The Medicare stakes are about to get higher.

Section 3025 of the Affordable Care Act established the Hospital Readmissions Reduction Program (HRRP), which is, essentially, a penalty program for hospitals with excessive readmissions for certain diagnostic groups. In fiscal year 2013, a 1% maximum penalty was instituted and CMS charged a total of 2,213 hospitals about $280 million in readmission penalties. In year two, penalties went up to 2%, but planned readmissions were excluded for excess readmission calculations.

But here comes the third phase. On Oct. 1, 2014, the maximum penalty will go up to 3% and expand the number of conditions for which readmissions are penalized. Included for the first time will be chronic lung disease and elective hip and knee replacements. These new diagnosis groups mean more data are needed to measure and market your performance.

While the changes to the HRRP don’t have a direct impact on post-acute provider payments, they do affect the metrics you measure. So now is the time to ask: What is your current rate of readmission among residents in these new diagnostic groups? How does your rate compare to local or state benchmarks? Risk-adjusted rates reveal areas of market strength and areas for program management improvement.

How can you make an immediate impact on readmission rates and gain the attention of referrers in your market? By looking at the conclusions that your root cause analysis (RCA) suggests and focusing on one factor at a time. A provider recently discovered it had a high rate of rehospitalizations among its total knee population. By taking a closer look at individual cases of beneficiaries readmitted to the hospital, important care transition factors were identified and addressed through clinical program coordination. Insights gained through the RCA process makes it possible to predict and prevent events even before they occur.

Typically, the focus is on the 30-day readmission rate, but you must also have an understanding of what specific days in the stay might be problematic for you, and that requires a more detailed analysis. For example, do you have a high rate of readmissions within the first three days following admission? Tracking and trending this rate will help you measure improvement in your care transition process.

In calendar year 2013, we calculated the national average adjusted rate of readmissions to be 3.4% within the first three days following admission to a SNF. Pneumonia (a penalized diagnosis) had the highest adjusted rate of readmissions in the first three days at 3.6%, while congestive heart failure had the lowest adjusted three-day rate of readmission at 3.2%. Adding metrics into your data warehouse allows you to manage the variables that accompany care transitions among specific diagnostic groups, and prove to your referral sources that you have an analytics-driven process in place to manage these transitions.

Whatever role you play — payer, provider, or beneficiary — you have heightened concerns over rehospitalization events. Additional diagnostic groups are an invitation for more data, and ultimately, more data-driven decisions.

 By looking at these sub-groups of residents, you can quickly identify where to take action to lower your overall rate of rehospitalizations. By doing so, you’ll improve your standing with local hospitals and other referral sources; but what’s more, you’ll take the right course of action driven by analytics — not by hunches, gut feelings or old beliefs. So pinpoint the diagnostic areas where you perform well and tell your data story to the world!

Steven Littlehale is a gerontological clinical nurse specialist, and executive vice president and chief clinical officer at PointRight Inc.