News: MedPAC analyzes readmissions reduction program, recommends increased E/M rates

Examining readmission and mortality changes from 2010 to 2016, the Medicare Payment Advisory Commission (MedPAC) found the Hospital Readmissions Reduction Program (HRRP) contributed to a significant decline in readmission rates without increasing ED visits or observation stays, or adversely impacting mortality rates.

MedPAC’s findings contradict those found in a study by the New England Journal of Medicine, published earlier this month.

The information released in MedPAC’s semiannual report to Congress, addressed the effect of the HRRP, the implications of raising ambulatory evaluation and management (E/M) rates, and methods for ensuring appropriate access to hospital ED services, Revenue Cycle Advisor reported.

MedPAC’s report summarized the short-term financial impact of the HRRP—a pay-for-performance program intended to reduce readmission rates by lowering payments to IPPS hospitals for not meeting certain metrics. But after the program’s 2010 implementation, researchers expressed concern that reducing readmissions would lead patients to non-inpatient services, increasing observation stays or ED use, according to Revenue Cycle Advisor. They also feared that the intentional reduction in avoidable readmissions would reduce necessary readmissions, resulting in higher mortality for heart failure patients.

According to MedPAC, ambulatory E/M services, such as hospital outpatient visits, are underpriced relative to other visits. MedPAC suggests increasing payment rates for ambulatory E/M services provided by all clinicians, regardless of specialty.

This adjustment to the fee schedule would “address several years of passive devaluation of ambulatory E/M services,” according to the report. 

Editor’s note: This article originally appeared in Revenue Cycle Advisor. To read about the readmissions and observation stays study from the New England Journal of Medicine, click here. To read about the effect CDI can have on readmission metrics, click here. To read about general E/M documentation principles, click here.