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June 15, 2018

Are hospitals actually cutting readmissions—or is that just fuzzy math? A new study deepens the controversy.

Daily Briefing

    Read Advisory Board's take on this story.

    Data largely suggest that efforts to curb hospital readmission rates under the Affordable Care Act (ACA) are succeeding, but those declines all but disappear when observation stays are factored in to the equation, according to a research perspective recently published in the New England Journal of Medicine.

    Case study: Learn how MemorialCare streamlined low-risk patient throughput

    The ACA's Hospital Readmissions Reduction Program (HRRP), implemented in 2012, aims to reduce the number of patients who are readmitted to the hospital within 30 days of discharge for several conditions. Several studies in recent years have suggested the program is working as intended, but the new research suggests the program instead might be shifting patients who would otherwise be admitted to the hospital into "observation stays."

    Study details

    For the study, Brad Wright, an associate professor of health management and policy at University of Iowa in Iowa City, and Amber Sabbatini, an assistant professor of emergency medicine at the University of Washington School of Medicine, examined nine years' worth of claims data for commercially insured patients.

    The researchers found that inpatient readmissions fell by 2.3% during the study period. However, they said the reduction was much lower when they factored in observation stays, which typically last fewer than three nights and are considered outpatient services, meaning they are not included in HRRP's methodology.

    In an interview with HealthLeaders Media, Wright said the study showed "a very small reduction in readmissions." He said, "That is not just looking at people who were hospitalized who bounced back and now we are putting them all on observation. That takes away some of the reduction in readmissions but not all of it. It's when you also include the observation stays as initial index events. That's where the wipe out happens."

    As a result, the researchers said the reduction in readmissions seen in recent years might not represent actual improvements, and suggest a potential gap in readmission measures—and hospital quality measures more broadly.


    In the interview, Wright said the researchers suspect "a confluence of events" is contributing to the increase in observation stays.

    "If you look at just the inpatient events, you see a reduction in those readmissions," Wright said, "Something seems to be working on that side of things. But it's not being applied to patients in observation." He added, "If we are trying to incentivize quality the way we figured out to do it, we should include this group of patients as well."

    Wright said one of the events is "the increase in the use of observations, which is happening for a host of reasons alongside the readmissions reduction program." Wright said another "piece ... is audits from Medicare contractors. If they are denying payments for shorter inpatient stays that they think are inappropriate and should have been handled as observations, hospitals obviously don't want to forego payment. So, there is pressure to put more patients in observation."

    According to Wright, "From the clinical side, you've given physicians a space where, as technology has improved, patients who would have at one time been handled in the inpatient setting can now be handled appropriately in an outpatient observation setting." Wright said, "The other piece is that you create a space for physicians to ensure patient safety. Patients in the past would have been discharged home. You now have created an avenue for them to be kept in the hospital to rule out potentially life-threatening causes for whatever is going out with them."

    Wright said, "We're not trying to wade into the fray about the validity of readmissions as a quality measure. We're saying that for better or worse this is a metric that is widely used."

    However, Wright said, "In my own personal opinion, I do think that readmissions are an important thing to measure. We have created a policy of paying hospitals a capitated amount. That puts pressure on them to get patients out of the hospital more quickly. So it's important that the pendulum doesn't swing too far in the other direction, and you end up playing policy whack-a-mole and push it back in the other direction" (Marselas, McKnight's Long-Term Care News, 6/1; Commins, HealthLeaders Media, 5/31).

    Advisory Board's take

    Megan TooleyJulie Bass

    Megan Tooley, Practice Manager, Cardiovascular Roundtable, and Julie Bass, Consultant, Cardiovascular Roundtable

    It comes as no surprise to us that observation stays have gone up in recent years. As hospitals have faced scrutiny over readmissions and short-stay inpatient cases (due to regulations such as the two-midnight rule), observation has become increasingly appealing.

    Hospitals often use observation stays either to determine whether patients should be admitted as an inpatient or can be treated quickly and discharged. However, while observation is great in theory, it is often overused. Evidence has shown that overuse can lead to inefficiency in care and put greater financial responsibility on patients.

    In our work with cardiovascular (CV) leaders, we've discovered that many want to lower their program's number of unnecessary observation stays. However, it's often difficult for CV leaders to strike the balance between leveraging observation as a way to determine patients' next steps while also caring for them in the most efficient way.

    Yet the right strategies are out there. In speaking with programs that have optimized low-risk CV patient throughput—and figured out how observation best fits in—we've heard effective strategies that include:

    • pushing for earlier identification of patients appropriate for direct discharge from the ED;
    • providing decision support for determining necessary diagnostics and testing; and
    • streamlining observation operations through timely rounding.

    For instance, one Cardiovascular Roundtable member organization, MemorialCare in California, used our research on CV short-stay patient management to implement a new chest pain protocol in their ED— allowing some patients to avoid an observation stay altogether. Within six months of implementation, the new protocol reduced inappropriate testing and resource utilization, decreased the length and number of observation stays, improved care coordination, and reduced the 30-day ED return rate by 70%. To learn more about how MemorialCare streamlined low-risk patient throughput, read our case study.  

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