Innovations in Healthcare

Medicare Readmissions Penalties Expected to Reach $428 Million


CMS started the third year of its Hospital Readmissions Reduction Program on October 1, with 2,610 U.S. hospitals—slightly more than in previous years—on the hook for penalties of up to 3% of their Medicare diagnosis-related grouping payments based on 30-day readmissions rates for diagnoses of myocardial infarction, heart failure, pneumonia, COPD, and elective total hip and total knee arthroplasty posted between July 2010 and June 2013.

According to analysis by Kaiser Health News, 39 hospitals will incur the maximum penalty, and hospitals collectively will pay an estimated $428 million in penalties in the current fiscal year for readmission rates deemed higher than expected by CMS formulas.

Medicare’s overall readmission rate in 2013 was 18%, which was down slightly from previous years but still amounted to two million patients. CMS estimates that these readmissions cost $26 billion, 65% of which was attributed to avoidable readmissions. CMS’ fiscal year 2015 final rule for reimbursement under the Hospital Inpatient Prospective Payment System, first published in the Federal Register, spells out fiscal year 2015 penalties and readmissions payment adjustment factors.

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