The Hospital Readmissions Reduction Program and Observation Hospitalizations

The Centers for Medicare & Medicaid Services (CMS) Hospital Readmissions Reduction Program (HRRP) penalizes hospitals having excess inpatient rehospitalizations within 30 days of index inpatient stays for targeted conditions. Observation hospitalizations are increasing in frequency and may clinically resemble inpatient hospitalizations, yet HRRP excludes observation in index and 30-day rehospitalization counts. Using 100% 2014 Medicare fee-for-service claims and CMS’s 30-day rehospitalization methodology, this study from HIP Investigator Dr. Christie Bartels modeled how observation hospitalizations impact HRRP metrics when counted as index (denominator) and 30-day (numerator) rehospitalizations.

The study found that by ignoring observation hospitalizations in 30-day HRRP quality metrics, nearly one of five potential rehospitalizations is missed. Given hospital variability in observation use, these findings are critically important to accurately understand re-hospitalization risk and indicate that HRRP may not be fulfilling its intended purpose.