Impact of the Hospital Readmission Reduction Program on hospital readmission and mortality: An economic analysis

Reduction in hospital readmissions has long been identified as a target area for healthcare public policy reform by the US government. In October 2012, the Affordable Care Act (ACA) established the Hospital Readmissions Reduction Program (HRRP) program, which requires the Centers for Medicare and Medicaid Services to reduce payments to hospitals with excess readmissions. Even with recent changes in ACA, the HRRP program is still in place. In this study, we empirically examine the effectiveness of the introduction of the HRRP on hospital readmission and mortality rates. We observe that, in general, the introduction of the HRRP has significantly reduced readmission rates. However, the introduction of the HRRP does not necessarily decrease the mortality rates, which highlights the unintended consequences of public policy. What is more interesting is that the impact of the HRRP is heterogeneous in hospital size and racial groups. First, after the HRRP introduction, large hospitals have experienced a greater reduction in readmission rates than small hospitals. Second, after the introduction of the HRRP, the zip code regions with a higher percentage of Hispanic and African‐American populations have experienced a larger reduction in readmission rates. These results contribute to both theory and practice in public policy and provide important and nuanced policy implications for evaluating the effectiveness of the HRRP. Policy‐makers also need to pay close attention to these results for future implementations of policies similar to the HRRP.