Dramatic drop in hospital inpatient readmissions cannot be explained by a shift to observation stays

Hospitals achieved a notable reduction in their inpatient readmissions rate in 2012 and were not using observation stays to game the system, according to Centers for Medicare & Medicaid Services researchers. That means it is possible increases in the quality of care and care coordination are working in reducing readmissions.

The national, all-cause, 30-day hospital readmission rate for Medicare fee-for-service beneficiaries was 18.5% in 2012, a recently released Medicare & Medicaid Research Review (MMRR) report stated. This was a significant decline from 19%, which was the rate for each year between 2007 and 2011.

Skeptics said this decline might simply reflect hospitals’ growing use of observation status — a trend of great concern to post-acute providers, since beneficiaries must spend three nights as a hospital inpatient to qualify for follow-up skilled care.

The growth in observation stays is possibly due to heightened auditor scrutiny over when inpatient status truly is warranted. Some people have theorized that hospitals also are using observation status more liberally because of reimbursement penalties tied to inpatient readmission rates, the MMRR researchers explained.

The criticism is that hospitals treated the usual number of returning patients in 2012, but kept the inpatient readmissions rate in check by classifying more of these return visits as observation stays. However, if this were the case, “one would expect to see unusually large growth” in observation stays occurring within 30 days of hospital discharge in 2012, the study authors wrote. But observation stays within the 30-day window increased only to 9.2% in 2012, the researchers determined by looking at Medicare claims data. This was about the same as the 9% annual growth for each of the previous five years.

The same was true for the growth in emergency department visits in 2012, suggesting that hospitals also were not artificially controlling inpatient readmissions numbers by substituting ED care for inpatient care, the report stated.

Their findings bolster the case that improved care quality might have led to fewer readmissions in 2012, the researchers noted, although they acknowledged that a “comprehensive explanation” was outside the scope of their work.