Federal programs designed to cut costs and improve health by penalizing doctors and hospitals are failing at an alarming rate. Some of them actually harm patients, and many don’t cut costs. One in particular, the Hospital Readmissions Reduction Program (HRRP), may have caused thousands of deaths instead of preventing them, and probably hasn’t saved money during its seven years in operation.

The Centers for Medicare and Medicaid Services began reviewing the safety of this program on Jan. 19. It shouldn’t take CMS nearly four months to err on the side of caution and pull the plug on it.

The HRRP was imposed upon Medicare by the Affordable Care Act. Its goal makes sense: reduce the number of patients readmitted to hospitals soon after being discharged. But its approach — penalizing hospitals millions of dollars if their rate of readmissions within 30 days exceeds an arbitrary threshold — makes no sense at all.


The HRRP and other federal “pay for performance programs” were under fire before they began. Evidence suggested that some hospitals would try to avoid penalties by not readmitting patients within the 30-day window, or if they showed up in the emergency department during that time would treat them there and send them home or place them in so-called observation units rather than admitting them to the hospital. There were also indications that these kinds of programs would disproportionately harm socially disadvantaged individuals.

Influential health policy experts either ignored this evidence or downplayed it.

The behavior of the Medicare Payment Advisory Commission (MedPAC), an independent federal body that advises Congress on Medicare, illustrates the problem. In its June 2008 report published two years before the HRRP readmission penalties were enacted, 16 commissioners voted unanimously that “Congress should direct the Secretary to reduce payments to hospitals with relatively high readmission rates for select conditions.” The commission’s untested theory was that punishing hospitals for excess readmissions would nudge them to offer better discharge instructions and more services, such as nurses calling patients at home after discharge, which would somehow improve health so much that readmissions would drop.

The commissioners voted for this approach even though it had never been pilot tested and they could cite no evidence for it. They were, however, aware of its risks. In a section of the same 2008 MedPAC report, entitled “Undesirable responses,” the commissioners presaged the harm that the readmissions program could cause by listing possible negative side effects of the readmissions policy, including denial of care for “certain patients,” such as those who are frail or senile or who have trouble sticking with their management plans.

Long before MedPAC recommended the HRRP to Congress, research had already shown that readmission rates are heavily influenced by factors beyond hospitals’ control. The long list of factors that influence readmissions include, among other things, low income, limited education, race, poor diet, and not taking medications as prescribed. Medicare does not collect data on these key factors and, even if it did, it is impossible to predict how they affect hospital readmission rates. Hospitals that care for larger numbers of poor and very sick patients have paid millions more in HRRP penalties than hospitals that treat a smaller number of such patients, offering proof of this point.

A year before the HRRP began, hundreds of economists and health policy experts signed a letter to Congress defending Affordable Care Act programs that penalized doctors and hospitals for undesirable outcomes — such as readmissions — that are influenced by factors outside of physician and hospital control. These experts asserted without evidence that the ACA “contains essentially every cost-containment provision analysts have considered effective in reducing the rate of medical spending.”

The evidence hasn’t supported their optimism.

Large and rigorous studies have shown that death rates among hospitalized individuals rose after the HRRP began, likely because some critically ill patients were not re-hospitalized and given the inpatient care they needed. Equally worrisome, the discriminatory penalties were disproportionately levied on so-called safety-net hospitals that care for a high number of poor, uninsured, and very sick people. These hospitals are often underfunded to begin with, and the HRRP imposed a kind of reverse Robin Hood effect. This stealing from the poor is a problem with other pay-for-performance nostrums.

The most troubling data come from two recent studies of the HRRP that were published in the Journal of the American Medical Association. The largest of theseexamined its effects on death rates among patients with heart failure, heart attack, and pneumonia within the arbitrary 30-day post-discharge period. The authors reached three disturbing conclusions:

  • After readmission penalties were imposed, there was a significant increase in death rates among people with heart failure.
  • This increase occurred largely in patients who were never readmitted to the hospital but who died within the first 30 days after discharge.
  • There was almost no change in death rates among patients who had been readmitted to the hospital.

The study observed almost the same increase in pneumonia deaths. A smaller separate study also observed an increase in heart failure deaths.

And just two months ago, another time trend study published in JAMA also observed visible increases in heart failure deaths after the start of HRRP.

The likely reason for the increased death rates was that readmission penalties led to some people being denied lifesaving hospital admissions.

To make matters worse, the HRRP doesn’t even seem to save money. Studies show that it may have caused some hospitals to increase their use of emergency rooms and workarounds called observation stays in which patients are placed under observation in the hospital but are not admitted as inpatients, and so don’t count as readmissions.

The HRRP isn’t the only evidence-free federal penalty program that has failed to cut costs and that may be harming patients. Studies of other pay-for-performance programs demonstrated that, instead of improving care, they induced some doctors to “fire” their sickest and poorest patients to raise their quality scores and payments. A large Medicare physician pay-for-performance program known as the Merit-Based Incentive Payment System (MIPS) has been roundly criticized by several studies, including one published on Monday. Their work persuaded the Medicare Payment Advisory Commission to recommend to Congress that MIPS be repealed. MedPAC voted to repeal MIPS in January 2018. Although that decision attracted substantial attention in the health policy world, we haven’t heard a peep about it out of Congress, suggesting that MIPS could stay in existence for years.

The “wellness penalty” is another example of a risky program authorized by the Affordable Care Act. It lets employers increase health insurance premiums for people with high cholesterol or high blood pressure or weighing too much (any of which can be caused in part by genes) who don’t participate in wellness programs or improve their cholesterol, blood pressure, or weight. Some people have refused to participate in this kind of “preventive” testing and quit their jobs because they are worried that their records may not be private, raising fears of reduced employment opportunities in the future. A large controlled trial recently showed that such legislated wellness programs yield no health benefits, despite the efforts of a bloated $4 trillion “wellness” industry that has received business and government subsidies for decades.

Lazy thinking by legislators and advisers must stop. Policymakers must adopt a code of ethics analogous to the oath doctors swear to first do no harm. Just as we require controlled trials showing that new drugs are safe and effective before they can go on the market, we need to insist on the same standards for health policies. Objective methods already exist to measure the effects of national health policies. But doing this will require less hype, more honest interpretation of research, better awareness of the influence of special interests (including a vast consulting industry), and more circumspection from academic leaders when advising Congress.

If we agree that health policies should be shown to be safe and effective before implementation, then it follows that risky programs like the HRRP should be terminated.


Stephen Soumerai, Sc.D., is professor of population medicine, founding and former director of the Division of Health Policy and Insurance Research, and teaches research methods at Harvard Medical School. Kip Sullivan, J.D., is a member of the policy advisory board for Health Care for All Minnesota and the Minnesota chapter of Physicians for a National Health Program.