A Primer on 30 Day Readmission Contributions to Revenue and Days Length of Stay



By: Saparja Nag  Oct. 17, 2017

Readmission data and analysis has been of key interest to clinicians, hospital administrators, and governmental health programs in order to improve patient care and reduce hospital costs. Programs like the Hospital Readmission Reduction Program (HRRP) and Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) are specific initiatives that enlist hospitals and physicians to decrease readmission rates in their practices. Clinical, operational, and financial effects from declining readmissions must be considered and addressed in implementing the programs. For example, a hospital that has a higher percentage of revenue from 30 day readmissions is more likely to be impacted from declining readmissions. In some cases, patients who are readmitted within 30 days are likely to have a higher LOS than others based on their condition or other symptoms. Therefore, 30 day readmissions may be less profitable for certain specialties and hospitals.

Dexur’s analysis is from the Center of Medicare & Medicaid Services claims data for Medicare patients. The data is further classified into source of admissions, diagnosis related group (DRG), and International Classification of Disease (ICD) codes. This allows for a breakdown of inpatients and payments by hospital, region, and quality metrics like length of stay and readmission rates.  A background on readmission rates and how they are defined can be found  here. The table below explains and defines the various metrics used in readmission rate analysis.

Data Field / MetricWhat It Means
Category / Sub-Category / DRG DefinitionCategories & sub-categories defined based on DRG.
Ex. DRG 470 is categorized in Orthopedics & sub-categorized as Joint Replacement
Total Revenue / PaymentsTotal payments made by Medicare across all discharges for that relevant DRG, category & sub-category
Total Inpatient DischargesTotal discharges/hospitalizations within a hospital with a defined admission & discharge date
Total LOSTotal number of days calculated from the date of admission minus the date of discharge multiplied by the number of discharges to arrive at the total LOS / Days
30 Day Readmissions % Contribution to RevenuePercentage of revenue / payments that come from 30 Day readmissions.
Ex. There were 100 inpatient hospitalizations totaling $1000 in Medicare payments / revenue. Of the 100 inpatient hospitalizations, 20 of them had been hospitalized in the PRIOR 30 days from any hospital. These 20 hospitalizations accounted for $400 in payments to a hospital. This implies that the hospital has 40% of revenue coming from 30 day readmissions.
30 Day Readmissions % Contribution to Days Length of Stay (LOS)The percentage of total days that come from 30 Day readmissions.
Ex. There were 100 inpatient hospitalizations in which patients stayed for a total 500 days. Of the 100 inpatient hospitalizations, 20 of them were hospitalized in the PRIOR 30 days from any hospital. These 20 hospitalizations accounted for 150 days in the hospital. This implies that a hospital has 30% of days length of stay coming from 30 day readmissions.

ABOUT THE AUTHOR

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Saparja Nag

Saparja is a healthcare journalist with a particular interest in how medicine can and should affect health policy. She has extensive experience as a health educator and research scientist in biochemistry. She also enjoys running, cooking elaborate meals, and then eating elaborate meals. Saparja received a Bachelors of Arts in Biochemistry from Vassar College.