Modified HRRP benchmark may affect provider reimbursements

The 21st Century Cures Act was passed into law in 2016 with the express purpose of decreasing hospital readmissions. In connection with the legislation, the Centers for Medicare and Medicaid Services (CMS) announced changes to the Hospital Readmission Reduction Program (HRRP) in fiscal year (FY) 2018, finalizing those changes with the release of the FY 2019 Inpatient Prospective Payment System (IPPS) final rule. The program has been modified to incorporate measurements of the socioeconomic status of patients served by each hospital.

CMS has altered the HRRP benchmark that readmission rates are measured against. The new rule groups hospitals into “peer groups” that are defined in terms of the proportion of patients with dual eligibility for both Medicare and Medicaid. Rather than one benchmark applying across the board to all hospitals, different benchmarks will now apply for each peer group.

The changes to HRRP starting in FY 2019 could have significant monetary impacts to a provider’s reimbursement. Milliman’s James Lucas illustrates the effects in his article “Fiscal year 2019 HRRP impact to hospitals.”

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