The notion that hospitals can reduce readmissions, and that punishing them for “excess” readmissions will get them to do that, became conventional wisdom during the 2000s on the basis of very little evidence. The Medicare Payment Advisory Commission (MedPAC) urged Congress to enact the Hospital Readmissions Reduction Program (HRRP) beginning in 2007, and in 2010 Congress did so. State Medicaid programs and private insurers quickly adopted similar programs.
The rapid adoption of readmission-penalty programs without evidence confirming they can work has created widespread concern that these programs are inducing hospitals to increase utilization of emergency rooms and observation units to reduce readmissions within 30 days of discharge (the measure adopted by the Centers for Medicare and Medicaid Services [CMS] in its final rule on the HRRP), and this in turn may be harming sicker patients. Determining whether hospitals are gaming the HRRP and other readmission-penalty schemes by diverting patients to ERs and observation units (and perhaps by other means) should be a high priority for policy-makers.