Readmissions Better from ACA or Preexistingly Worse from DRG?

In 1983 after a very short period of testing on a very atypical state (New Jersey) and because there were no other existing options for cost cutting, the hospital payment method known as DRG or Diagnosis Related Groups was implemented. Bundling under a disease or condition or treatment remains a very popular method of cutting costs and is now being implemented with physician payments. What are the benefits and what are the consequences? Should we implement methods that have long term consequences when we fail to consider or study these issues?

If there is any consolation for President Obama and CMS, 

...it may well be that Readmission Penalties took away some of the "poor quality" result of the Bundling Bungling that preceded it (DRGs). This may be the only evidence for Accountable Care working. Of course Readmissions focus has consequences also.

Is the Change in Readmission Rates an Indication of Poor Quality from DRGs?

This is an interesting question. As noted previously by the President, readmissions has improved.

The following was prepared for the President by CMS.




Why Have Readmissions Improved?

Although the article implicates that ACA has contributed to a decline in readmissions, is this the whole story? There was no analysis including controls and variables. There was only a graphic with a beginning time and an end time.

There are many factors that interact to influence readmission changes. The ACA readmission penalty has been a powerful incentive. 

Perhaps the best alternative explanation for readmissions change is that "quality" as measured in readmissions, was made worse by the payment design that existed before the readmissions penalty. 


Lower quality from DRG could be huge as the DRG bundling 

of hospital payment has existed since 1983. 


Decades of health care for tens of millions of Americans may have been shaped to "poor quality" because of changes - changes such as fixed payment regardless of individual patient need, cuts in costs of supplies and personnel such as nursing, and a massive incentive to dump patients out of the hospital

But this could also be the result of  readmission rates "normalizing" after being too high before the readmission penalty was implemented. What if DRGs increased the readmission rate? This is a reasonable consideration considering the pressures to dump patients faster and without much consequence. 

What if the nation should have had 18% or even 17% all along, but the previous design resulted in a higher readmissions rate to 19% just waiting to decrease when the impact of the old design was removed? What if the DRG design inflated readmission rates from the 1980s until recently when "Accountable Care" resulted in hospitals less willing to do risky discharges?

DRG based payments (diagnosis related group bundling of payment) have focused hospitals on getting patients out faster and cheaper. Cheaper means personnel cuts and nurses are the biggest personnel cost. Nursing changes could also impact care in hospitals. Nurse ratios are considered by some to be important in care quality and patient safety.

An apparent improvement may be because of the issues that occurred in previous years.

Short List of Possible Benefits of DRGs or Bundling According to Disease

  • Cost cutting
  • Simplified payment for payers
  • Major pressure on physicians to get charts done in a timely fashion
  • Better payment to those most organized in information (faster, more)

Longer List of Drawbacks of DRGs or Bungling

  • Lesser payment and slower payment to those less organized
  • Closures of hundreds of small hospitals and decline of hospital based workforce in small health areas (general surgical specialties)
  • Facilitation of hospitalist workforce to get patients out faster, now employing 50,000 primary care trained physicians (basically polishing off internal medicine training as a source of primary care)
  • 8 to 10 billion more in hospital cost a year for hospitalists with billions more each year since 1983 to adapt to DRG and protect hospital interests
  • Additional costs of hospitalists thrust on hospitals marginal in bottom line
  • Marginalization of nursing - largest cost in personnel with personnel the largest hospital cost
  • Patients dumped faster and with less regard for home and community resources
  • Higher risk of poor outcomes for certain patients (pneumonia, anticoagulation) 
  • There are always potential problems for patients who are not always stabilized prior to departure from the hospital


Once again, health policy generally does not improve matters. Health policy results in winners and losers. Usually the bigger and more organized win and the rest are left behind - small hospitals, small practices, primary care, mental health, geriatrics, care where needed...


Can "Quality" Be Made Worse or Better?


This is the area most ignored by ACA, President Obama, and CMS. Many if not most health outcomes are shaped by patient factors - behavior, income, education, health literacy, home situations, work situations, environments, housing, and a number of daily influences. A few hours in a hospital or a few minutes of care from a physician or office is a minor influence. 

It is very difficult to prove that changes in outcomes are due to factors not associated with patient influences. The potential for a clinical intervention to influence quality is quite low. This should be obvious for a meaningless intervention involving digital health records at high cost and when impairing productivity and separating people who deliver care from the patients needing care.


To repeat, the potential for a clinical intervention to influence quality is quite low.

Is Readmission a Reasonable Indicator of Quality?

This answer is a resounding "no." The 30 day mark is a compromise - a compromise in payment that discriminates against care where needed.

Studies demonstrated that 30 days was the best choice of a time period to use. Readmission rates were not valid to use for two weeks after admission or longer than 30 days. Longer than 30 days shifts the influences substantially into patient factors and far from from hospital influence. Shorter duration is more about the level of illness of the patient or their type of condition. Different markers for "quality" would also have resulted in differences in the findings.

The science behind readmissions and all quality determinations is all quite shaky. This is because patient factors, genetics, and unknown factors are more influential.

If you want to force some measure upon hospitals, the readmissions measure is slightly better than nothing - except for rural hospitals, hospitals in counties with lowest proportions of workforce, hospitals in counties with higher proportions of elderly, poor, or disadvantaged, hospitals in counties with lesser resources and more difficult patient situations...

Perhaps the most important thing to understand about health care reform since 2010 - is how loosely the term is used. If this is all that can be obtained, how will we ever have reform that matters to most of us.

Why Not Some New Mottos?
Less Bundling Means Less Bungling
Less Peddling (EHR) Means Less Meddling in Health Care
Bigger Is Not Better When Most Depend Upon Small Health


What Do Others Say About Readmissions?
  • Readmission penalties as with other performance measure interventions, discriminate against providers that care for those who are sicker, poorer, older, or have more complex conditions.
  • Readmission improvement attempts can backfire with increases in readmissions for certain conditions.
  • Readmissions rates also have a questionable relationship with other quality measures with variation by condition.
  • Readmission rates are not always preventable. Even if a hospital does succeed in providing the highest quality of care, some readmissions simply are not preventable. Researchers estimate that 23.1 percent of 30-day unplanned readmissions are potentially unavoidable.[18] Meanwhile, the CMS goal for the Hospital Readmissions Reduction Program is to reduce 30-day readmission rates by 20 percent by the end of 2013. This would require a 91 percent reduction among those readmissions that are avoidable, which may be unrealistic.
  • Readmission rates often reflect the community and patient factors, not hospital care. Readmission rates reflect lack of local health resources, lack of local primary care access, and poorly coordinated care. Insurance design may contribute to poor coordination.
  • Incentives that distract providers can actually distract from care – by more dollars spent elsewhere, by attention of care givers directed elsewhere, by lower productivity, by financial compromise of the provider, by marginalization of patient needs. 
The above about what others say about readmissions is from What Obamacare’s Pay-For-Performance Programs Mean for Health Care Quality By Kathryn Nix

Recent Posts and References 

Rallying One Hundred for Health Access Not MACRA


The Ultimate Government Health Care Paradox - Government must facilitate better EHRs and better health access, not prevent them.

Government Compromise of Trauma Response
No Positive Spin for the Innovator Tailspin - more claims for innovation successes are apparently attempts to hide failure
Stop the Promotion To Restore Mental Health Access - claims of mental health care reforms or improvements are a stark contrast from the reality of lowest payment, highest complexity of care, unreliable payment, and poor support other than lots of rhetoric






Primary care can be recovered and should be recovered, 
but cannot be recovered when moving the wrong directions

Robert C. Bowman, M.D.        Robert.Bowman@DignityHealth.org

The blogs represent the opinion of the blogger alone.

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