Medicare’s Hospital Readmissions Reduction Program (HRRP) requires payments to hospitals with excess readmissions to be reduced by a calculated factor, as an incentive for hospitals to implement strategies to reduce the number of preventable readmissions. The Medicare regulations set forth in Title 42, Sections 412.150-412.154 of the Code of Federal Regulations sets forth the methodology to calculate a penalty to be imposed on hospitals based on the frequency of readmissions within 30 days that Medicare deems preventable for certain diagnoses. This formula, or “readmission payment adjustment factor” affects all Medicare payments to the hospital.
However, be cognizant that private Medicare managed care plans, in addition to applying the readmission payment adjustment factor to all Medicare payments, may also try to impose an additional burden on hospitals which is not in accordance with the Medicare HRRP. For example, we have seen a private Medicare managed care company outright deny, carte blanche, all readmissions if they occur within 30 days of discharge. Moreover, it labeled this policy “Medicare Readmission Policy for DRG Based Providers.” In reviewing the Medicare regulations related to the HRRP, there is no statutory and/or regulatory requirement that the private Medicare managed care plan outright deny claims for readmissions if they occur within 30 days of the original claim. The required action authorized by Medicare’s HRRP is the reduction of all Medicare payments to the hospital calculated pursuant to the readmission payment adjustment factor, which the private Medicare managed care insurer follows. Again, be aware that if the Medicare managed care plan implements additional policies, such as systematically denying all admissions within 30 days of a previous admission, those actions would not be in accordance with Medicare’s HRRP.
If a claim is denied by a Medicare managed care plan due to a readmission determination, it is suggested that the hospital file an appeal. In addition to arguing that the Medicare HRRP does not require systematic denial of readmissions, the hospital may assert that such a denial is a violation of Pennsylvania case law. In Pennsylvania, if an insurer is invoking an exclusionary provision to exclude coverage, the insurer bears the burden of proving that the exclusionary provision is applicable to this particular set of facts. The burden is NOT on the hospital to prove that the facts are not within the policy exclusion.
The hospital may also argue that the Medicare managed care plan’s policy of automatically denying an admission if it is within 30 days of a previous admission is a violation of the Pennsylvania Unfair Insurance Practices Act, 40 P.S. § 1171.5. This statute states that if an insurer fails to adopt and implement reasonable standards for the prompt investigation of claims and refuses to pay claims without a reasonable investigation based upon all available information, it constitutes unfair claims practices. 40 P.S. § 1171.5 (a)(10)(iii) and (iv).
Medicare’s Hospital Readmission Reduction Program is limited to the aforementioned factor reductions. However, if a Medicare managed care plan imposes additional penalties, such as outright denying a claim as a prohibited readmission, the above legal arguments can be espoused in an appeal to the carrier, including any clinical/medical arguments that can distinguish the two admissions. Our experience in filing these appeals has resulted in overturning readmission denials into compensable claims.
If any Provider has any questions regarding this topic, please feel to contact Attorney Charles J. Hilton at (412) 435-0162.
Charles J. Hilton & Associates, P.C.
Attorneys at Law
Oakmont Station Two
527 Cedar Way
Suite 203
Oakmont, PA 15139
The Hospital Revenue Cycle Law Firm