# Addressing Medicare Hospital Readmissions

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/crs%3AR42546

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** May 25, 2012
- **Citation:** R42546

## Text

Addressing Medicare Hospital Readmissions
(name redacted)
Specialist in Health Care Financing
(name redacted)
Research Associate
May 25, 2012

Congressional Research Service
7-....
www.crs.gov
R42546

CRS Report for Congress
Prepared for Members and Committees of Congress

Addressing Medicare Hospital Readmissions

Summary
Nearly 20% of Medicare beneficiaries aged 65 and over who were admitted to a hospital in 2005
were readmitted within 30 days following their initial discharge. The Medicare Payment Advisory
Commission (MedPAC) estimated that these readmissions cost the Medicare program as much as
$15 billion per year and that perhaps as much as two-thirds of these readmissions may be
preventable. Many policymakers believe that different care transition programs coupled with
payment reforms can constrain hospital readmissions among Medicare’s fee-for-service (FFS)
beneficiaries, could improve patient care, and may generate cost savings for the program.
Hospital readmissions are associated with a number of factors and are not necessarily attributable
to problems with the quality of patient care, but strong evidence indicates specific interventions to
better manage care transitions at the time of hospital discharge could reduce readmissions for
certain conditions.
Medicare is building on past work by Quality Improvement Organizations (QIOs) to help
providers identify the underlying causes of hospital readmissions in their communities and then
develop different strategies to prevent those rehospitalizations. In their newest round of Medicare
contracts, which began August 1, 2011, QIOs will work to reduce readmissions 20% by 2013 and
provide technical assistance to participants in the Community Care Transitions Program (CCTP),
a $500 million, five-year demonstration program established by the Patient Protection and
Affordable Care Act (ACA as amended, P.L. 111-148) to help participating hospitals improve
discharge procedures and manage patients’ care transitions more effectively. CCTP may be
continued or expanded if the Office of the Actuary (OACT) certifies that the expansion would
reduce Medicare spending without reducing quality. By mid-March 2012, 30 sites had been
selected.
As well as establishing CCTP, ACA included several payment initiatives to encourage FFS
providers, particularly hospitals, to work to minimize rehospitalizations and coordinate patient
care across settings. Two initiatives in particular are discussed in this report, the Hospital
Readmission Reduction Program (HRRP) and bundled payments. The HRRP will penalize an
acute care hospital with higher than expected readmission rates by as much as 1% of its base
payments starting in FY2013. Initially, the HRRP must use the three existing readmission
measures that are endorsed by the National Quality Forum (NQF) and are included on Medicare’s
Hospital COMPARE website (where publically reported data can be used to assess hospital
performance). Hospitals and industry advocates have expressed concerns about the existing
measures and the effect of the readmission penalties on certain safety-net hospitals; issues that are
likely to attract significant Congressional attention as the program’s implementation date
approaches. CMS is also exploring bundled payment methods where a single payment is made for
a defined group of services rather than individual payments for each service. The national
bundled payment pilot program established by the Center for Medicaid and Medicare Innovation
(CMMI) is a three-year project starting in 2012 that will encompass four different bundled
payment models. Changing these FFS financial incentives may be Medicare’s most effective
strategy for addressing hospital readmissions.
This report examines the complex issue of hospital readmissions along with Medicare’s ongoing
efforts and future activities to reduce unnecessary readmissions.

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Contents
Introduction...................................................................................................................................... 1
Factors that Influence Hospital Readmissions........................................................................... 4
Medicare’s Readmission Measures ........................................................................................... 7
Medicare’s Existing Payment Incentives and Conditions of Participation (COP) for
Discharge Planning............................................................................................................... 10
Current Medicare Care Transition Initiatives ................................................................................ 13
Community-Based Care Transitions Program (CCTP) for High-Risk Medicare
Beneficiaries ......................................................................................................................... 16
Forthcoming Medicare Payment Initiatives to Address Readmissions .......................................... 25
The Hospital Readmissions Reduction Program (HRRP) ....................................................... 26
National Pilot Program of Payment Bundling ......................................................................... 28
Bundled Payment for Care Improvement Initiative................................................................. 30
Concluding Observations............................................................................................................... 34

Tables
Table 1. Causes of and Tools for Addressing Readmissions .......................................................... 14
Table 2. Key Features of Five Different Care Transition Models .................................................. 20
Table 3. Differences in Eligible Services Included in the Four Bundled Payment Models ........... 31
Table 4. Characteristics of the Four Bundled Payment Models under CMMI’s Bundled
Payment Initiative ....................................................................................................................... 33
Table B-1. Jencks Readmission Framework .................................................................................. 44
Table C-1.Illustrative Calculation of Hospital HRRP Penalty ....................................................... 53

Appendixes
Appendix A. Hospital Actions That May Mitigate Against Readmissions .................................... 36
Appendix B. Different Readmission Measures and Methodologies .............................................. 43
Appendix C. Illustrative Example of the Hospital Readmission Reduction Program
Calculation .................................................................................................................................. 52

Contacts
Author Contact Information........................................................................................................... 54

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Introduction
Policy-makers and patient advocates are concerned that Medicare patients are cycling in and out
of acute care hospitals too frequently and that high hospital readmission rates may be a marker of
poor quality of care.1 Nearly 20% of Medicare beneficiaries aged 65 and over who were
hospitalized in 2005 were readmitted within 30 days following their initial hospital discharge.
The Medicare Payment Advisory Commission (MedPAC) estimated that these readmissions cost
$15 billion per year in hospital payments and that as much as two-thirds of these readmissions
may be preventable.2 As Medicare hospital stays have become shorter and beneficiaries’ postacute care becomes more fragmented, the movement of inpatients out of hospitals into other
health care settings and the transition of Medicare beneficiaries between different post-acute
providers have been identified as areas that need attention. In MedPAC’s view, existing incentives
to coordinate care across providers and settings are limited, because Medicare pays each provider
separately and because payments to these providers are not affected by their ability or efforts to
coordinate care across settings. In fact, under the existing fee-for-service (FFS) payment system,
hospitals that devote resources to reducing readmissions may suffer financially (unless other
patients fill the unused beds). Changes that address hospital readmissions among Medicare’s FFS
beneficiaries, such as placing a greater emphasis on effective discharge planning, adoption of
different care management programs, and payment reforms, may improve patient care and
generate cost savings for the program.3
The implementation of these changes becomes more complicated because readmission rates,4 the
use of post-acute services,5 and hospital utilization in general,6 vary substantially among
geographic locations. Communities with higher admission rates tend to have higher readmission
rates and perhaps a greater dependence on hospitals as a site of care.7 Also, the type of post-acute
1

Bernard Friedman and Jayasree Basu, “The Rate and Cost of Hospital Readmissions for Preventable Conditions,”
Medical Care Research and Review, vol. 61, no. 2 (June 2004), pp. 225-240.
2
MedPAC, Report to Congress: Promoting Greater Efficiency in Medicare, June 2007, Chapter 5. See
http://www.medpac.gov/documents/Jun07_EntireReport.pdf. (Subsequently referred to as MedPAC, Greater
Efficiency, June 2007.)
3
Although this report focuses on readmissions, some of these same strategies are thought to address preventable initial
admissions. In fact, hospitals with high admission rates may be most likely to have high readmission rates, suggesting
that addressing the needs of those patients most likely to be admitted may also reduce overall readmission rates. Arnold
M. Epstein, Ashish K.Jha, and John E Orav, “The Relationship Between Hospital Admission Rates and
Rehospitalizations.” New England Journal of Medicine (NEJM); vol. 365 (December 15, 2011), pp. 2287-2295.
(Subsequently referred to as Epstein et al., “The Relationship Between Hospital Admission Rates and
Rehospitalizations.”)
4
New Jersey (21.9%), Louisiana (21.9%), and Illinois (21.7%) had the highest while Oregon (15.7%), Utah (14.2%),
and Idaho (13.3%) had the lowest readmission rates for Medicare beneficiaries. Stephen F. Jencks, Mark V. Williams,
and Eric A. Coleman, “Rehospitalizations among Patients in the Medicare Fee-for-Service Program,” New England
Journal of Medicine, vol. 360 (April 2, 2009), pp. 1418-1428. (Subsequently referred to as Jencks, Williams, and
Coleman, “FFS Medicare Rehospitalizations.” NEJM, vol. 360 pp. 1418-1428) Also see Epstein et al., “The
Relationship Between Hospital Admission Rates and Rehospitalizations.”
5
MedPAC, Report to Congress: Regional Variation in Medicare Service Use, January, 2011. See
http://www.medpac.gov/documents/Jan11_RegionalVariation_report.pdf.
6
David Goodman, Elliot Fisher, and Chiang-Hua Chang, After Hospitalization: A Dartmouth Atlas Report on PostAcute Care for Medicare Beneficiaries, September 28, 2011. Available at http://www.dartmouthatlas.org/data/topic/
topic.aspx?cat=30.
7
Factors such as differences in patient status, the quality of inpatient care, and the availability of ambulatory services in
the community may also contribute to differences in readmission rates across certain regions and hospitals. Ibid., p. 6.

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care (if any) a beneficiary receives after the initial discharge can vary and may affect readmission
rates. After a hospital stay, roughly 40% of Medicare beneficiaries are discharged to a post-acute
setting providing skilled nursing care or rehabilitation services. Rates of 30-day hospital
readmissions among beneficiaries discharged to skilled nursing facilities (SNFs) have been
increasing over time; almost one-quarter of the Medicare beneficiaries discharged from a hospital
to a SNF in 2006 were readmitted to the hospital within 30 days.8 MedPAC has found that the
risk-adjusted rate at which Medicare covered SNF patients with any of five potentially avoidable
conditions (congestive heart failure, respiratory infection, urinary tract infection, sepsis and
electrolyte imbalance) were rehospitalized in 2009 was 14.2%, with considerable variation among
SNFs.9 Under current Medicare FFS payment rules, hospitals and post-acute providers lack
financial incentives to address hospital readmissions by coordinating beneficiaries’ care,
improving clinical information sharing, ensuring appropriate placement across the range of
different post-acute settings, or addressing other inefficiencies across providers.10
Hospitals must comply with standards established by Medicare’s Conditions of Participation
(COP) to bill the program. Medicare’s COP requires hospitals to have a discharge planning
process that applies to all patients. Under existing regulations, hospitals are expected to evaluate
whether a patient is expected to experience adverse health consequences upon discharge, develop
a discharge plan and arrange for its initial implementation, and counsel the patient, family
members or interested parties about the availability of post-hospital care. However, hospital
discharge planning is viewed as limited in scope and influence on patient behavior. (Other factors
associated with rehospitalizations and the effectiveness of hospital discharge planning are
discussed in Appendix A.) Transitional care models are intended to supplement the existing
hospital discharge planning process, provide patients with services both prior to discharge and
after discharge from the hospital, and often emphasize targeting care for “vulnerable” chronically
ill patients (those who are older, in poor health, or who have been hospitalized previously) most
at risk for hospital readmission.11
Generally, a readmission is seen as an outcome that is preceded by a number of intermediary
events that, in certain circumstances, may be addressed and remedied. From August, 2008
through July, 2011, as part of their 9th Statement of Work (SOW) Medicare’s Quality
Improvement Organizations (QIOs) in 14 states have been assessing primary factors affecting
readmissions to develop interventions to target these factors. In their view, the causes of
readmission include

8

The policy factors affecting these rehospitalizations may depend upon whether the beneficiary was originally
admitted from his or her home or a nursing home. Vincent Mor, Orna Intrator, Zhanlian Feng,and David C. Grabowski,
“The Revolving Door of Rehospitalizations from Skilled Nursing Facilities,” Health Affairs, vol, 29, no 1, January
2010, pp. 57-64.
9
Rehospitalization rates vary by type of SNF and ownership as well as the percent of dual-eligible beneficiaries treated
in the facilities. MedPAC, Report to Congress: Medicare Payment Policy March 2012, Chapter 7. pp. 194-200.
http://www.medpac.gov/chapters/Mar12_Ch07.pdf.
10
As an added complication, each post-acute provider, including SNFs, inpatient rehabilitation facilities (IRFs), longterm care hospitals (LTCHs) and home health agencies (HHAs) has a different Medicare prospective payment system,
patient assessment instrument (if any), and Medicare coverage requirement.
11
Transitional care complements but has different features than other care management models, such as care
coordination, disease management and case management. Mary D. Naylor, Linda Aiken, Ellen Kurtzman, Danielle
Olds, and Karen Hirshman, “THE CARE SPAN: The Importance of Transitional Care In Achieving Health Reform,”
Health Affairs, vol 30, no. 4 (April 2011) pp. 746-754. (Subsequently referred to as Naylor et al., “The Importance of
Transitional Care”).

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•

Fragmented documentation of medical conditions or failure to communicate need
for medical treatment;

•

Poor patient self-management;

•

Inadequate follow-up in the post-discharge setting;12

•

Community infrastructure and awareness problems;

•

Insufficient patient support, including support from family caregivers; and

•

Medication discrepancies that occur during an initial admission or following a
discharge and which may result in illness or harm to a patient.

QIO’s work-to-date suggests readmissions can be reduced by bringing together community
stakeholders to create standardized processes to support patients before and after discharge from
the hospital. Other QIO readmission efforts have focused on improvements to patient and
caregiver education, medication management, or use of common patient health records to
improve communication of patient health information between providers within and outside the
hospital setting. As discussed later in “Current Medicare Care Transition Initiatives,” QIOs efforts
to address readmissions are continuing in their 10th SOW.13 QIOs are also providing technical
assistance to candidates seeking to participate in the Community Care Transitions Program
established by the Patient Protection and Affordable Care Act (ACA as amended, P.L. 111-148).
This report is intended to help Congress understand the complex issue of hospital readmissions
and Medicare’s ongoing and future activities to address those rehospitalizations.14 To that end, the
next sections of the report will discuss factors that may influence hospital readmissions,
Medicare’s readmission measures, existing payment incentives for FFS reimbursement and the
existing hospital COPs. The report will then discuss Medicare’s efforts to provide technical and
financial assistance to hospitals’ efforts to improve discharge procedures and manage patients’
care transitions. The final section of the report will discuss Medicare’s upcoming payment
initiatives to address hospital readmissions, specifically the Hospital Readmission Reduction
12
One study reports that (1) the cost of copayments for medications and follow-up visits, (2) lack of home health
coverage if the beneficiary does not meet Medicare’s current home-bound requirements, and, (3) lack of payment for
transitional care services (post-discharge phone calls, coaching services, and clinical services) are factors that providers
see as barriers to their efforts to reduce rehospitalizations. Amy Boutwell, Marian Johnson, Patricia Rutherford et al.,
“An Early Look at A Four-State Initiative to Reduce Avoidable Hospital Readmissions,” Health Affairs, vol 30, no. 7
(July 2011) pp. 1272-1280.
13
Certain changes to the QIO program were included as part of the Trade Adjustment Assistance Extension Act of
2011 (P.L. 112-40) that was enacted on October 21, 2011. These changes apply to QIO contracts entered into or
renewed starting January 1, 2012. The QIO’s 10th SOW which established projects to address hospital readmissions is
not affected.
14
Although outside of the scope of this discussion, other initiatives within the Department of Health and Human
Services (HHS) also seek to reduce hospital readmissions and warrant mentioning, in passing. For instance, the
Partnership for Patients: Better Care, Lower Costs is a public-private partnership that as one of its goals seeks to reduce
hospital readmissions by 20% over a three-year period. Other information technology (IT) initiatives within HHS seek
to improve care transitions for discharged patients, particularly the first two projects announced under the Investing in
Innovation (i2) Initiative within the Office of the National Coordinator for Health Information Technology (ONC). The
first project sought (and found three) developers to create a web-based application of the CMS discharge checklist to
help patients and their caregivers leave the hospital. At the end of January, 2012, ONC announced a second IT project,
the discharge follow-up challenge to assist with scheduling of post-hospital appointments and testing. Although not
specifically targeted to Medicare beneficiaries, these efforts, if successful, are likely to impact Medicare’s readmissions
as well.

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Program (HRRP) and the bundled payment demonstrations currently proposed by the Center for
Medicare and Medicaid Innovation (CMMI).15

Factors that Influence Hospital Readmissions
There is an ongoing debate in the academic literature and among industry advocates about which
factors influence hospital readmissions, and whether and how much control hospitals have over
these underlying factors. The challenge facing Medicare in attempting to reduce hospital
readmissions is to provide appropriate incentives, including targeted technical assistance, to
encourage hospitals to address the underlying causes and then work to minimize
rehospitalizations, particularly since readmissions generate additional Medicare payments for
hospitals. Medicare’s efforts are further complicated by a large body of research which identifies
possible causes that are associated with readmissions, with limited consensus about which should
be included for a fair assessment of hospital performance. The following discussion examines
some of the research on these factors, including a description of the mixed evidence of their
importance.
Generally, research has found that Medicare beneficiaries with certain medical conditions and
demographic characteristics are more likely than others to be readmitted to the hospital after a
discharge. Medicare FFS claims data from 2003 to 2004 indicate that readmission rates range
broadly by condition and procedure. More than three-quarters of all rehospitalizations occurred
after initial admissions for medical conditions, not surgical conditions. Most rehospitalizations
(regardless of whether the initial admission was for a surgical or a medical condition) were for
medical conditions.16 Relatively high readmission rates are found for Medicare beneficiaries with
multiple chronic illnesses.17,18 ,19 An additional factor that may be associated with readmissions is
a patient’s history of prior rehospitalizations.20 Patients with worse health—as indicated by higher
clinical severity scores—have higher 30-day readmission rates than patients with lower severity
scores. The differences in these readmission rates between the two groups have increased over
time.21
15

Medicare shared savings programs, including Accountable Care Organizations (ACOs) and other demonstration
programs concerned with case management or medical monitoring programs for chronically ill beneficiaries, are
outside the scope of this discussion.
16
84.4% of the rehospitalizations after an initial admission for a medical condition and 72.2% of the rehospitalizations
after an initial admission for a surgical condition were for a medical diagnosis. Jencks, Williams, and Coleman, “Feefor-Service Medicare Rehospitalizations,” NEJM, vol 360. pp. 1418-1428.
17
In a meta-analysis of 44 studies, the mean readmission rate was 34% for patients with chronic illnesses compared to
a mean, overall rate of 27%. Karen L. Soeken, Patricia A. Prescott, and Dorothy G. Herron et al., “Predictors of
Hospital Readmission: A Meta-Analysis,” Evaluation and the Health Professions, vol. 14, no. 3 (1991), pp. 262-281.
18
Among those 65 years and older, patients with five or more medically comorbid conditions had odds that were more
than 2.5 times the odds of patients without those conditions to have an unplanned readmission within 30 days. Edward.
R. Marcantonio, Sylvia McKean, Michael Goldfinger, Sharon Kleefield, Mark Yurkofsky, Troyen A. Brennan,
“Factors Associated with Unplanned Hospital Readmission Among Patients 65 years of Age and Older in a Medicare
Managed Care Plan,” The American Journal of Medicine, vol. 107, no. 1 (July 1999), pp. 13-17.
19
2005 data indicate that 30-day readmission rates for patients with end-stage renal disease are nearly twice as high as
readmission rates for patients without end-stage renal disease. MedPAC, Greater Efficiency, June 2007, p. 107.
20
Jencks, Williams, and Coleman, “FFS Medicare Rehospitalizations.” NEJM, vol. 360 pp. 1418-1428. Presentation by
Stephen F. Jencks, at the National Hospital Payment Reform Summit, Washington, DC, September 17, 2009.
21
This trend was demonstrated using Medicare data for FFS beneficiaries discharged from acute care hospitals from
1997, 2002, and 2007. These differences may be attributable to patients with high clinical severity scores having
(continued...)

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Demographic characteristics, such as race, age, gender, and socio-economic status have been
studied as factors influencing the likelihood of readmissions, with mixed results.22 The different
studies of readmission risk factors varied by the target condition(s) included, analytic approach,
follow-up period, and handling of deaths and hospital transfers among other features.23 Generally,
across a number of studies assessing the significance of various risk factors for hospital
readmission, there is no evidence that demographic characteristics like age, gender, or factors
such as income or education consistently predict hospital readmissions.24 There is some evidence
indicating variation in readmission rates by race and socio-economic status, cited by advocates
who wish to have those factors reflected in the readmission models.25,26,27 One study examined the
readmission rates of black and elderly Medicare patients receiving care at minority-serving
hospitals (defined as inclusion in the top 10% of hospitals by proportion of black patients served)
and non-minority serving hospitals from 2006 to 2008. It found that older black Medicare patients
had higher readmission rates than white patients for three common medical conditions: acute
myocardial infarction (AMI), congestive heart failure (CHF)28, and pneumonia (PN), but
concluded that the association of readmission rates with the site of care was consistently greater
than the association with race.29
Some have cautioned that the inclusion of certain non-clinical factors, such as race and socioeconomic status, should be avoided in statistical models used for the public reporting of health
outcomes, because these factors may be related to patient quality of care that are important to
capture and for hospitals to address.30 One concern is that including an adjustment for race or
(...continued)
increased, unobserved clinical severity or not receiving high-quality transitional care services. Matthew Press, Amol
Navathe, Jingsan Zhu, Wei Chen, Jessica Mittler, Dennis Scanlon, and Kevin Volpp, “Clinical Severity in the
Measurement of Readmission Rates: A Comparison of Medicare Beneficiaries in 1997 and 2007.” Paper presented at
the 2011 Academy Health Annual Research Meeting, Seattle, WA.
22
Devan Kansagara, Honora Englander, and Amanda Salanitro et al., “Risk Prediction Models for Hospital
Readmission: A Systematic Review,” JAMA, vol. 306, no. 15 (October 19, 2011), pp. 1688-1698.
23
Joshua West, Larry Gamm, and Brock Oxford et al., “Determinants of Preventable Readmissions in the United
States: A Systematic Review,” Implementation Science, vol. 5, no. 88 (2010), pp. 1-28.
24
Joseph S. Ross, Gregory K. Mulvey, and Brett Stauffer et al., “Statistical Models and Patient Predictors of
Readmission for Heart Failure,” Archives of Internal Medicine, vol. 168, no. 13 (July 14, 2008), pp. 1371-1386.
25
Karen E. Joynt and Ashish K. Jha, “Who Has Higher Readmission Rates for Heart Failure and Why: Implications for
Efforts to Improve Care Using Financial Incentives,” Circulation: Cardiovascular Quality and Outcomes. Journal of
the American Heart Association, vol. 4 (June 2011), pp. 53-59.
26
For instance, the odds of a readmission increases with age (per 10 years), as well as for females and African
Americans (marginal increase in odds for this group), following coronary artery bypass graft surgery. Edward L.
Hanna, Michael J. Racz, and Gary Walford et al., “Predictors of Readmission for Complications of Coronary Artery
Bypass Graft Surgery,” JAMA, vol. 290, no. 6 (August 13, 2003), pp. 773-780.
27
Trendwatch: Examining the Drivers of Readmissions and Reducing Unnecessary Readmissions for Better Patient
Care, American Hospital Association, September 2011.
28
This report will not use congestive heart failure (CHF) or heart failure (HF) interchangeably. In this instance, the
study examined rates of CHF by race and site of care.
29
Patients discharged from minority-serving hospitals had odds of readmission that were 1.23 times the odds of
readmission for patients discharged from non-minority-serving hospitals. Black Medicare patients had odds of
readmission that were 1.13 times the odds of readmission for white Medicare patients. These results varied by
condition studied. Karen E. Joynt, E. John Orav, and Ashish K Jha, “Thirty-day Readmission Rates for Medicare
Beneficiaries by Race and Site of Care,” JAMA, vol. 305, no. 7, (February 16, 2011) pp. 675-681.
30
See Harlan Krumholz et al., “Standards for Statistical Models Used for Public Reporting of Health Outcomes, AHA
Scientific Statement, Circulation: Cardiovascular Quality and Outcomes. Journal of the American Heart Association,:
2006: 113, pp. 456-462 for additional discussion with respect to preferred attributes of models used for publically
(continued...)

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socioeconomic status lowers the performance bar for hospitals that serve a high proportion of
these patients and does not provide comparable incentives to work to minimize readmissions as
other hospitals. Alternatively, hospital advocates maintain that, without such an adjustment,
safety-net hospitals serving these patient populations will be disproportionately affected and the
resulting financial penalties (when the hospitals may already be financially strained) could reduce
quality of care provided to such patient populations. Also, in their view, without such a risk
adjustment, other hospitals may have an incentive to avoid treating minority and low-income
patients if those populations are seen as having higher readmission rates. Simply stated, it can be
difficult to assess whether the high readmission rates associated with certain categories of patients
should be attributed to them or the hospitals that they predominantly use.
As an additional complication, patients may not properly manage their own health conditions or
use of medications and thus may be at risk for readmissions. The post-discharge period is a
“vulnerable phase” for patients who may have worsening clinical conditions; without appropriate
support from family members or caregivers, patients discharged from the hospital may not follow
through with nutrition and diet, medication usage, and other therapies.31 A patient who is
discharged from the hospital but does not see a primary care provider outside the hospital, may be
susceptible to readmission if the patient’s condition deteriorates and there is no adequate followup care.32 These situations may be mitigated if the physician who treated the patient in the
hospital communicates with the patient’s primary care physician or other family members, but
this does not occur routinely.33 Moreover, families of patients may not know what post-acute care
options are available to them.34 Alternatively, available, accessible options for post-acute or
follow-up care may be limited within certain communities.
Certain hospital processes and procedures could be implicated in readmissions. For instance, a
hospital that does not properly assess the medications a patient was taking prior to admission may
unknowingly prescribe a medication which has an interaction with one of the patient’s existing
medications; this could lead to an adverse event and result in a readmission. In other instances
when diagnostic information or the treatment course provided to the patient during the
hospitalization is not recorded, the patient’s primary care provider outside the hospital may not be
able to correctly diagnose or assist with the patient’s condition.35 Additionally, communication by
hospital staff and physicians to patients within the hospital is important—better patient
(...continued)
reported outcome data. (Subsequently referred to as Krumholz et al., Standards for Statistical Models, AHA Scientific
Statement Circulation: 2006).
31
Mihai.Gheorghiade, and Eric D. Peterson, “Improving Postdischarge Outcomes in Patients Hospitalized for Acute
Heart Failure Syndromes,” JAMA, vol. 305, no. 23, (2011), pp. 2456-2457. (Subsequently referred to as Gheorghiade et
al., “Improving Post Discharge Outcomes” JAMA vol. 305, no. 23, (2011), pp. 2456-2457).
32
There was no bill for a visit to a physician’s office between the patient’s discharge and rehospitalization for more
than half of the beneficiaries who were rehospitalized within 30 days after a medical discharge to the community.
Jencks, Williams, and Coleman, “FFS Medicare Rehospitalizations.” NEJM, vol. 360 p. 1426.
33
Gheorghiade et al., “Improving Post Discharge Outcomes’ JAMA vol. 305, no. 23, (2011), pp. 2456-2457.
34
Robert L. Kane, “Finding The Right Level of Posthospital Care: ‘We Didn’t Realize There Was Any Other Option
for Him,” JAMA, vol 305, no. 3, (2010), pp. 284-293. This study also provides mixed evidence for whether certain
post-discharge care settings (i.e., skilled nursing facilities or inpatient rehabilitation facilities) were better for specified
patients (e.g., with strokes or hip fractures).
35
Arnold M. Epstein, Ashish K Jha, and E. John Orav, (2011). “Explaining Variations in Readmission Rates: The
Propensity to use Hospital Services.” Paper presented at the 2011 AcademyHealth Annual Research Meeting, Seattle,
WA.

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satisfaction scores at hospitals (including patient satisfaction with discharge planning, for heart
failure and pneumonia, but not for AMI) are associated with lower risk-adjusted 30-day
readmission rates.36
Finally, hospitals currently do not have financial incentives to avoid rehospitalizations or to delay
discharges.37 Under the current FFS system, Medicare does not reimburse for supportive services
for patients (including those with complex medical conditions) even if such activities may reduce
readmissions. Medicare also does not pay hospitals or other providers for transitional care
services, another activity thought to reduce readmissions. For example, hospitals and other
providers may not provide telephone reminders about follow-up medical appointments,
medication reminders, in-home check-ups, or care coordination with outpatient providers on
behalf of the patient post-discharge because these extra services are not rewarded and result in
extra costs for hospitals or other providers.38 Additionally, shorter lengths of stay under
Medicare’s FFS payment system have been posited as an explanation for higher readmission
rates; however, compared to higher-cost hospitals, lower-cost hospitals (which are likely to
discharge patients earlier) do not have significantly higher 30-day readmission rates.39
Although certain studies indicate that readmission rates are associated with age, patient illness,
and other factors, the specific reasons such persons are readmitted may warrant continued
investigation. A variety of adverse events might occur before a hospital admission, during a
hospital stay, as a patient is being discharged, or after a patient is home or in another setting that
could result in rehospitalization. The reasons for readmission likely vary by person, by hospital,
and by care setting, if not by locality.

Medicare’s Readmission Measures
The Centers for Medicare & Medicaid Services (CMS) has drawn increased attention to the topic
of hospital readmissions by establishing readmission measures for three common Medicare
hospitalizations as quality indicators and including that data on its Hospital COMPARE website
to permit public assessment of hospitals’ performance in this area. The readmission measure for
patients treated for heart failure (HF) was finalized in the FY2009 inpatient prospective payment
system (IPPS) rule published in the Federal Register on August 19, 2008;40 the two other
measures for readmitted patients treated initially for AMI and PN were finalized in the CY2009
hospital outpatient final rule published November 18, 2008, after endorsement of the measures by

36

William Boulding, Seth Glickman, Matthew Manary, Kevin Schulman, and Richard Staelin, “Relationship Between
Patient Satisfaction With Inpatient Care and Hospital Readmission Within 30 Days,” The American Journal of
Managed Care, vol. 17, (January 2011) no. 1, pp. 41-48.
37
Vincent Mor and Richard W. Besdine,“Policy Options to Improve Discharge Planning and Reduce
Rehospitalization,” JAMA, vol. 305, no. 3, (January 19, 2011), pp. 302-303.
38
Important information in this discussion is taken from the Care Transitions Quality Improvement Organization
Support Center (QIOSC). This information may be accessed at http://www.cfmc.org/integratingcare/toolkit.htm.
39
Lena M. Chen, Ashish K Jha, Stuart Guterman, Abigail B. Ridgway, E. John Orav, and Arnold M. Epstein, “Hospital
Cost of Care, Quality of Care, and Readmission Rates: Penny Wise and Pound Foolish?” Archives of Internal
Medicine, vol 170, no. 4, (February 22, 2010), pp. 340-346.
40
This report will not use heart failure (HF) or congestive heart failure (CHF) interchangeably. CMS publishes the list
of International Classification of Disease Code (ICD) 9 codes that are used to identify heart failure cases (see pp.
27962-27963 of the May 11, 2012, Federal Register notice.) Other studies may not provide such information. This
report will use HF or CHF as indicated by study or context being discussed.

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the National Qualify + (NQF).41 Starting June, 2009, Hospital COMPARE indicates whether a
hospital’s risk-adjusted relative 30-day hospital readmission rates for Medicare patients initially
admitted for HF, AMI, and PN were higher, lower, or no different than the U.S. national
average.42 Beginning in FY2010, CMS’s Inpatient Quality Reporting (IQR) program also
included the readmission data used to construct risk-adjusted 30-day readmission rates for these
Medicare patients as quality measures.43 Accordingly, since then, the amount that a hospital’s
inpatient payment rate is increased each year could depend upon reporting the required quality
data on readmission measures.44
As discussed in Appendix B, the three readmission models estimate hospital-specific, riskstandardized, all-cause 30-day readmission rates for patients discharged alive to a non-acute care
setting with a principal diagnosis of HF, AMI, and PN. The measures include admissions to all
short-stay acute-care hospitals for people age 65 years and older who are in FFS Medicare and
who have a complete-claims history for 12 months prior to admission. The measures are riskadjusted to account for Medicare patients’ age, gender, past medical history, and other diseases,
conditions or comorbidities that increase readmission risks.45 The three condition-specific
readmission measures are adjusted for patient-level risk factors and account for a hospital quality
of care effect using hierarchical regression modeling techniques.46 The FY2012 IPPS final rule
indicates that CMS has adopted the same three measures for comparing hospital’s readmission
rates under the HRRP established by Section 3025 of ACA.47 Under this program, hospitals with
41

The HF measure was the first readmission measure endorsed by NQF after publication of the proposed FY2009 IPPS
rule and before publication of the final FY2009 IPPS rule. As anticipated by CMS, NQF endorsement of the other two
readmission measures occurred after publication of final FY2009 IPPS rule and before publication of the CY2009
hospital outpatient prospective payment system (OPPS) rule.
42
Currently, the public is able to assess the 30-day risk-adjusted readmission rates for a hospital for three conditions as
well as whether these rates are the same as, above or below the national average. These measures are calculated using
three years of Medicare data; for FY2012, Medicare claims and enrollment data from July 2006 to June 2009 will be
used. Hospital COMPARE’s outcome of care measures, including condition-specific readmission rates, can be found
here: http://data.medicare.gov/dataset/Hospital-Outcome-Of-Care-Measures/f24z-mvb9.
43
The Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) initiative was developed as a result
of MMA. In 2010, the RHQDAPU program was renamed the Hospital Inpatient Quality Reporting (IQR) Program. See
http://www.qualitynet.org/dcs/ContentServer?cid=1138115987129&pagename=QnetPublic%2FPage%2FQnetTier2&
c=Page.
44
See http://www.hospitalcompare.hhs.gov/staticpages/for-consumers/ooc/death-mortality-measures.aspx for
readmissions data reported in Hospital COMPARE.
45
Information on the beneficiary’s past medical history and comorbidities are based on diagnoses (ICD-9 codes) on the
patient’s discharge claim, and are from the hospital inpatient, hospital outpatient, and physician Medicare claims
submitted up to 12 months prior to the admission. See http://www.hospitalcompare.hhs.gov/staticpages/forprofessionals/ooc/risk-adjustments-and-covariates.aspx.
46
The hierarchical generalized linear model accounts for the clustering of patients within hospitals based on the
assumption that an individual hospital will provide similar quality of care across patients within its patient population,
which can be measured using hospital-specific intercepts. The hospital-specific intercepts are given a distribution in
order to account for the clustering or non-independence of patients within the same hospital. If there were no
differences amoung hospitals, then, after adjusting for patient risk, the hospital intercepts should be identical across all
hospitals. The expected number of readmissions in each hospital is estimated using its patient mix and the average
hospital-specific intercept (the average of each of the estimated hospital-specific intercepts). The predicted number of
readmissions in each hospital is estimated given the same patient mix but the hospital-specific intercept. The excess
readmission ratio for a hospital is its predicted number divided by its expected number of readmissions. This is a form
of indirect standardization that accounts for variation across hospitals in how sick their patients are when admitted to
the hospital and the variation in the number of patients a hospital treats to reveal differences in hospital-specific quality.
47
Federal Register, August 18, 2011, vol. 76, no 160, pp. 51660-51676. Until FY2015, the hospital readmission
program is required to use three readmission measures that were endorsed by NQF as of enactment. At that point,(to
the extent practicable), CMS will expand the measures to the four additional conditions identified in MedPAC’s June
(continued...)

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higher-than-expected spending on readmissions for Medicare FFS beneficiaries initially
hospitalized with one of these three principal diagnoses will be penalized starting in FY2013. The
penalty will be capped at 1% of a hospital’s base payments for all its Medicare discharges in
FY2013, 2% in FY2014, and 3% in FY2015 and subsequently.
CMS has established its three readmission measures as all-cause readmissions of an aged
beneficiary to the same hospital or a different hospital within 30 days of the original (index or
initial) admission, with limited exclusions of subsequent admissions.48 Academics, other policy
makers, and organizations have used different time periods and definitions to measure
readmissions.49 Also, unlike an all-cause measure, other approaches to readmission measures
attempt to identify preventable admissions and use different methods to distinguish those
readmissions that might be avoided and those that might not be avoided. As noted by certain
hospitals and their advocates, these different methods can result in different relative readmission
rates for hospitals, a comparative analyses that may have financial implications for their Medicare
payments starting in FY2013 when the penalties are implemented. Also, although Medicare’s allcause readmission measures do exclude certain readmissions, according to hospital advocates
they do not exclude a sufficient number of planned readmissions related to the original admission
or, as directed by statute, a sufficient number of unrelated readmissions.50 Finally, hospital
advocates fear that the HRRP program may end up penalizing hospitals unfairly for those factors
affecting readmissions that are out of their control. This is expressed as a particular concern for
safety-net hospitals that serve challenging patient populations within limited financial if not
clinical resources. However, as discussed subsequently, CMS has implemented other policy
initiatives and demonstration projects to provide technical and financial assistance to address
fundamental causes of rehospitalizations, particularly for certain low-performing providers.

(...continued)
2007 report. There is no requirement that NQF endorse these additional measures as long as CMS considers such
endorsed measures.
48
This methodology does not try to distinguish preventable admissions, but is an all-cause readmission measure with
the following exclusions. All admissions from Medicare disabled beneficiaries under the age of 65 are excluded. The
admissions of certain aged Medicare beneficiaries are excluded: those who die in the hospital; those who are
subsequently transferred to another acute care facility; those who are discharged against medical advice (AMA); those
without at least 30 days post-discharge enrollment in FFS Medicare; and those who are readmitted on the same day to
the same hospital with the same condition (patient admission is only counted once). Only the AMI readmission
measure will exclude patients who are discharged alive on the same day that they are admitted (because these patients
are unlikely to have had a heart attack). Also, the AMI measure will exclude readmissions within 30 days for
percutaneous transluminal coronary angioplasty (PTCA) or coronary artery bypass graft (CABG) procedures (because
these readmissions likely represent planned readmissions that are part of the same episode of care.) See
http://www.hospitalcompare.hhs.gov/staticpages/for-professionals/ooc/data-collection-methods.aspx.
49
A shorter time interval may provide a greater degree of confidence that a readmission is related to the initial
condition. A longer readmission time interval will identify more readmissions. 30-day readmission rates are the most
common readmission measure, according to Norbert .I Goldfield,, Elizabeth C. McCullough, John .S. Hughes, Anna.M.
Tang, Beth Eastman, Lisa K. Rawlins, and Richard.F Averill, “Identifying Potentially Preventable Readmissions,”
Healthcare Financing Review, vol 30, no. 1, (Fall 2008), pp. 75-91.
50
ACA directs the Secretary to use endorsed measures that have exclusions for readmissions that are unrelated to the
prior discharge (such as a planned readmission or a transfer to another acute care hospital).

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Medicare’s Existing Payment Incentives and Conditions of
Participation (COP) for Discharge Planning
Policy makers have longstanding concerns about the financial and quality incentives in a FFS
payment system. Generally, under FFS, a provider receives a payment, set in advance, for each
service, bears the risk for the number and costs for inputs that comprise that service, but has no
limit on the number of services provided. Most typically, payment is made regardless of quality
or outcomes.51 The current design of Medicare’s IPPS for acute care hospitals in particular (and
FFS generally) does not provide incentives to hospitals to contain avoidable readmissions for
beneficiaries or to improve the quality of care provided.52 Medicare now pays for all readmissions
except when patients are rehospitalized within 24 hours after discharge for the same condition for
which they were originally hospitalized.53 Under existing payment incentives, hospitals could lose
income by reducing readmissions, as fewer rehospitalizations would result in fewer billable
discharges. Under Medicare FFS, hospitals and physicians are usually paid separately, even if a
physician is working in the hospital. In fact, although IPPS hospitals are usually paid on a percase basis, physicians are typically paid on a per-service basis. Similarly, post-acute care
providers of post-hospital care are each paid separately and receive more reimbursement for each
Medicare admission or episode of home health care.
Under IPPS, Medicare pays for most acute-care hospital stays using a prospectively determined
payment for each discharge, intended to cover the services provided during a hospital stay;54 any
differences between Medicare payments and hospital costs, either profits or losses, are absorbed
by the hospital. In essence, hospitals are financially rewarded for the efficient delivery of medical
and surgical care and are more likely to discharge patients earlier.55 These incentives to provide
efficient care also extend to the amount of resources that hospitals dedicate to discharge planning.
Hospitals that participate in the Medicare program are required by Medicare’s COP to provide
discharge care instructions to Medicare beneficiaries.56 These requirements are subject to survey
and recertification efforts by state agencies or by CMS-approved accrediting bodies.
51

Harold D. Miller, “From Volume to Value: Better Ways to Pay For Health Care,” Health Affairs, vol. 28, no. 5
(September/October 2009), pp. 1418-1428.
52
Sheila Leatherman, Donald Berwick, and Debra Iles, Lawrence S. Lewin, Frank Davidoff, Thomas Nolan, and
Maureen Bisognano, “The Business Case For Quality: Case Studies and An Analysis,” Health Affairs, vol. 22, no. 2
(March/April 2003), pp. 17-30.
53
When a patient is discharged or transferred from an IPPS hospital and is readmitted to the same hospital on the same
day for symptoms related to, or for the evaluation and management of, the prior stay’s medical condition, the two
hospital stays are combined. Also, QIOs and other Medicare contractors have the authority to review readmissions for
medical necessity and related conditions. CMS Medicare Claims Processing Manual, Chapter 3, Section 40.2.5.
54
Payments under IPPS depend on the relative resource use associated with a patient classification group, referred to as
the Medicare severity (MS) diagnosis related groups (DRG or collectively, MS-DRG), to which the patient is assigned
based on an estimate of the relative resources needed to care for a patient with a specific diagnosis and set of care
needs. Medicare’s IPPS includes adjustments that reflect certain characteristics of the hospital. For instance, a hospital
with an approved resident training program could qualify for an indirect medical education (IME) adjustment; hospitals
that serve a sufficient number of poor Medicare or Medicaid patients would receive higher Medicare payments because
of their disproportionate share hospital (DSH) adjustment. Through FY2012, hospitals located more than 15 miles from
another hospital with less than 1,600 total discharges receive a low-volume adjustment. Hospitals in Maryland are not
paid using IPPS; rather, they receive Medicare payments based on a state-specific Medicare reimbursement system.
55
MedPAC, Greater Efficiency, June 2007 pp. 105-106.
56
42 CFR 482 contains the COP for hospitals, which are the minimum health and safety standards that hospitals must
meet to be Medicare and Medicaid certified. These include, among numerous requirements, requirements related to
patients’ rights, emergency services, outpatient services, medical record services, and laboratory services. See
(continued...)

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The Medicare discharge-planning COP regulation (42 CFR 482.43) requires Medicare
participating hospitals (more than 90% of all acute-care hospitals in the United States) to have a
discharge planning process that applies to all patients. The hospital is required to identify all
patients who are expected to experience adverse health consequences upon discharge at an early
stage of hospitalization. The hospital must provide a discharge-planning evaluation to these
patients and to other patients upon request; this evaluation must be done on a timely basis and
must include an evaluation of the patient’s likely need for and availability of post-acute services.
This information must be included in the patient’s medical record and the hospital must discuss
the evaluation results with the patient or patient’s representative. The hospital must develop any
necessary discharge plan and arrange for its initial implementation.57 The hospital must counsel
the patient, family members or interested parties as necessary to prepare them for post-hospital
care and advise them of its availability.58 The hospital must transfer or refer patients along with
necessary medical information to appropriate facilities, agencies, or outpatient services as needed
for follow-up or ancillary care.
Despite these requirements, some studies have found instances in which discharge planning is
incomplete and necessary information is not provided by hospitals to physicians and post-acute
providers in a timely manner. A literature review of 55 observational studies published between
1970 and 2005 indicated that primary care physicians considered the following information to be
among the most important components of discharge information: a patient’s main diagnosis;
pertinent physical findings; results of procedures and laboratory tests; and discharge medications,
with reasons for any changes to the previous medication regimen; among other information.59
However, these studies also found that audits of hospital discharge documents, which are often
physician-dictated and transcribed, demonstrated a frequent absence of such information. In
addition, only between 12% and 34% of physicians treating a patient after a hospital discharge
had a copy of the patient’s hospital discharge summary.60 Another analysis of discharge
summaries of adults 70 years and older at an academic teaching facility found that 74% of
summaries did not include pending test results and 82% of the summaries did not include
information regarding patient’s final cognitive status.61 Generally, outpatient physicians who do
not have complete and timely information about a patient’s case may not make adequate followup care decisions.
(...continued)
http://www.cms.hhs.gov/CFCsAndCOP/06_Hospitals.asp#TopOfPage.
57
Both the discharge plan evaluation and a discharge plan must be developed by, or under the supervision of, a
registered professional nurse, social worker, or other appropriately qualified personnel.
58
Among other requirements related to the discharge plan, the hospital must include, where appropriate, a list of home
health agencies or skilled nursing facilities available to the patient, that are participating in the Medicare program and
serving the area in which the patient resides or, for skilled nursing facilities, in the geographic area the patient requests.
59
After analyzing these studies, the authors found that discharge summaries lacked the following information (results
were reported as both a median and a range of percentage of occurrences): diagnostic test results, 38% (ranging from
33% to 63%); the treatment or hospital course, 14.5% (ranging from 7% to 22%); discharge medications, 21% (ranging
from 2% to 40%); test results pending at discharge, 65% (no range available); and follow-up plans, 14% (ranging from
2%-43%). Sunil Kripalani, Frank LeFevre, and Christopher. O. Phillips, Mark Williams, Preetha Basaviah, David W.
Baker, “Deficits in Communication and Information Transfer Between Hospital-based and Primary Care Physicians:
Implications for Patient Safety and Continuity of Care,” JAMA, vol. 297, no. 8 (February 28, 2007), pp. 831-841.
60
Ibid.
61
The study also found that higher discharge summary scores were associated with reduced 30-day readmissions.
Alicia Arbaje, Vishnu Surapaneni, Karen Chen, Ivana Vaughn, Kathryn Eubank, and Bruce Leff, “Higher Quality
Discharge Summaries of Hospitalized Older Adults are Associated with Reduced Risk of Readmission: Instrument
Development and Outcomes,” Paper presented at the 2011 Academy Health Annual Research Meeting, Seattle, WA.

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The evidence regarding the impact of hospital discharge planning activities as now conducted on
hospital readmissions may depend upon measures used to assess discharge planning. A study used
two different discharge planning measures to evaluate CHF and PN readmissions.62 It found no
association between CHF readmission rates and a measure based on whether discharge planning
was documented in the medical record chart.63 (As noted by the author, this measure may simply
capture whether hospitals document their activities, not the adequacy of the process or the
sufficiency of the information conveyed to patients, caregivers, and post-acute providers.) There
was only a modest association between PN and CHF readmissions and a readmission measure
based on the patient-reported experience with discharge planning. In fact, there was only a weak
correlation between the two discharge measures.64
As discussed in the next section, there is a body of work that supports the importance of
comprehensive and timely discharge planning as a strategy to reduce hospital readmissions. A
meta-analysis of 8 studies of HF patients receiving comprehensive discharge planning, which
generally entails post-discharge activities, had 75% the risk of hospital readmission compared to
patients with HF treated with usual care.65 A systematic review of 21 randomized controlled trials
with patients having a mix of medical and surgical conditions found that patients with an
individualized discharge plan, compared to those without an individualized discharge plan, had
85% of the readmission risk.66 In its June 2011, report, MedPAC recommended that the hospital
COP be updated to encourage the adoption of different processes that are thought to improve
patient outcomes. For instance hospitals could be required to get discharge instructions to the
appropriate community provider within 48 hours of discharge (which is thought to reduce
hospital readmission rates).67 On October 24, 2011, CMS published proposed changes to the
hospital (and critical access hospital) COP, primarily to streamline burdensome or dated
regulations. These regulations were finalized on May 16, 2012 and become effective July 16,
2012. There were no modifications to the existing hospital discharge planning requirements.
The following section will discuss recent and ongoing efforts to identify certain systemic causes
and structured approaches to address Medicare rehospitalizations within specific providers and
62

Ashish K. Jha, E. John Orav, and Arnold M. Epstein, “Public Reporting of Discharge Planning and Rates of
Readmission” NEJM, 2009; 361: 2637-45 examined two different discharge measures to evaluate CHF and PN
readmissions to conclude that efforts to publically report data on discharge planning was not likely to yield large
reductions in unnecessary admissions.
63
Performance on the chart-based discharge measure was measured using a scale from 0-100. The authors note that
performance criteria were met if the medical record stated that the patient or a caregiver was provided with written
instructions or educational material prior to discharge addressing the following: activity level, diet, discharge
medications, follow-up appointment, weight monitoring, and what to do if symptoms worsen.
64
Low correlation between performance evaluated with the two discharge planning measures may be due to the fact
that the chart-based measure had information from CHF patients only, while the patient-reported measure had
information from all hospitalized medical and surgical patients.
65
Christopher Phillips, Scott Wright, David Kern, Ramesh Singa, Sasha Sheppard, Haya Rubin, “Comprehensive
Discharge Planning With Postdischarge Support for Older Patients With Congestive Heart Failure”, JAMA, vol. 291,
no. 11 (2004), pp. 1358-67.
66
Sasha Shepperd, Jacqueline McClaran, Christopher Phillips, Natasha Lannin, Lindy Clemson, Annie McCluskey, Ian
Cameron, Sarah Barras, “Discharge Planning from Hospital to Home”, The Cochrane Library, published online
January 20, 2010. Available at http://onlinelibrary.wiley.com/doi/10.1002/14651858.CD000313.pub3/abstract.
67
MedPAC also recommended changes in the enforcement of COP and the correction of provider deficiencies through
the development of intermediate sanctions and other interventions. Issues associated with how to define, measure and
audit compliance would need to be addressed. MedPAC, “Enhancing Technical Assistance to Providers,” June 2011,
pp. 107-112.

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communities, including the recently implemented pilot project, the Community Based Care
Transitions Program.

Current Medicare Care Transition Initiatives
Prior to the enactment of ACA, from August 2008, through July 2011, during its 9th SOW, QIOs
in 14 states collaborated with providers in selected communities to identify the underlying causes
of hospital readmissions in their communities and then develop different strategies to prevent
those rehospitalizations.68 QIOs sought to identify causes of poor transitional care and to develop
targeted intervention strategies in order to improve patient outcomes, such as reducing 30-day
readmission rates. The Care Transitions Quality Improvement Organization Support Center
(QIOSC)—which assisted Medicare QIOs in the care transition project—found three fundamental
causes of patient readmissions: (1) declining health conditions that were not being properly
managed, (2) medication regimens that were not appropriate, and (3) inappropriate use of
emergency rooms (rather than using other types of medical services).69 The QIOSC attributed
these problems to three systemic gaps in care for patients:70
•

Lack of engagement or activation of patients and families into effective postacute self management,

•

Lack of standard and known processes among providers for transferring patients
and medical responsibility, and

•

Ineffective or unreliable sharing of relevant clinical information.

To address these gaps, QIOs worked on different approaches to (1) engage (or activate) patients;71
(2) develop standard, known discharge processes, including scheduling necessary follow-up
care;72 and (3) ensure that clinicians and providers have necessary, timely information on the
patient’s condition and need for follow-up care.73 Table 1 provides a brief summary of underlying
68

CMS has been involved with supporting care transitions since 2003, when it joined with the Administration on Aging
(AoA) to fund Aging and Disability Resource Center care transitions programs. Local area agencies on aging had been
working with Medicare QIOs in some states on the 9th SOW care transitions project.
69
A QIO support contractor (also called a national coordinating center) leads national efforts to support the local QIOs
in achieving the goals of each SOW project. The project support contractor is the contact that sends, receives and
disseminates information to the QIOs, collects and reports data, establishes and maintains contacts with national
clinical quality improvement experts, and gathers or develops quality improvement tools. The Colorado Foundation for
Medical Care (CFMC) was the QIOSC for the 9th SOW care transitions project.
70
http://www.cfmc.org/integratingcare/toolkit_rca.htm.
71
Patient activation means that patients have information about their condition, understand warning signs that indicate
a clinical deterioration in their health status; patients (or their representatives) know how to advocate for themselves in
order to ask appropriate questions. Patient activation also may include a personal health record, an emergency care
plan, a pill box or medication manager, and instruction using a “teach-back” method—where the patient explains to a
provider or “coach” (in order to ensure that he or she understands) what his or her condition is, what medications are
being taken, or other issues.
72
In the 9th SOW, QIOs developed a number of protocols, standard forms, or best practices to assess patients’ health
status, routinize discharge procedures and schedule necessary follow-up care.
73
In the 9th SOW, depending up the locality, QIOs identified care coordination efforts, which could link providers
across settings, (data sharing between providers inside and outside the hospital); discharge process improvements, such
as notifications given to a patient’s primary care physician; and community outreach, which could provide better social
supports and assistance tailored to the patient’s needs.

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causes of hospital readmissions, their significance for readmissions as well as specific
interventions thought to address those contributing factors. This information is supplemented by
the discussion in Appendix A of this report.
Table 1. Causes of and Tools for Addressing Readmissions
Significance for
readmissions

Specific interventions
to address problem

Improve discharge planning –
Provide clear, timely, understandable
information or instructions regarding
patients’ likely need for post-hospital
treatment, as well as post-acute
treatment options to all patients or
their representatives. Develop
standardized approaches to providing
appropriate discharge planning for
patients at risk for rehospitalization.

Future
hospitalizations
may be reduced, in
part, by informing
patients and
caregivers in a
timely manner
about how best to
manage the
patient’s care
following hospital
discharge, as well
as regarding
availability of postacute providers in
the geographic
area.

(1) Create a patient
health record. (2)
Evaluate the hospital
discharge plan. (3)
Communicate with
providers in the hospital
to discuss tests and
patient care plan.

Poor patient selfmanagement - Many
patients may not receive
information they need to
manage their care. For
instance, heart failure
patients did not receive
information about
worsening symptoms, diet,
drug interactions, followup appointments, and
weight monitoring.

Educate patients on selfmanagement of care – Teach
patients and their representatives
how to manage and advocate for
their health care needs to prevent
the unnecessary decline of patient
health and/or address the
appropriate interventions for the
patient’s health.

Patient behavior
could contribute to
risks for future
hospitalizations,
due to
inappropriate use
of medications,
poor understanding
of signs of
deteriorating
health, or other
poor management.

(1) Make follow-up
appointments and
coordinate referrals for
community resources.
(2) Discuss test and
laboratory results with
patients. (3) Assist
patients with
understanding
prescribed medications.
(4) Coach patients to
advocate for their own
health needs and to
recognize health warning
signs. (5) Follow-up with
patients after discharge,
including home visits and
telephone calls.

Lack of post-discharge
follow-up - Many patients
are not meeting with a
physician outside the
hospital setting following
hospital discharge. In
addition, a large
proportion of patients are
not receiving discharge
instructions. Around 25%
of Medicare beneficiaries
are reported to have been
rehospitalized following a

Improve post-acute follow-up
and patient support - Provide
access and reminders to patients and
their representatives to necessary
post-acute care, including
rehabilitative, home health, or skilled
nursing services. Fill in
communication gaps between
hospital and other providers by
ensuring sharing of appropriate
clinical information.

Information
regarding patient
treatment history
or post-discharge
plans may not be
available to the
post-acute
providers—
including home
health agencies,
physicians, or
SNFs—resulting in
treatment errors

(1) Make follow-up
appointments and
coordinate referrals for
community resources.
(2) Create a patient
health record. (3)
Support selfmanagement. (4) Use
bundled payment
methodology.

Problem

Goal

Fragmented
documentation Diagnostic test results,
hospital treatment
information, tests pending
at discharge, or follow-up
plans—which are
considered essential by
physicians treating
discharged patients—are
often not provided in
hospital discharge
summaries.

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Problem

Goal

stay in a skilled nursing
facility (SNF).

Significance for
readmissions

Specific interventions
to address problem

or poor care.

Community
infrastructure
problems - Substantial
variation among states in
regard to hospital
readmission from SNFs
has been observed.
Variation among states has
also been observed in
regard to hospital
readmissions.

Bring together community
stakeholders - Create awareness of
the readmissions issue and begin to
address practice patterns that may
contribute to readmissions.

In part due to
different regional
practice patterns,
compared to areas
with fewer hospital
beds, areas with
more hospital beds
may be more likely
to have higher
hospital
readmission rates.

State-specific programs
that (1) bring together
various state-level and
local stakeholders to
identify and apply
community resources;
and (2) partner hospitals
with patients, home
health agencies, SNFs
and outpatient
providers.

Lack of patient
support - Patients who
live alone or have no
access to caregiver
support are more at risk
for a hospital readmission
than those with a support
system.

Improve caregiver engagement
and education to create a
support system for the patient
in the post-discharge setting Enable caregivers to understand and
comply with discharge care plans,
including taking patients to follow-up
physician visits or other
appointments, or by assisting with
patients’ other daily needs.

Assistance
provided by
caregivers may help
prevent the
occurrence of an
adverse event or
the deterioration
of patient health
that may lead to a
rehospitalization.

(1) Educate caregivers
about warning signs of
deteriorating patient
health. (2) Involve
caregivers in discussion
of post-discharge followup needs. (3) Educate
caregivers, along with
patients, about patient
care needs and disease
management.

Medication
discrepancies Medication errors are
some of the most
widespread medical errors
and may be common in
hospitals. Also, surgical
errors have been shown
to be associated with a
higher risk of hospital
readmission.

Establish common personal
health record and reconcile
medication - Provide a tool with
personalized information about
medications used by patient as well
as reconcile pre-hospital visit
medication list with discharge
medication list.

Medication
discrepancies can
lead to adverse
events, which can
lead to an
emergency room
and/or a hospital
readmission.

(1) Perform medication
reconciliation in hospital.
(2) Educate patients
about medications. (3)
Create and use patient
health record. (4)
Maintain telephone
contact (or visit homes
of patient) to address
medication issue.

Source: CRS summary of QIO documents and readmission literature available at http://www.cfmc.org/
integratingcare/toolkit.htm.

As part of the 10th SOW which began August 1, 2011, QIOs will work to reduce
readmissions 20% by 2013 which would prevent the rehospitalization of an estimated 1.6
million hospital patients, among other goals.74 QIOs will also provide technical assistance
to candidates seeking to participate in Community Care Transitions Program (discussed
next) and other communities.75
74
In June, 2011, MedPAC recommended that the QIO program be restructured to give providers (and communities)
increased choice in who can provide technical quality improvement assistance, to increase competition between these
entities, to provide more flexibility in the use of the resources (by direct grants to providers among other changes) and
to increase focus on low-performing providers and communities. MedPAC’s June 2011, Report to Congress: Medicare
and the Health Care Delivery System (subsequently referred to as “MedPAC, “Enhancing Technical Assistance to
Providers” June 2011”).
75
As indicated in the 10th SOW, QIOs will provide technical support for the application process which may include
data analyses and trending reports, interventions selection rationale, and cost estimates for interventions and assistance
(continued...)

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Community-Based Care Transitions Program (CCTP) for High-Risk
Medicare Beneficiaries
Section 3026 of the ACA establishes a five-year community-based care transitions program
(CCTP) for eligible entities beginning January 1, 2011, to test models for improving care
transitions for high-risk Medicare beneficiaries.76 An eligible entity is an IPPS hospital with high
readmission rates77 or certain community based organizations (CBOs)78 that provide care
transition services. Consideration is given to CBOs working with multiple high readmission
hospitals in the community. Preference is given to entities that participate in the care transitions
program administered by the AoA or that provide services to medically underserved populations,
small communities, and rural areas. Consideration is given to physician practices (particularly
primary care practices) that meet the statutory CBO definition, to programs that have established
care management interventions with state Medicaid programs and those who have established
relationships with primary care medical homes serving Medicare beneficiaries (described
subsequently). As noted by CMS, awardees are expected to work closely with accountable care
organizations (ACOs) and medical homes developed in their communities, as it is ultimately the
responsibility of the delivery system to manage care transition and the services needed to support
them.
The goals of the CCTP are to improve transitions of high-risk beneficiaries from the inpatient
hospital setting to other care settings, to improve quality of care, to reduce readmissions for highrisk beneficiaries, and to document measureable savings to the Medicare program. To this end,
Medicare plans to spend $500 million for this five-year program beginning in January 1, 2011.
CCTP may be continued or expanded if the Office of the Actuary (OACT) certifies that the
expansion would reduce Medicare spending without reducing quality.79

(...continued)
with other application requirements. QIOs will also provide assistance for communities that are not accepted into
formal Care Transitions Programs by providing quarterly readmission metrics on various measures (coalition
readmission rates; hospital readmission rates, post-acute care setting readmission rates, disease specific readmission
rates, emergency department visit rates, and observation stay rates and mortality rates).
76
High-risk beneficiaries will be identified using a hierarchical condition category score based on the existence of
multiple chronic conditions, previous substandard transitions into post-hospitalization care, or other readmission risk
factors which may include cognitive impairment, depression, a history of multiple readmissions, or others factors. The
CCTP program is restricted to Medicare FFS beneficiaries including those who are dually eligible (for Medicaid and
Medicare).
77
High readmission hospitals are those with 30-day readmission rates on at least two of the three Hospitals COMPARE
measures (HF, AMI, PN) that fall into the top quartile for their state. A listing of the high readmission hospitals can be
found at http://www.cms.gov/DemoProjectsEvalRpts/downloads/CCTP_FourthQuartileHospsbyState.pdf.
78
Eligible CBOs have a governing body that includes sufficient representation of multiple health care stakeholders
(including consumers) and provide care transition services across a continuum of care though arrangements with IPPS
hospitals. As noted by CMS, CBOs are expected to coordinate across all settings, including hospitals, nursing homes,
home health, SNF, and hospice. “Beneficiaries often experience multiple transitions following discharge from the
hospital and therefore a CBO must follow that beneficiary across various settings if there is any hope of reducing
avoidable admissions.” See https://questions.cms.hhs.gov/app/answers/detail/a_id/10602/related/1.
79
As noted in the CTTP application, participants are expected to reduce Medicare expenditures through the provision
of care transition services which would reduce avoidable hospital readmissions. The application must include
assumptions regarding overall participation rates, rationale and projections of the readmissions to be avoided, and
overall reduction in readmission rates.

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CMS has published a solicitation for applications from entities interested in participating in the
CCTP.80 CCTP applications must describe the root cause analysis that informed the selection of
the proposed intervention and target population. These applications also include information
about the beneficiary notification process which tells them about participation in the program and
information about the applicant’s implementation strategy (including recruitment strategy and
contingency plans for achieving beneficiary participation thresholds). Applicants must have prior
experience with successfully managing care transitions and reducing readmissions. Entities are
awarded a two-year agreement that may be extended—based on their performance—on an annual
basis for the remaining three years. Applicants must provide a budget and a per eligible discharge
rate for transitional care services. Entities selected to participate are paid a per eligible discharge
rate to cover the direct costs of care transition services, and are paid by CMS on a monthly basis
for services delivered in the previous month.81
CMS has selected the Lewin Group, a health care consulting organization, to provide support to
entities selected to provide transitional care services. The Lewin Group and its team will provide
technical assistance and guidance for an estimated 500 CBOs and hospitals expected to be
involved in the project. Lewin will gather best practices through site visits and facilitate peer-topeer information sharing through online collaboration and national meetings.82 On November 18,
2011, CMS made the first seven site selections for CCTP. An additional 23 sites were selected to
participate in CCTP on March 14, 2012.83 Other awards will be issued on a rolling basis until the
$500 million funding ceiling is reached.
The statutory language establishing the CCTP indicated that the care transition interventions
could include (1) initiating transition services no later than 24 hours prior to discharge, (2)
arranging timely post-discharge follow-up to educate patients and caregivers about responding to
their own health symptoms, (3) providing assistance to ensure productive and timely interactions
between patients and post-acute and out-patient providers, (4) providing self-management support
(or caregiver support), and (5) conducting medication review, counseling, and management
support. The intervention may not include payment for discharge planning services required
under Medicare COP.

In the CTTP solicitation, CMS provides information about certain evidence-based care
transitions models that were jointly funded by AoA and CMS. Entities participating in the
program are not required to use these transition models,84 but consideration is given to
applicants proposing to use the following care transition models:85
•

The Care Transitions Initiative (CTI) is a four-week program which provides a nurse
transition “coach” (an advanced practice nurse) to assist patients with complex care
needs, and their families, in being more assertive during care transitions, to have

80

http://www.cms.gov/DemoProjectsEvalRpts/MD/itemdetail.asp?itemID=CMS1239313.
https://questions.cms.hhs.gov/app/answers/detail/a_id/10703/kw/
Community%20Based%20Care%20Transition%20Program.
82
The Lewin Group’s team includes the Colorado Foundation for Medical Care, the University of Colorado, Seamon
Corporation, 371 Productions and ON24.
83
For summary data on the collaborative network, the prior experience, the target population, the service community,
and the implementation strategy of the participants, see http://innovation.cms.gov/initiatives/Partnership-for-Patients/
CCTP/partners.html.
84
https://questions.cms.hhs.gov/app/answers/detail/a_id/10600.
85
https://questions.cms.hhs.gov/app/answers/detail/a_id/10600.
81

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continuity of care across settings, and have their needs met in any care setting.86 In a
randomized controlled trial involving 750 subjects aged 65 and older in a large,
integrated delivery system in Colorado, patients receiving the CTI had lower readmission
rates at 30 days and at 90 days and lower mean hospital costs than those patients without
the CTI intervention.87 In addition, a qualitative review of the results appeared to indicate
improved self-management and confidence about what was required by study participants
who received the intervention.88 A number of hospitals and health systems have
implemented the CTI model, including the implementation of CTI in 2007 in 10
California locations as part of a one-year, $650,000, effort funded by the California
Health Care Foundation.89
•

The Transitional Care Model (TCM) created by a team based at the University of
Pennsylvania (including testing in three completed National Institutes of Health funded
randomized, controlled clinical trials), establishes a transitional care team led by an
advanced practice nurse who has a masters degree in nursing. This transitional care nurse
(TCN) treats a patient before, during, and after discharge from the hospital and
specifically targets chronically ill high-risk older adults.90 In a multi-site randomized
control trial for persons age 65 and older and hospitalized with heart failure, the
intervention TCM group had fewer readmissions in one year following hospital
discharge. The total cost of care for the intervention group was 39% lower per patient
than for the control group.91

•

Project BOOST (Better Outcomes for Older Adults through Safe Transitions) has a
toolkit which aims to improve care transitions for older adults.92 The intervention
sponsored by the Society of Hospital Medicine and the John A. Hartford Foundation,
involves a risk assessment of the patient on eight dimensions with risk-specific
interventions developed to target specific patients.93 The patient’s understanding of his or
her situation as well as readiness to be discharged is assessed at different points during
the hospital stay.94 Project BOOST is associated with improved quality of life, increased

86

See http://www.caretransitions.org/.
Eric A. Coleman, Carla Parry, and Sandra Chalmers et al., “The Care Transitions Intervention: Results of a
Randomized Controlled Trial,” Archives of Internal Medicine, vol. 166 (September 25, 2006), pp. 1822-1828.
88
Carla Parry. Heidi M. Kramer, and Eric A. Coleman, “A Qualitative Exploration of a Patient-Centered Coaching
Intervention to Improve Care Transitions in Chronically Ill Older Adults,” Home Health Care Services Quarterly, vol.
25, nos. 3 and 4 (2006), pp. 39-53.
89
See http://www.chcf.org/topics/view.cfm?itemID=128306. Six of the nine grantees that completed the project had
specific plans to continue the care transitions work when the project ended in September 2008. The CHCF Care
Transitions Projects: Final Progress Report and Meeting Summary, March 2009.
90
See http://www.transitionalcare.info/.
91
Mary A. Naylor, Dorothy Brooten, and Roberta Campbell et al., “Transitional Care of Older Adults Hospitalized
with Heart Failure: A Randomized Clinical Trial,” Journal of the American Geriatrics Society, vol. 52, no. 5 (May 1,
2004), pp. 675-684.
92
http://www.hospitalmedicine.org/ResourceRoomRedesign/RR_CareTransitions/PDFs/
Workbook_for_Improvement.pdf.
93
The 8P is an eight component screening tool that evaluates (1) problem medications, (2) psychological needs, (3)
principal diagnosis, (4) polypharmcy (the potential for adverse reactions when a patient takes multiple drugs); (5)
health literacy, (6) patient support, (7) prior hospitalizations, and (8) need for palliative care.
94
The patient is evaluated in two domains: logistical issues and psychosocial issues using the general assessment of
preparedness (GAP) Tool. Depending upon the question, the assessment occurs at admission, prior to discharge, or at
discharge.
87

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involvement and satisfaction with hospital discharge care and improved communication
between the hospital and physicians.95
•

Re-Engineered Design (RED) consists of a set of 11 actions taken primarily during a
hospital stay by discharge advocates (registered nurses) to address care transition
elements.96 In a study involving Project RED, 370 patients participating in the project
were one-third less likely to be readmitted to the hospital or visit the emergency
department than patients who did not participate in the project. Compared to roughly onethird of patients not in the project who left the hospital with a follow-up appointment,
almost all project participants had an appointment at that time. Also, more than 90% of
participants’ primary care physicians received patient discharge information within one
day of leaving the hospital. Medication review by pharmacists of project participants also
successfully identified a number of medication errors.97 and

•

Transforming Care at the Bedside (TCAB) was created through a partnership between the
Institute for Healthcare Improvement and the Robert Wood Johnson Foundation in 2003
in order to address safety and quality of patient care in hospitals and to improve staff
satisfaction. One aspect of TCAB addresses transitional care and encompasses (1)
assessing the patient’s post-discharge options at the time of hospital admission; (2)
educating the patient and family caregiver and confirming their understanding of
discharge instructions; (3) providing medication information to outpatient providers seen
after leaving the hospital; and (4) scheduling post-acute care follow-up for high-risk
patients,98 or providing a follow-up phone call and scheduled physician office visit to
moderate risk patients.99 An assessment found the intervention was associated with
reductions in patient wait times and an increase in patient and staff satisfaction, among
other benefits.100

Generally, these models aim to provide (1) care coordination between the hospital and posthospital settings and providers; (2) education of patient and family caregivers; (3) follow-up
95

David Preen, Belinda E. S. Bailey, Alan Wright, Peter Kendall, Martin Phillips, Joseph Hung, Randall Hendriks,
Annette Mather, and Elizabeth Williams, “Effects of a Multidisciplinary, Post-discharge Continuance of Care
Intervention on Quality of Life, Discharge Satisfaction, and Hospital Length of Stay: A Randomized Controlled Trial.”
International Journal for Quality in Health Care, vol. 17, no. 1 (2005), pp. 43-51.
96
See http://www.bu.edu/fammed/projectred/. Louise is a virtual nurse or discharge advocate that runs on a touch
screen display as part of a bedside patient education system that is also part of the RED toolkit.
97
Brian W. Jack, Veerappa K. Chetty, and David Anthony et al., “A Reengineered Hospital Discharge Program to
Decrease Rehospitalization,” Annals of Internal Medicine, vol. 150, no. 3. (February 3, 2009), pp. 178-187.
98
A high-risk patient is defined as one who has been admitted two or more times in the past year and failed teach back
(could not recall or repeat discharge instructions) or as someone whose family caregiver has a low degree of confidence
to carry out self-care at home. Self-care includes weighing self, maintaining diet or adhering to medications, and
accessing food, transportation, and medications.
99
A moderate risk patient is defined as one who has been admitted once in the past year and as someone whose patient
or family caregiver has a moderate degree of confidence to carry out self-care at home. Gail A. Nielsen, Annette
Bartely, Eric Coleman, Roger Resar, Pat Rutherford, Dan Souw, and Jane Taylor. Transforming Care at the Bedside
How-to Guide: Creating an Ideal Transition Home for Patients with Heart Failure. Cambridge, MA: Institute for
Healthcare Improvement; 2008. Although the guide addresses the creation of transition homes for patients with heart
failure, it is presented as adaptable for patients with other conditions.
100
Holly L. Lorenz, Pamela K. Greenhouse, Rosemary Miller, Mary K. Wisniewski, and Susan L. Frank,
“Transforming Care at the Bedside: An Ambulatory Model for Improving the Patient Experience,” The Journal of
Nursing Administration, vol. 38, no. 4, (April 2008), pp. 194-199.

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monitoring of a patient’s health status after discharge; and (4) care from a transitional coach or
team to manage clinical, psychosocial, rehabilitative, nutritional, and pharmacy needs after
discharge. The scope of the intervention (and therefore the associated costs) with respect to
patients targeted, as well as the duration and types of services involved, will vary by care
transition model. Table 2 summarizes key features of the five different care transition models.
Table 2. Key Features of Five Different Care Transition Models

Program focus

Care
Transitions
Initiative (CTI)

Transitional
Care Model
(TCM)

“Coleman
Model”

“Naylor
Model”

Project
BOOST

Patient/caregiver
coaching and
education. Patient
self-management.

Discharge
management and
follow-up.

In-hospital and
discharge
management and
follow-up.

ReEngineered
Design (RED)

Transforming
Care at the
Bedside
(TCAB)
Creating an
Ideal
Transition
Home

Discharge
management and
follow-up.

Discharge
management.
Patient selfmanagement and
follow-up.

Patients Targeted
Age

Age 65 and older
(may be applied to
younger adults).

Age 65 and
older.

At least 18 years
old, with a focus
on older adults.

No age
specified.

No age
specified.

Risk factors and
other patient
characteristics

Have at least one
of 11 diagnoses.

2 or more risk
factors: recent
hospitalizations,
multiple chronic
conditions, or
poor self-health
ratings.

Identifies high
risk patients
using 8P
screening tool at
admission.

Not discussed.

Moderate-risk
and high-risk
patients with
congestive heart
failure (but can
be adapted and
generalized to
other patient
populations).

Cognitive ability
assessed on
admission. If
dementia is
present, then a
reliable
caregiver is
required.

Not discussed.

Patient
assessment on
admission,
including
cognitive status.
Goal is to
identify
learner(s) who
can be either
patient or
caregiver.

English speaking
with working
telephone.
Planned discharge
to home or SNF
(not long-term
care).

Assessment of
cognitive ability
and ability to
participate in
intervention

Cognitive ability
and mental state
determined
through mental
health screen. For
patients who fail
or if dementia is
present, a willing,
reliable caregiver
is required.

Congressional Research Service

Patient’s home is
primary care
setting (testing
TCM on longterm care
recipients).
Cognitively
intact patients
are required
(are now testing
TCM on
cognitively
impaired older
adults).

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Addressing Medicare Hospital Readmissions

Care
Transitions
Initiative (CTI)

Transitional
Care Model
(TCM)

“Coleman
Model”

“Naylor
Model”

Project
BOOST

ReEngineered
Design (RED)

Transforming
Care at the
Bedside
(TCAB)
Creating an
Ideal
Transition
Home

Program Scope
Length of
program

4 weeks.

1-3 months.

Hospital
admission up to
72 hours after
discharge.

Hospital
admission up to
72 hours after
discharge.

Hospital
admission up to
5 days following
discharge.

Staff or team
involved

Transitions
“coach” does not
provide skilled
care.

Transitions care
nurse (TCN) is
an advanced
practice nurse
(APN) with
masters degree
and a caseload
of 15-20
patients.

No explicit care
coordinator.
Team approach
among clinical
nursing staff,
hospitalists
(physicians who
specialize in the
practice of
hospital
medicine) and
other hospital
staff.

Trained
registered nurse
(“discharge
advocate”)
coordinates
discharge plan
with the hospital
team.

Teams of 5-7
people, including
front-line staff
(nurses,
physicians, and
pharmacists) and
patients or
caregivers to
create hospital
program; APN
makes follow-up
phone calls.

Patient
education

Educates patients
or caregivers
about medications
and personal
health record.
Provides
information about
signs of
deteriorating
conditions and
appropriate
follow-up actions.

Educates
patients and
caregivers to
identify (and
meet) health
goals and
manage care.
Nurse discusses
medication and
discharge
instructions with
patient and
family.

Uses teach-back
methoda with
patients and
caregivers to
discuss
medications,
diagnosis,
prognosis, and
self-care, as well
as to educate
about warning
signs requiring
further medical
attention.

Provides
education
throughout the
hospital stay.
Explains
medication plan.
Educates patient
about medical
emergency
options.
Assesses
patient’s grasp
of the discharge
plan and followup care.

Uses teaching
materials
(written, visual,
audio, and faceto-face) and uses
teach-back
methods every
day to educate
patient and
families about
critical
information
needed after
discharge.

In-hospital
services

One visit to help
patient manage
transition out of
hospital.

Assessment
within 24 hours
of TCM
enrollment.
Daily visits
throughout stay.

At different
points of stay,
patients are
assessed using
general
assessment of
preparedness
(GAP) tool to
see if they are
ready for
discharge.

Contact
throughout the
hospital stay.

Intervention
begins in the
hospital on the
first day of
admission and
continues every
day during
hospitalization.

Discharge
planning plan or
checklist

Provides personal
health record
(PHR) with
structured
discharge

Provides written
plan with
instructions and
phone numbers
for emergency

Provides
patients with
clear,
understandable
written

Evaluates
discharge plan
compared to
national
guidelines. Gives

Designates team
member
accountable for
effective
discharge of

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Care
Transitions
Initiative (CTI)

Transitional
Care Model
(TCM)

“Coleman
Model”

“Naylor
Model”

Project
BOOST

ReEngineered
Design (RED)

Transforming
Care at the
Bedside
(TCAB)
Creating an
Ideal
Transition
Home

checklist.

care.

discharge
instructions that
have reminders
of what patients
must do to care
for themselves
following
discharge.

the patient a
written
discharge plan
with
hospitalization,
medication, and
follow-up care
information.

each patient.
Gives patient
discharge
checklist.

Post-discharge
follow-up
services with
patient

Follow-up visits to
SNF and/or the
home. Telephone
calls.

TCN visit in
home within 2448 hours of
discharge and at
least weekly
during the first
month following
discharge, and at
least semimonthly during
the rest of the
intervention;
daily telephone
availability.

Telephone
contact within
72 hours of
discharge.
Ensures followup appointment
with aftercare
medical provider
within 7 days.
Arranges
transportation
to initial follow
up.

Telephone
contact 2-3 days
after discharge
to reinforce
discharge plan
and help with
any problems.

Prior to
discharge: for
high risk
patients,
schedule faceto-face visit
within 48 hours
after discharge;
for moderate
risk patients,
follow-up phone
call within 48
hours and
physician visit
within 5 days.

Assistance with
planning followup services or
treatment or
communication
with post
hospital
providers.

Emphasize
importance of
follow-up
physician visit;
prepare for visit
using role-playing.
Coach follows up
with primary care
provider or
specialist following
patient visit with
provider or
specialist.

TCN
accompanies
patient on first
post-discharge
physician visit
and, if needed,
on subsequent
visits.

Hospitals
confirm that
patient’s
principal
outpatient
provider
receives
discharge
summary.
Suggests
communicating
discharge
summary
information to
other post-acute
providers.

Makes
appointments
with clinicians
and for postdischarge
laboratory
testing and
other services.
Coordinates
appointments
and helps
patients keep
these
appointments.
Provides
outpatient
physicians with
discharge
summaries,
medication lists,
list of patient
medical issues,
including test
results.

Provides patient
information
(discharge
summaries) to
next care
providers within
one day of
discharge. Prior
to discharge,
schedules an
office visit for
moderate and
high-risk
patients.

Medication
management
services

In-hospital
medications are
discussed with

TCN discusses
medications
with hospital

Medications are
reconciled at
admission,

Reconciles the
discharge
medication plan

Reconciles
medications on
admission and

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Written
documentation
of patient’s
treatment,
conditions and
plan of care at
discharge

Transforming
Care at the
Bedside
(TCAB)
Creating an
Ideal
Transition
Home

Care
Transitions
Initiative (CTI)

Transitional
Care Model
(TCM)

“Coleman
Model”

“Naylor
Model”

Project
BOOST

patient and at
home visit
medication lists
are reconciled.
Intervention
focuses on
medication selfmanagement by
patient.
Medication list
provided in PHR.

pharmacist and
other providers.
TCN reconciles
medication upon
patient discharge
from hospital.

during inhospital
transfers and at
discharge.
Medication use
and side effects
are reviewed
with patients.

with prior
medication plan.
Medication use
and side effects
are discussed.
Plan for
acquiring
medications is
discussed with
patient.

discharge.
Evaluates
withheld
medications to
decide if
necessary to
restart. Provides
new medication
list and assesses
patient’s
understanding of
list.

PHR includes
patients medical
history,
medications
(dosages) and
allergies, list of
warning signs or
“red flags” (drug
reactions and signs
of worsening
condition).

Each patient and
primary care
provider of the
patient receives
a summary of
the patient’s
transition, at the
end of the TCM
intervention.

Principal care
providers
receive
discharge
summary.
Patients receive
printed
reminders of
post-discharge
care plan.

Patients are
given a written
discharge plan.

Transition
report assesses
patient’s ability
to engage in
various self-care
activities.
Patients are
given phone
numbers to call
for help, reasons
to request help,
and self-care
instructions.

ReEngineered
Design (RED)

Source: CRS summary of information from care models’ websites provided in above descriptions.
a.

Teach back involves asking patients to recall and restate what they have been told.

Among other goals, CCTP seeks to document whether Medicare can realize measurable program
savings by paying for care transition services. Evaluations of the earlier Medicare Care
Coordination Demonstration (MCCD)101 or the Medicare Health Support (MHS) Pilot
Program102did not find that care coordination programs resulted in clear improvements to patient
101

Established by the Balanced Budget of 1997, 15 care coordination programs for chronically ill FFS Medicare
beneficiaries were started in 2002.The end dates for 11 of the 15 programs were extended from 2006 to 2008; Two of
the 11 were further extended through March, 2010, because of their potential for achieving cost neutrality.
http://www.cms.gov/DemoProjectsEvalRpts/MD/itemdetail.asp?filterType=none&filterByDID=0&sortByDID=3&
sortOrder=descending&itemID=CMS1198864&intNumPerPage=2000. Only two programs had a statistically
significant effect on the annual number of hospitalizations. No program reduced Medicare program expenditures. The
interventions did not systematically improve process measures of quality of care or patients’ health behaviors. Deborah
Peikes, Arnold Chen, Jennifer Schore, and Randall Brown, “Effects of Care Coordination on Hospitalization, Quality
of Care, and Health Care Expenditures Among Medicare Beneficiaries: 15 Randomized Trials” JAMA, vol. 301, no. 6
(2009), pp. 603-618. (Subsequently referred to as Peikes et al., “Effects of Care Coordination.”)
102
Established by MMA, starting in 2005, the MHS Program tested different care management interventions to
improve clinical quality of care and beneficiary/provider satisfaction as well as achieving cost savings for chronically
ill Medicare FFS beneficiaries with congestive heart failure or diabetes. Designed in two-phases, after a three-year
period, the program or any of its components could be expanded if evaluated as successful according to established
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quality of care or lower Medicare’s costs. Still, an examination of the more successful MCCD
participants indicates that care coordinators should interact with patients in person rather than by
telephone only and should collaborate closely with patients’ physicians to influence their care.103
At this point, experts suggest that the most effective intervention for care coordination with
respect to cost savings and quality improvement would include a proven care transitions
program.104 However, hospitals or other entities may face certain difficulties in implementing or
sustaining care transitions initiatives. Patient participation rates in these programs have been low,
as a substantial proportion of patients were not interested in enrolling in the transitions programs
or receiving home visits.105
One study found that exposing heart failure patients to a transitions program led to a nearly 50%
reduction in 30-day readmission rates. Looking at the program expenditures, hospital costs and
patient revenues, the study found that the contribution of each patient to the hospital’s profit
margin was reduced by $227 using a care transitions program, compared to the status quo.106
Each participating hospital lost roughly $750 of revenue on average for each patient participating
in the program.107 The authors speculate that even after implementation of the readmission
penalties, hospitals still would not have a financial incentive to pay for transitions programs. In
their view, potential future payment reforms, such as bundled payments or payment based on

(...continued)
measures and conditions. CMS discontinued the program in 2008 after a preliminary evaluation of 18-month interim
results. See https://www.cms.gov/CCIP/02_Highlights.asp and https://www.cms.gov/reports/downloads/
MHS_Second_Report_to_Congress_October_2008.pdf.
103
Also, in order to achieve reduced hospitalizations, the programs may want to target patients with intermediate
average costs, not those who are relatively healthy or extremely sick. J. Z. Ayanian. “The Elusive Quest for Quality and
Cost Savings in the Medicare Program’” JAMA, vol. 301, no. 6 (2009), pp. 668-670. This was also a lesson from MHS
program. Michael Barr, Sandra Foote, Randall Krakauer, and Patrick Mattingly, “Lessons for the New CMS Innovation
Center from the Medicare Health Support Program” Health Affairs, 29 No. 7 (2010); 1305-1309.
104
Peikes et al., “Effects of Care Coordination.” Also, Rachel Voss, Rebekah Gardner, Rose Baier, Kristen Butterfield,
Susan Lehrman, and Stefan Gravenstein, “The Care Transitions Intervention: Translating from Efficacy to
Effectiveness,” Archives of Internal Medicine, vol. 171, no. 14 (July 2011), pp. 1232-1237. (Subsequently referred to as
the Voss study) In this study, Medicare patients who participated in the month-long intervention had 30-day
readmission rates of 13% while those who did not participate in the intervention had readmission rates of 20%.
105
In the Voss study, 55% of patients agreed to participate in the intervention and 14% agreed to a home visit. Low
participation rates also affected the care coordination programs participating in the MCCD. Peikes et al., “Effects of
Care Coordination.”
106
Under the current payment system and typical intervention, the average episode of care costs per patient was
determined to be $6,780, while the revenue was $8,196, for a contribution margin of $1,436. With the care transitions
program, the episode of care costs was slightly lower, $6,236, while the revenue for the episode of care was also lower,
$7,445, for a contribution margin of $1,209. The difference ($1,436-$1,209) in contribution margin was then $227. See
Brett Stauffer, Cliff Fullerton, Neil Fleming, Gerald Ogola, Jeph Herrin, Pamala Martin Stafford, and David J. Ballard,
“Effectiveness and Cost of a Transitional Care Program for Heart Failure,” Archives of Internal Medicine, vol. 171, no.
14 (July 2011), 1238-1243.(Subsequently referred to as Stauffer et al., Effectiveness and Cost of a Transitional Care
Program for Heart Failure (2011)).
107
A hospital’s financial benefit from a rehospitalization could depend upon whether it had excess bed capacity. One
study found that the average length of stay for rehospitalized patients was 0.6 day more than that for comparable
patients whose most recent rehospitalization had been at least 6 months previously; although the hospital incurred
higher costs when treating rehospitalized patients, Medicare’s payments would be approximately the same for both sets
of patients. There might be as much financial benefit from rehospitalizations as first time admissions for a hospital with
excess capacity, but not other hospitals. Jencks, Williams, and Coleman, “FFS Medicare Rehospitalizations,” NEJM,
vol. 360 p. 1427.

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episodes of care, may be necessary to encourage integration of the delivery system along with the
effective use of coordination of care and improved transitional care programs.108
These conclusions were supported in a cost analysis of different clinical interventions and a
simulation of alternative payment incentives using data from New York state.109 Generally, a
hospital’s response would depend both on its circumstances and the payment incentives
established by the different payors.110 The study examined pay-for-performance (P4P) and
episode-based payments. The P4P simulation assumed that each hospital would receive a reduced
payment if its readmissions exceeded a benchmark. With this payment design, a payer would
retrieve savings immediately even if hospital behavior did not change because low-performing
providers were paid less when they exceeded the benchmarks. High-performing hospitals’
payments were not adjusted. Although high performers have no financial incentive to reduce
readmissions further, low-performing hospitals were seen as having the greatest potential for
reducing aggregate readmissions. In this simulation however, only 7% of low-performing
hospitals respond to the payment penalty by implementing a program, such as CTI or Project
RED, to reduce readmissions.111 As discussed in the next section, the financial incentives for
episode-based payments are markedly different than bundled payments under FFS. Under
episode-based payment structures as modeled in the simulation, at least half of the hospitals in
New York state could be motivated to implement either CTI or Project RED.

Forthcoming Medicare Payment Initiatives to
Address Readmissions
As well as establishing CCTP to assist certain high readmission hospitals with care transitions,
ACA included several payment initiatives to encourage FFS providers, particularly hospitals, to
work to minimize rehospitalizations, if not coordinate patient care across settings. This section
will discuss the Hospital Readmission Reduction Program (HRRP), the national pilot program
included in ACA, and the national bundled payment pilot program established by the Center for
Medicaid and Medicare Innovation (CMMI).112
108

In the study by Stauffer noted above, bundled payments would both improve the quality of care for patients and pay
for the transitional care programs. However, the bundled payment amount for the index discharge would need to be set
higher than current reimbursement rates to appropriately fund these programs. Stauffer et al., Effectiveness and Cost of
a Transitional Care Program for Heart Failure (2011).
109
Reducing Hospital Readmissions in New York State: A Simulation Analysis of Alternative Payment Incentives,
Mathmatica Policy Research, September 2011.
110
The study examined pay-for-performance (P4P) and episode based payments. The P4P simulation assumed that each
hospital would receive a reduced payment if its readmissions exceeded a benchmark. Under episode-based payments
the hospitals would receive an enhanced payment for a patient’s initial admission, but no payments for subsequent
admissions within 30 days.
111
This appears to be an obstacle for other care transitions programs as well. In fact, one component of Project BOOST
(discussed earlier) is designed to help advocates for that program establish at least a revenue-neutral business case for
the adoption of that intervention by the hospital See Project BOOST: A Return on Investment Analysis found
http://www.hospitalmedicine.org/ResourceRoomRedesign/RR_CareTransitions/PDFs/BOOST_ROI_Paper.final.pdf.
112
The hospital Value-based Purchasing (VBP) program which will redistribute Medicare payments from lowperforming hospitals to high-achieving or improving hospitals based on certain performance measures starting October
1, 2012, is outside the scope of this discussion; readmission measures cannot be included as part of that program. As
directed by statute, hospital scores in the VBP program will include an efficiency measure starting in FY2015 that will
assess hospital performance based on Medicare spending per beneficiary. This measure will include all spending on
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The Hospital Readmissions Reduction Program (HRRP)
Section 3025 of ACA establishes the HRRP which will reduce Medicare’s payments to hospitals
with higher than expected readmission rates starting for discharges on October 1, 2012.113 In
FY2013 and FY2014, CMS has been directed to select high-volume and high-expenditure
conditions that have readmission measures that are endorsed by NQF. In FY2015, the
readmission measures will be expanded (to the extent practicable) to include the additional four
conditions identified by MedPAC in its June 2007, Report to Congress and to other appropriate
conditions.114 For those measures, the Secretary may use measures without NQF endorsement as
long as due consideration is given to any endorsed measures. Under the program, acute-care
hospitals with excess readmissions will have their base operating DRG payment amounts (for all
Medicare discharges) reduced by an adjustment factor.115 The adjustment factor selected is the
one that would result in the least amount of penalty for the hospital. Specifically, the HRRP
adjustment in a fiscal year will be the greater of: (1) a floor adjustment factor of 0.99 in FY2013;
0.98 in FY2014 and 0.97 in FY2015 and beyond or (2) an excess readmissions ratio based on a
hospital’s adjusted actual or predicted readmissions versus adjusted expected readmissions (which
is used to calculate the amount of excess payments for the applicable conditions and then divided
by the hospital’s total operating base payments for Medicare to derive a penalty percentage).
MedPAC has estimated that the aggregate HRRP penalties will be approximately 0.2% of
Medicare’s IPPS payments in 2013.
CMS is implementing this program over two years. In the FY2012 IPPS rate-setting process,
CMS finalized the readmission measures and related methodology, the calculation of the
readmission rates, and the public reporting of the data. While the 2012 rule included a general
discussion of the payment adjustment model, specific information regarding the payment
adjustment will be included in next year’s IPPS rule. In FY2013, the program will include three
readmissions measures for Medicare inpatient hospital readmissions involving three high-volume
and/or high-rate conditions, PN, AMI, and HF, which account for approximately 12% of all
Medicare admissions. As endorsed by NQF, Medicare’s time frame for a readmission is 30
days.116 As CMS stated, a 30- day timeframe incorporates “a substantial proportion of
readmissions attributable to an index [or initial] hospitalization” and is short enough so that
hospitals and other community entities would be able to improve patient outcomes with
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hospital patients from three days before admission to 30 days after discharge, including Medicare spending on any
rehospitalization. In this respect, the VBP program may provide a general incentive for hospitals to devise and
implement strategies to avoid their patients’ readmissions.
113
Section 3025 of ACA also establishes a program, to be administered by the Agency for Healthcare Research and
Quality, where patient safety organizations (PSOs) work with high readmission hospitals to improve their readmission
rates by March, 2012. See http://www.pso.ahrq.gov/readmin/readmin.htm#general for additional information.
114
MedPAC identified chronic obstructive pulmonary disease, coronary artery bypass graft surgery, percutaneous
transluminal coronary angioplasty and other vascular procedures in addition to PN, HF, and AMI as accounting for
almost 30% of potentially preventable readmissions.
115
The base operating DRG payment amount is determined without regard to the hospital value-based purchasing
program and also excludes outlier, IME, DSH, and low-volume hospital payments. Statutory language indicates that
hospital-specific payments for sole community hospitals (SCHs) are exempt and payments for Medicare dependent
hospitals (MDHs) are exempt for discharges occurring during fiscal years 2012 and 2013. The MDH hospital status
will expire on October 1, 2012.
116
Each rehospitalization during the 30 days following an index admission is considered a readmission, rather than
another index admission. However, patients with multiple readmissions are only counted once.

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appropriate hospital care and transitional care.117 For the FY2013 hospital readmission program,
CMS will assess hospital performance on readmissions using a three-year measurement period
(the applicable period) starting in July 1, 2008 through June 30, 2011. IPPS hospitals with a small
number of cases in the selected conditions (less than 25 cases in three years) would not be subject
to the HRRP penalty (but their cases would be included in the national data). Critical access
hospitals and other IPPS exempt hospitals will not be subject to the readmission penalty.118 As
noted earlier, CMS did not propose specific policies with respect to the HRRP payment
adjustment in the FY2012 rule, but did receive public comments on certain issues. (See the
discussion of the CMS’ all-cause measure in Appendix B for additional information on
implementation issues raised during the FY2012 IPPS public comment period.)
HRRP’s risk-adjustment is intended to control for differences across hospitals in patient
characteristics. Some contend, however, that certain factors affecting readmissions are not
accounted for in the existing risk adjustment and that some hospitals may find it more difficult
than others to reduce readmission rates. Because of the patients that they treat or due to other
factors, hospitals with more complex patient populations or those in certain locations, may have
greater difficulty than other hospitals in responding to high readmission rates.119 Some fear that
these hospitals may have limited resources to spend investing in strategies to reduce preventable
readmissions. This problem may be compounded because the payment penalty applies to only
hospitals and not to other providers that may care for a patient following a patient discharge.120
Finally, hospitals may be located in areas where access to post-acute care or supportive services
within the community following a hospitalization (during the time period for measuring
readmissions) is limited and thus hospitals treating patients in those areas may be less able to
prevent readmissions.
Other factors confronting hospitals may compete with HRRP’s incentives to reduce readmissions.
First, hospitals will continue to be paid for each readmission; despite the payment penalty applied
to the per discharge Medicare reimbursement, hospitals can potentially reduce losses from the
penalty with income from the readmissions. Second, there are annual caps on the payment
penalty, which could create an incentive for some hospitals to limit their investments in patient
safety and other readmission reduction strategies if the costs of such investments are greater than
117

CMS noted that the 30-day time frame “is a clinically meaningful period for hospitals, in collaboration with their
medical communities, to reduce readmission risk. This time period for assessing readmission is an accepted standard in
research and measurement. We believe that during this 30-day time period, hospital and community partners can take
steps to reduce risk by ensuring patients are clinically ready to be discharged, improving communication across
providers, reducing risks of infections, and educating patients on symptoms to monitor whom to contact with questions
and where and when to seek follow-up care can influence readmission rates.” See pp. 51669-70 of the Federal
Register, August 18, 2011, vol. 76, no 160.
118
The Secretary may exempt Maryland hospitals (paid under a Medicare waiver) if the state has a comparable costsavings program. As discussed in the proposed FY2013 IPPS rule published in the Federal Register on May 11, 2012,
Maryland has established a Admission-Readmission Revenue (ARR) Program effective July 1, 2011. CMS will
evaluate that voluntary program and determine whether it meets the criteria to exempt Maryland hospitals from HRRP.
119
“Only a small percentage of 30 day readmissions are probably preventable, and much of what drives hospital
readmission rates are patient- and community-level factors outside the hospital’s control.” Karen Joynt and Ashish Jha,
“Perspective: Thirty-Day Readmissions—Truth and Consequences,” NEJM, (March 28, 2012).
120
In March 2012, MedPAC recommended that Medicare payments to SNFs with relative high risk-adjusted
rehospitalizations be reduced. Once the risk-adjusted measures have been established, MedPAC recommends that the
policy be expanded to cover 30 days after discharge so that SNFs would be encouraged to adopt

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR42546. Public record. Not legal advice.