One-year costs of medical admissions with and without a 30-day readmission and enhanced risk adjustment

BACKGROUND: To overcome the limitations of administrative data in adequately adjusting for differences in patients’ risk of readmissions, recent studies have added supplemental data from patient surveys and other sources (e.g., electronic health records). However, judging the adequacy of enhanced risk adjustment for use in assessment of 30-day readmission as a hospital quality indicator is not straightforward. In this paper, we evaluate the adequacy of risk adjustment by comparing the one-year costs of those readmitted within 30 days to those not after excluding the costs of the readmission. METHODS: In this two-step study, we first used comprehensive administrative and survey data on a nationally representative Medicare cohort of hospitalized patients to compare patients with a medical admission who experienced a 30-day readmission to patients without a readmission in terms of their overall Medicare payments during 12 months following the index discharge. We then examined the extent to which a series of enhanced risk adjustment models incorporating code-based comorbidities, self-reported health status and prior healthcare utilization, reduced the payment differences between the admitted and not readmitted groups. RESULTS: Our analytic cohort consisted 4684 index medical hospitalization of which 842 met the 30-day readmission criteria. Those readmitted were more likely to be older, White, sicker and with higher healthcare utilization in the previous year. The unadjusted subsequent one-year Medicare spending among those readmitted ($56,856) was 60% higher than that among the non-readmitted ($35,465). Even with enhanced risk adjustment, and across a variety of sensitivity analyses, one-year Medicare spending remained substantially higher (46.6%, p < 0.01) among readmitted patients. CONCLUSIONS: Enhanced risk adjustment models combining health status indicators from administrative and survey data with previous healthcare utilization are unable to substantially reduce the cost differences between those medical admission patients readmitted within 30 days and those not. The unmeasured patient severity that these cost differences most likely reflect raises the question of the fairness of programs that place large penalties on hospitals with higher than expected readmission rates. ELECTRONIC SUPPLEMENTARY MATERIAL: The online version of this article (10.1186/s12913-019-3983-7) contains supplementary material, which is available to authorized users.