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Hospital Readmission Reduction Program


The Hospital Readmissions Reduction Program (HRRP) was created under the Patient Protection and Affordable Care Act of 2020. This program is value-based, and it was established with the main objective of reducing payments to hospitals that have excess readmissions. The program plays an important role in ensuring that Americans get improved healthcare services as it links payment to the quality of care given in different hospitals. Therefore, the rate of readmissions in hospitals is inversely proportional to the level of payments received. As such, HRRP incentivizes hospitals to improve the quality of care given to patients and communication level, especially in post-discharge planning to support patients sufficiently as they transition from care facilities to their homes. The purpose of this paper is to explain the benefits, impact on clinical outcomes, and costs related to the HRRP policy.

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HRRP Benefits and Impacts

The first benefit of the HRRP policy is the impressive reduction of readmission rates of patients in various hospitals. According to McGarry et al. (2016), “early evaluations of this program have been promising, with multiple descriptive studies finding declining readmission rates among Medicare beneficiaries in conjunction with HRRP implementation” (p. 162). As such, care outcomes have improved healthcare services in the hospitals. Readmissions are expensive to the patient in terms of associated costs, poor health outcomes, and lost time. Therefore, HRRP has played a central role in ensuring that patients experience an improved quality of life based on the nature of care that they receive from hospitals.

In terms of clinical outcomes, HRRP has motivated hospitals to become creative in the way they handle patients to ensure a minimum number of readmissions. With the focus turning on the quality of care provided, clinical outcomes have improved considerably as patients stay away from hospitals after discharge. Therefore, it suffices to argue that HRRP has been critical in the improvement of clinical outcomes. A study conducted by Hoffman and Yakusheva (2020) showed that each “additional $5000 in the incentive amount was associated with a 0.6 – to 1.3–percentage point decrease, or up to a 26% decrease, in excess readmission” (p. 1). These results underscore the important role that HRRP has played in ameliorating clinical outcomes.

As such, for hospitals to keep readmissions at a minimum, means that they need comprehensive financial planning and human resource management strategies to derive maximum utility from the available resources. This assertion implies that HRRP has introduced the concept of cost-effectiveness in American hospitals. According to Gai and Pachamanova (2019), the main areas in which HRRP has benefited the healthcare sector include the “effort to reduce excess hospital readmissions, lower health care costs, and improve patient safety and outcomes” (p. 1). Therefore, in terms of healthcare costs, with increased quality of care and minimal readmissions within 30 days after discharge, such costs have gone down significantly. Even people without healthcare insurance coverage, are likely to benefit from the HRRP directives as hospitals step up their efforts to provide high-quality care to all patients.

However, HRRP has had unintended consequences whereby adverse effects have been experienced in various hospitals. For instance, the initial design of the policy did not consider that different hospitals handle diverse populations of patients. A good example is that of teaching and rural hospitals that mainly deal with patients with complex health conditions, which means that they will have high admission rates. Therefore, such hospitals will be handed higher penalties, and this aspect affects their ability to provide quality care to patients (Joynt Maddox et al., 2019). This scenario becomes cyclical as these care facilities continually lack the finances to put the right infrastructure and human resources in place for minimal readmissions. This realization led to the revision of the HRRP policy to include stratification of hospitals based on the nature of the patient populations served. After this revision, teaching hospitals and others serving vulnerable populations stood a better chance of receiving reduced penalties for readmissions (Joynt Maddox et al., 2019). Therefore, they would have the needed resources to ensure improved clinical outcomes through cost-effective management and planning.


As such, it suffices to conclude that HRRP has had numerous benefits by ensuring that people in the US receive quality healthcare services. With hospitals facing the probability of being penalized for higher readmission levels than expected, they have resorted to cost-effectiveness in the quest to derive maximum utility from the available resources. In return, the rate of readmissions has dropped significantly, which underscores improved clinical outcomes. The cost of care has also been reduced due to the minimal readmissions and the provision of quality care services. However, HRRP initially had major flaws, which prevented hospitals that treat complicated cases from achieving the objective of minimal readmission rates. Nevertheless, this problem was solved in 2019 when the policy was revised to stratify hospitals based on the patients’ demographics. Therefore, such hospitals now receive fewer penalties than before, and this scenario allows them to improve the quality of services delivered to patients.


Gai, Y., & Pachamanova, D. (2019). Impact of the Medicare hospital readmissions reduction program on vulnerable populations. BMC Health Services Research, 19(837), 1-15.

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Hoffman, G. J., & Yakusheva, O. (2020). Association between financial incentives in Medicare’s hospital readmissions reduction program and hospital readmission performance. JAMA, 3(4), 1-11.

Joynt Maddox, K. E., Reidhead, M., Qi, A. C., & Nerenz, D. R. (2019). Association of stratification by dual enrollment status with financial penalties in the hospital readmissions reduction program. JAMA Internal Medicine, 179(6), 769–776.

McGarry, B. E., Blankley, A. A., & Li, Y. (2016). The impact of the Medicare hospital readmission reduction program in New York state. Medical Care, 54(2), 162-171.

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