II 113th CONGRESS 2d Session S. 2501 IN THE SENATE OF THE UNITED STATES June 19, 2014 Mr. Manchin (for himself, Mr. Wicker , Mr. Kirk , and Mr. Nelson ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to make improvements to the Medicare hospital readmissions reduction program.

1. Short title This Act may be cited as the Hospital Readmissions Program Accuracy and Accountability Act of 2014 . 2. Findings Congress makes the following findings: (1) Eliminating avoidable hospital readmissions should be a core tenet of public and private efforts to improve quality of care and reduce health care expenditures. (2) Measures adopted by the Centers for Medicare & Medicaid Services should accurately reflect the quality of care provided by specific hospitals and providers, and such measures should never lower outcome or quality expectations for certain cohorts of hospitals and providers. (3) There are numerous socioeconomic conditions that impact health outcomes and the Medicare hospital readmission reduction program is one of many Federal outcome performance programs that fails to accurately adjust for these influences. (4) Holding all other factors constant, socioeconomic conditions, such as poverty, low levels of literacy, limited English proficiency, minimal social support, poor living conditions, and limited community resources, likely have direct and significant impacts on avoidable hospital readmissions. (5) The Medicare hospital readmission reduction program includes risk adjustment for clinical variables, such as comorbidity and severity of illness, because hospitals should not be penalized for the effects of these uncontrollable factors. Socioeconomic factors can influence readmissions to an equal or greater degree than these clinical factors and the Medicare hospital readmissions reduction program will more accurately measure quality of care once risk adjustment for socioeconomic status is implemented. (6) Research by the Medicare Payment Advisory Commission, the National Quality Forum, and other independent experts has provided compelling evidence that failing to adjust for socioeconomic status in the Medicare hospital readmission reduction program may provide an inaccurate picture of the quality of care provided by hospitals, and has led to the unfair penalization and stigmatization of hospitals serving low-income populations that are, in fact, delivering high-quality health care. (7) Risk adjustment for socioeconomic status in the Medicare hospital readmission reduction program will improve quality of care, increase accountability for all inpatient hospitals serving Medicare beneficiaries, and further reduce preventable readmissions nationwide. (8) The Secretary of Health and Human Services should consider the adoption of socioeconomic adjustment methodologies in other quality reporting and pay-for-performance programs under the Medicare program. 3. Improvements to the Medicare hospital readmissions reduction program Section 1886(q) of the Social Security Act ( 42 U.S.C. 1395ww(q) ) is amended— (1) in paragraph (4)(C)— (A) in clause (i), in the matter preceding subclause (I), by striking clause (ii) and inserting clauses (ii) and (iii) ; and (B) by adding at the end the following new clause: (iii) Adjustment for socioeconomic status (I) In general In determining a hospital's excess readmission ratio under clause (i) for purposes of making payments for discharges occurring on or after October 1, 2016, the Secretary shall risk adjust readmissions to account for the socioeconomic status of the patients served by the hospital. (II) Socioeconomic status For purposes of subclause (I), subject to subclauses (III) and (V), the Secretary shall, to the maximum extent practicable, utilize the most recent data available from the Bureau of the Census in order to develop a quantitative method to adjust for socioeconomic status. In developing such quantitative method, the Secretary— (aa) shall, to the maximum extent practicable, use inputs that address at least one of the following factors— (AA) income; (BB) education level; and (CC) poverty rate; and (bb) may include inputs that address other socioeconomic and sociodemographic factors determined appropriate by the Secretary. (III) Revision of inputs The Secretary may revise the inputs for such quantitative method under subclause (II) on an annual basis to improve the accuracy and validity of the adjustment under subclause (I). (IV) Patients served by the hospital For purposes of subclause (I), the Secretary shall, to the maximum extent practicable, measure the socioeconomic status for all patients served by each hospital. The Secretary may supplement incomplete or inaccessible patient-level data with data related to the geographic region of the patients served by the hospital. (V) Use of alternative adjustment method (aa) In general For purposes of subclause (I), in the case of payments for discharges occurring on or after October 1, 2017, the Secretary may apply a socioeconomic status adjustment using a method other than the method described in subclause (II), such as peer groupings and stratification. (bb) Comparative analysis Prior to the application of the alternative adjustment method under item (aa), the Secretary shall conduct a comparative analysis of such alternative adjustment method and the method described in subclause (II). The Secretary shall publish the results of such comparative analysis and the proposed alternative adjustment method in the Federal Register and seek public comment on such method. (cc) Requirement The Secretary may not apply any alternative adjustment method under item (aa) unless the Secretary determines that such alternative method will demonstrate an aggregate improvement in the accuracy and effectiveness of hospital readmissions reduction program incentives and measurements compared to the adjustment required under subclause (I). ; (2) in paragraph (6)(A), by adding the following before the period at the end: , including information on the results of the readmission measures under this subsection (both before and after the adjustment under paragraph (4)(C)(iii)) and the penalties under this subsection (both before and after such adjustment) ; and (3) by adding at the end the following new paragraph: (9) Adjustment The Secretary shall make proportional adjustments to base operating DRG payment amounts (as defined in paragraph (2)) of applicable hospitals to assure that the application of paragraph (4)(C)(iii) does not result in aggregate payments under this section in a fiscal year that are greater or less than those that would otherwise be made under this section in such fiscal year, as estimated by the Secretary. .