANCE: Beginning in fiscal year 2019, Medicare’s Hospital Readmissions Reduction Program (HRRP) stratifies hospitals into 5 peer groups based on the proportion of each hospital’s patient population that is dually enrolled in Medicare and Medicaid. The effect of this policy change is largely unknown. OBJECTIVE: To identify hospital and state characteristics associated with changes in HRRP-related performance and penalties after stratification. DESIGN, SETTING, AND PARTICIPANTS: A cross-sectional analysis was performed of all 3049 hospitals participating in the HRRP in fiscal years 2018 and 2019, using publicly available data on hospital penalties, merged with information on hospital characteristics and state Medicaid eligibility cutoffs. EXPOSURES: The HRRP, under the 2018 traditional method and the 2019 stratification method. MAIN OUTCOMES AND MEASURES: Performance on readmissions, as measured by the excess readmissions ratio, and penalties under the HRRP both in relative percentage change and in absolute dollars. RESULTS: The study sample included 3049 hospitals. The mean proportion of dually enrolled beneficiaries ranged from 9.5% in the lowest quintile to 44.7% in the highest quintile. At the hospital level, changes in penalties ranged from an increase of $225 000 to a decrease of more than $436 000 after stratification. In total, hospitals in the lowest quintile of dual enrollment saw an increase of $12 330 157 in penalties, while those in the highest quintile of dual enrollment saw a decrease of $22 445 644. Teaching hospitals (odds ratio [OR], 2.13; 95% CI, 1.76-2.57; P