Hospital Readmission CMS Penalties Climb for 2017

Medicare is going to penalize 2, 597 hospitals by withholding more than half a billion dollars in payments next year.

In October 2012, CMS (Centers for Medicare and Medicaid Services) began reducing Medicare payments for Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions. Excess readmissions are measured by a ratio, by dividing a hospital’s number of “predicted” 30-day readmissions for heart attack, heart failure, pneumonia, hip/knee replacement, and COPD by the number that would be “expected, ” based on an average hospital with similar patients. A ratio greater than 1.0000 indicates excess readmissions.

The penalties, according to a Kaiser Health News KHN analysis, are for about the same number of hospitals penalized last year, but the average penalty will increase by 20%. Overall, the total amount being withheld amounts to $108 million because of changes in how readmissions are measured.

The Kaiser analysis found that 1, 621 hospitals have been penalized in each of the five years of the program.

Since the Hospital Readmissions Reduction Program (HRRP) began, national readmission rates have dropped.

The program has not been without controversy. Hospitals that treat low-income patients say they face special challenges because their patients may have more trouble recuperating due to an inability to afford medications or lacking social support to follow physician instructions. CMS says those hospitals should not be held to a different standard.

According to KHN, the fines are based on Medicare patients who left the hospital from July 2012 through June 2015. For each hospital, the government calculated how many readmissions it expected, given national rates and the health of each hospital’s patients. Hospitals with more unplanned readmissions than expected will receive a reduction in each Medicare case reimbursement for the upcoming fiscal year that runs from October 1, 2016 through September 2017.

The payment cuts apply to all Medicare patients, not just those with one of the six conditions Medicare measured. The maximum reduction for any hospital is 3%, and it does not affect special Medicare payments for hospitals that treat large numbers of low-income patients or train residents. Forty-nine hospitals received the maximum fine. The average penalty was 0.73% of each Medicare payment, up from 0.61% last year and higher than in any other year, according to the KHN analysis.

According to a study just published in AJMC.com, the HRRP has had a major impact on hospital leaders’ efforts to reduce readmission rates, which has implications for the design of future quality improvement programs. “However, leaders are concerned about the size of the penalties, lack of adjustment for socioeconomic and clinical factors, and hospitals’ inability to impact patient adherence and post-acute care. These concerns may have implications as policy makers consider changes to the HRRP, as well as to other Medicare value-based payment programs that contain similar readmission metrics.”

To see the data on specific hospitals, click here: https://www.medicare.gov/hospitalcompare/readmission-reduction-program.html