What Is the Value of Adding Medicare Data in Estimating VA Hospital Readmission Rates

Hospital readmission has received increased attention from policy makers and researchers since the finding that unplanned readmissions cost Medicare $17.4 billion in 2004 (Jencks, Williams, and Coleman 2009). Rates of 30-day readmissions for selected medical conditions are now publicly reported for hospitals reimbursed by Medicare (i.e., those acute hospitals in the Inpatient Prospective Payment System [IPPS]; Centers for Medicare and Medicaid Services 2012a), and for Veterans Health Administration (VA) hospitals. As of October 2012, the Centers for Medicare and Medicaid Services (CMS), through the Hospital Readmissions Reduction Program (HRRP), began to reduce payments to IPPS hospitals with excess readmissions among patients initially hospitalized for acute myocardial infarction (AMI), heart failure (HF), or pneumonia (PN; Centers for Medicare and Medicaid Services 2012a; Kocher and Adashi 2011). The estimated reduction in payments during the first year of the program was $280 million (Federal Register 2012). These developments necessitate accurate estimation of readmission rates. However, fragmentation of health care delivery across multiple health care systems and payers may make it difficult to track a patient's history of inpatient admissions and readmissions comprehensively. For instance, among Medicare beneficiaries, only 11 percent have their health care paid by Medicare alone; 15 percent have supplemental coverage through Medicaid, 34 percent through private employer-sponsored plans, and the remainder through other federal plans or self-purchased (Kaiser Family Foundation 2009). VA enrollees frequently receive health care through their Medicare benefits. Of the one-third of veterans eligible for both VA and Medicare, 46 percent use both for outpatient care, and more than 60 percent receive Medicare-reimbursed inpatient care (Hynes et al. 2007). Although prior studies have described the importance of using multiple data sources to estimate the disease burden of a population (Byrne et al. 2006; Rosen et al. 2005), and others have calculated readmission rates using multiple payer data from the Healthcare Cost and Utilization Project (HCUP; Wier et al. 2011), no studies to date have directly examined the effects of including readmissions data from an additional payer. The goal of this study was to investigate the effects of including outside payer data in an assessment of a health care system's readmission rates. We conducted this study in the VA as it has comprehensive inpatient and outpatient administrative data that can be readily linked to Medicare claims. Compared with a baseline assessment of readmissions that uses VA-only data, the addition of Medicare data may have two direct effects. First, if a patient is discharged from the VA and then readmitted to a Medicare-reimbursed hospital, correct identification of this readmission outcome can be made, whereas with VA-only data it cannot, as these data would not be able to detect hospitalizations outside of the VA system. Second, diagnoses coded in Medicare claims prior to a VA index hospitalization may reveal additional risk information that can be incorporated into a hospital's case mix, enabling more accurate comparison of readmission rates across hospitals. We hypothesize that these effects will (1) increase observed readmission rates; (2) increase the prevalence of diagnostic and procedure-based risk factors used to predict readmission; (3) affect the ratings of hospitals based on the VA Hospital Compare readmission measure; and (4) change which hospitals would be identified as having excess readmissions under the methodology used by CMS to penalize IPPS hospitals. Although the VA in its role as both a payer and provider makes it unusual in the context of the larger health care environment, the insights gained from studying VA readmissions can be informative to other hospital settings. For instance, Medicare-reimbursed hospitals implementing quality improvement programs to reduce readmissions may be unable to track their patients' readmissions to other hospitals, even though these would be accounted for in Medicare payment reduction calculations (Nasir et al. 2010). As a result, hospitals may not appropriately prioritize their quality improvement interventions. In addition, 16 states currently have a legislative mandate for all-payer claims database reporting (Miller and Peters 2013) that is often used for performance measurement but still may lack complete claims from either one payer source or a variety of payers (Love, Custer, and Miller 2010). Thus, their readmission rates may be underestimated; the extent to which this occurs within hospitals across different conditions and across hospitals will vary, but it will undoubtedly change hospital profiles to some degree.