Comparison of Long-run Trends in 30-day Readmission by Degrees of Medicare Payment Cuts.
The Affordable Care Act enacted significant Medicare payment reductions to providers, yet long-term effects of such major reductions on patient outcomes remain uncertain. Using the 1997 Balanced Budget Act (BBA) as an experiment, we compare long-run trends in 30-day readmission across hospitals with different amount of payment cuts.



Using 100% Medicare claims between 1995 and 2011 and instrumental variable hospital fixed-effects regression models, we compared changes in 30-day readmission trends for 5 leading Medicare conditions between urban hospitals facing small, moderate, and large BBA payment reductions across 4 periods [1995-1997 (pre-BBA period), 1998-2000, 2001-2005, 2006-2001]. Patient sample includes Medicare patients who were admitted to general, acute, urban, short-stay hospitals in the United States 1995-2011. Sample size ranges from 1.4 million patients for acute myocardial infarction to 3 million for pneumonia.



We found that 30-day readmission trends diverged post-BBA (2001-2005) between hospitals facing small and large payment cuts, where large-cut hospitals experience slower improvement in readmission rates relative to small-cut hospitals. The gap between small-cut and large-cut hospitals readmission trend was 6% for acute myocardial infarction, 4% for congestive heart failure and pneumonia (all P<0.01) in the 2001-2005 period. The gaps between hospitals were eliminated by the 2006-2011 period as the effect of BBA naturally dissipated over time.



Although payment-cut differences are associated with widening gaps in readmission rates across hospitals, the negative association appears to dissipate in the long run.
*Graduate School of Business and Public Policy, Naval Postgraduate School, Monterey, CA †National Bureau of Economic Research, Cambridge, MA ‡Work completed while at School of Public Policy, University of Southern California, Los Angeles, CA.
Yu-Chu
YC
Shen
Vivian Y
VY
Wu
D000368:Aged; D000369:Aged, 80 and over; D002017:Budgets / Q000331:legislation & jurisprudence; D005260:Female; D005102:Health Expenditures / Q000639:trends*; D006786:Hospitals, Urban / Q000191:economics*; D006801:Humans; D007349:Insurance, Health, Reimbursement / Q000331:legislation & jurisprudence / Q000639:trends*; D008297:Male; D006278:Medicare / Q000331:legislation & jurisprudence*; D009203:Myocardial Infarction / Q000191:economics; D058991:Patient Protection and Affordable Care Act; D010359:Patient Readmission / Q000639:trends*; D011014:Pneumonia / Q000191:economics; D014481:United States