The Case for Case-Mix Adjusted Rehospitalization Rates

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By Steven Littlehale, Executive Vice President, PointRight

When you look at your personal monthly budget and see that your non-disposable income — what you need to cover your base monthly expenses — equals 65% of your monthly income. Can you assume 65% is an acceptable rate for all households? Well, of course not! Families come in different sizes, have different needs, live in different parts of the country, and have differing goals. What they require for living expenses can vary greatly.

Apply that same thinking to rehospitalization rates. When you see that a skilled nursing facility has a published rate of 16%, does that mean that they are performing worse than the one down the street that has an 8% rate? Again, of course it doesn't. The facility with the higher rates my take more complex residents leading to a more volatile and risky case-mix than the facility maintaining a rate below 10%. Perhaps the low percentage rate is the result of that facility having a large memory care unit with long-term stay residents. However, you can't exactly make these assumptions. You have to look at other data be certain.

This certainty lies in evaluating case-mix adjusted rehospitalization rates. Just as one family may have different expenses that impact the monthly budget, nursing facilities' mix of residents also affects rehospitalization rates. Nursing facilities often attract specific cohorts through specialization and reputation. Just as people close to a family may not know its dynamics, nursing home referrers like physicians, hospitals, and community members may not fully understand the people they serve or their success at serving them. Acuity, diseases and other conditions all influence rehospitalization. This reality makes unadjusted comparisons almost meaningless. Currently published nursing home rehospitalization rates are unadjusted and do not reflect the true quality of care provided.

To help communicate the strengths of a nursing facility to stakeholders and develop realistic quality improvement goals, providers need to look at their unadjusted (observed) rates, but more importantly, their case-mix (acuity) adjusted rates using MDS 3.0 data. From this, an expected rehospitalization rate and case-mix adjusted rates can be calculated.

Case-Mix Adjusted Rate =
Observed Rate
X  National Average Rate
Expected Rate

Regardless of this adjustment, facility rates consider all people who return to the hospital. It's essential to be able to then break this overall rate down by payer type and also key diseases – pneumonia for example. The disease-specific, case-mix adjusted analysis distinguishes quality improvement opportunities from marketing challenges and aligns with how hospitals are motivated by the Hospitalization Readmission Reduction Program (HRRP). You can be excellent at managing pneumonia care, but your overall rehospitalization rate may mask this area of excellence.  Conversely, you may have a real need to improve how you care for admissions with pneumonia, but it is being bolstered by excellence in other areas. The danger here is accepting additional referrals and having a negative outcome damage your reputation and worse your rehospitalization rate.

As hospitals scrutinize readmissions coming from all sources and calculating the associated financial penalty, skilled nursing facilities will need to understand case-mix adjusted rates to discuss and negotiate referrals. Using the example above, if you can show that fewer of your pneumonia patients return to the hospital than that of your competitors, you will not only gain pneumonia residents, but you should also be able to keep getting even better at treating this type of patient, boosting your outcomes and helping you to differentiate your facility through specialty care.

Planning to control and manage rehospitalization rates requires three steps:

1.     Manage rates proactively and work to reduce unplanned, unnecessary returns.

2.     Educate teams beyond those outdated, published rates to include case-mix adjusted rates and rates by payer.

3.     Finally, communicate strengths and explain quality initiatives to referrers, the community, and insurance providers.

Rehospitalization reform brings opportunity for skilled nursing facilities to put their best face on the care they provide. Once you truly can read your rates beyond what is published and match strengths to the needs of your community and refers, quality facilities can begin to break the stereotyped image of nursing home care and ground their reputation as an extension of quality hospital care.

Learn more about case-mix adjusted rates. Download: Rehospitalization: Real Rates for Real Results.