Luck of the draw: Role of chance in the assignment of medicare readmissions penalties

Andrew D. Wilcock, Sushant Joshi, Jose Escarce, Peter J. Huckfeldt, Teryl Nuckols, Ioana Popescu, Neeraj Sood

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1 Scopus citations


Pay-for-performance programs are one strategy used by health plans to improve the efficiency and quality of care delivered to beneficiaries. Under such programs, providers are often compared against their peers in order to win bonuses or face penalties in payment. Yet luck has the potential to affect performance assessment through randomness in the sorting of patients among providers or through random events during the evaluation period. To investigate the impact luck can have on the assessment of performance, we investigated its role in assigning penalties under Medicare's Hospital Readmissions Reduction Policy (HRRP), a program that penalizes hospitals with excess readmissions. We performed simulations that estimated program hospitals' 2015 readmission penalties in 1,000 different hypothetical fiscal years. These hypothetical fiscal years were created by: (a) randomly varying which patients were admitted to each hospital and (b) randomly varying the readmission status of discharged patients. We found significant differences in penalty sizes and probability of penalty across hypothetical fiscal years, signifying the importance of luck in readmission performance under the HRRP. Nearly all of the impact from luck arose from events occurring after hospital discharge. Luck played a smaller role in determining penalties for hospitals with more beds, teaching hospitals, and safety-net hospitals.

Original languageEnglish (US)
Article numbere0261363
JournalPloS one
Issue number12 December
StatePublished - Dec 2021

Bibliographical note

Publisher Copyright:
© 2021 Wilcock et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.


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