Association for Public Policy Analysis & Management

This article presents results from a nationwide assessment of the impact of the Hospital Readmission Reduction Program (HRRP) on inpatient care and mortality. The HRRP required the Centers for Medicare and Medicaid Services to reduce payments to hospitals with excess hospital readmissions.  I use a regression kink design to estimate the effect of this provision on readmission rates, inpatient expenditures, patient characteristics, and mortality. Estimates indicate that penalized hospitals increased total spending on HRRP patients by 3% and laboratory tests by 6%. Increases were higher among hospitals with a higher Medicare share and among hospitals penalized primarily for excess heart attack readmissions. I find that this additional care had no impact on mortality, but that it did lead to a reduction in readmission rates. Evidence also suggests that the penalized hospitals increased the quantity of care for other diagnoses common among HRRP patients but not named in the law. There is no evidence that hospitals reduced the quantity of care for patients with diagnoses outside the HRRP.  This result is inconsistent with the hypothesis that hospitals substitute resources from diagnosis groups outside the HRRP and into diagnosis groups in the HRRP.