Mixed messages to consumers from Medicare: Hospital Compare grades versus value-based payment penalty

Abstract

Objectives: To (1) compare the 2015 hospital grades reported on Medicare's Hospital Compare website for heart failure (HF) and acute myocardial infarction (AMI) readmissions with the HF- and AMI-specific scores for excess readmissions used to assess Medicare readmission penalties and (2) assess how often hospitals were penalized for excess readmissions in only 1 or 2 conditions, given that hospitals received a penalty impacting all Medicare payments based on an overall readmission score calculated from 5 conditions (HF, AMI, pneumonia, chronic obstructive pulmonary disease, and total hip/knee arthroplasty).

Study design: Retrospective secondary data analysis.

Methods: Descriptive analyses of hospital-specific, condition-specific grades and excess readmission scores and hospital-level penalties downloaded from Hospital Compare.

Results: Of the 2956 hospitals that had publicly reported HF grades on Hospital Compare, 91.9% (2717) were graded as "no different" than the national rate for HF readmissions, which included 48.6% that were scored as having excessive HF admissions, and 87% received an overall readmission penalty. Of 120 (4.1%) hospitals graded as "better" than the national rate for HF, none were scored as having excessive HF readmissions and 50% were penalized. AMI data yielded similar results. Among 2591 hospitals penalized for overall readmissions, 26.6% had only 1 condition with excess readmissions and 27.5% had 2 conditions.

Conclusions: Many hospitals with an HF and AMI readmission grade of "no different" than the national rate on Hospital Compare received penalties for excessive readmissions under the Hospital Readmissions Reduction Program. The value signal to consumers and hospitals communicated by grades and penalties is therefore weakened because the methods applied to the same hospital data produce conflicting messages of "average grades" yet "bad enough for penalty."

Figure 1.

Excess Readmission Ratio by Hospital Compare Grade and Overall Readmission Penalty: Heart Failure Note: The Excess Readmission Ratio (ERR; y-axis) refers to the ratio of a hospital’s risk-adjusted “predicted” readmissions for the targeted condition to the number of “expected” readmissions for that hospital’s patient case-mix at an average hospital nationwide. ERRs > 1 (above dashed line) indicate excessive readmissions. Hospital Compare grades (x-axis) are assigned relative to the National Rate. Risk-adjusted models are used to provide an interval estimate (95% confidence interval) for the hospital’s readmission rate for each targeted condition. Hospitals whose interval estimates include the National Rate for the condition are graded as “No Different”; those whose interval estimate is entirely below the National Rate are graded as “Better” and those whose interval estimate is entirely above the National Rate as “Worse.” Readmission penalties (denoted by dot color) are assigned based on ERRs across all conditions. The size of the penalty (not shown) can range from 0 to 3% of total Medicare reimbursements, and is a function of aggregate ERRs, cost of index admission and hospital’s base DRG payment.

Figure 2.

Excess Readmission Ratio by Hospital Compare Grade and Overall Readmission Penalty: Acute Myocardial Infarction Note: Acute Myocardial Infarction: AMI. The Excess Readmission Ratio (ERR; y-axis) refers to the ratio of a hospital’s risk-adjusted “predicted” readmissions for the targeted condition to the number of “expected” readmissions for that hospital’s patient case-mix at an average hospital nationwide. ERRs > 1 (above dashed line) indicate excessive readmissions. Hospital Compare grades (x-axis) are assigned relative to the National Rate. Risk-adjusted models are used to provide an interval estimate (95% confidence interval) for the hospital’s readmission rate for each targeted condition. Hospitals whose interval estimates include the National Rate for the condition are graded as “No Different”; those whose interval estimate is entirely below the National Rate are graded as “Better” and those whose interval estimate is entirely above the National Rate as “Worse.” Readmission penalties (denoted by dot color) are assigned based on ERRs across all conditions. The size of the penalty (not shown) can range from 0 to 3% of total Medicare reimbursements, and is a function of aggregate ERRs, cost of index admission and hospital’s base DRG payment.