New Data Shows Affordable Care Act Reforms Are Leading to Lower Hospital Readmission Rates for Medicare Beneficiaries

Being re-hospitalized shortly after being discharged is an unpleasant experience for patients. It’s also costly for patients, insurance companies and other payers, and—if the patient is a Medicare beneficiary—taxpayers, too. High readmission rates – the percentage of inpatient discharges where a re-hospitalization occurred – can also be a sign of low-quality care. It often means there may have been unclear instructions to patients or lack of follow-up care.

While many people only understand the Affordable Care Act as a plan to expand health insurance, it includes many provisions to slow the growth in health costs. Why does this matter? The consistent increase in health care costs over the past several decades puts a strain on the national pocketbook and that of millions of families who faced rapidly increasing premiums.

And we’re seeing results. Health care price inflation is now at its lowest level in 50 years, and, according to the most recent projections, health care spending grew at the slowest rate on record over the last three years. Real per person spending grew at just a 1.3 percent rate, and this slow growth was seen in Medicare, Medicaid and private insurance. Inflation for health care goods and services is currently running at just 1 percent on a year-over-year basis.

As just one of the many reforms to slow health care costs and improve patient quality, over the past several years the Centers for Medicare & Medicaid Services (CMS) and others have focused on reducing avoidable readmissions, including hospital-level improvement initiatives, community-based care transitions programs, and broad-based payment incentives like the Hospital Readmissions Reduction Program.

The all-cause 30-day hospital readmission rate among Medicare fee-for-service beneficiaries held constant from 2007 to 2011. Earlier this year, a group of researchers at CMS published a study revealing good news about hospital readmissions: In 2012, when the Affordable Care Act’s reforms focused on reducing avoidable readmissions kicked in, this rate began to fall. After holding steady at 19 percent from 2007 to 2011 the all-cause 30-day hospital readmission rate among Medicare fee-for-service beneficiaries fell to 18.5 percent in 2012.

We are pleased to report that the decline in readmission rates is continuing into 2013. Preliminary claims data shows the Medicare readmission rate averaged less than 18 percent over the first eight months of 2013. This translates into an estimated 130,000 fewer hospital readmissions between January 2012 and August 2013.

Line chart. Shows annual readmission rates holding steady at 19 percent from 2007-2011, then declining to 18.5 percent in 2012 and 18 percent for the first 8 months of 2013.

Source: Office of Information Products and Data Analytics, CMS

In addition, this trend is widespread across the country. To see how rates are changing at the local level, we compared readmission rates over the first eight months of 2013 to the average rates for 2007-2011 in local health care markets. We found that this year’s readmission rates were at least a half a percentage point lower in 76 percent of local markets (232 of the 306). Fewer than 10 percent of local markets had higher rates. Using the same comparison, readmission rates also went down in 49 states and the District of Columbia. The only state that did not see a decrease – Utah – already had one of the lowest readmission rates in the country.

Percentage Point Change in Medicare Readmission Rates by HRR,
January-August 2013 to 2007-2011 Average

Map of the United States.  Shows readmission rates declined in the vast majority of HRRs and improvement was widespread throughout the country.  Rates increased in a small number of HRRs with increases not focused in particular areas of the country.

Source: Office of Information Products and Data Analytics, CMS

We can see that the decline in all-cause readmission rates that began in 2012 is continuing this year on a widespread basis. While we continue to monitor and study these encouraging reductions, what is clear is that intense focus on reducing hospital re-admissions through improved processes of care and new tools in the Affordable Care Act are having a demonstrably positive impact.

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