One of the most reasonable stipulations of the Affordable Care Act is the HRRP section (Section 3025). It recognizes that there is a moral hazard in treating the same patient over and over again for the same condition (and being paid for that treatment). As a result HRRP was stipulated, which requires that an admitting hospital keep its Readmission Rate at or below a reasonable annual rate as compared to peer hospitals. If they do not they face penalties to their Medicare reimbursements portfolio.

Unfortunately in many cases Re-admissions can vary depending on a wide variety of factors:

  • How well does the patient understand and follow the medical regimen prescribed at Discharge?
  • How much of a lifestyle change does the post discharge regimen represent (i.e. a heavy smoker/drinker)?
  • Does the patient have the ability to assess possible negative trends following discharge and self-report, or are
    they likely to wait until things progress to an Acute situation, requiring a visit to the ER?
These are factors typically out of the Hospitals control. In fairness Hospitals are not trying to generate revenue by creating Revolving Door ER Patients. Most Emergency Rooms are Loss Leaders that act as the front door to the hospital. The losses incurred in the ER are offset by care given in Surgical Suites and Longer Term Care. For those hospitals which do not offer those services (and are mandated to not offer more than 96 hours of In Patient care – like a CA Hospital) there is no opportunity to recover the losses incurred in the ER in other departments. This means that an ER that is losing money on the first visit by a patient who then sees them again, gets an opportunity to lose money TWICE on that patient… however the rationale behind HRRP still does make sense. 
The problem is that HRRP has a disproportionally large impact on Rural Critical Access Hospitals – so much of their revenue comes from Medicare, a 3% penalty on all Medicare reimbursements due to a higher than acceptable Readmission rate can have a significant negative impact on their bottom line, and many are already in trouble.