Readmission Rate Fines Increase in Year 3 of Medicare Program

During the third year of the Hospital Readmission Reduction Program, CMS will penalize more hospitals than it did during the first and second years of the program.

An analysis of CMS data by Kaiser Health News found that 2610 hospitals will be penalized during fiscal year 2015, up 17.3% from 2225, in FY 2014. Fines for these hospitals with high readmission rates will be up significantly and total an estimated $428 million, which is up 88.5% from $227 million.

A total of 39 hospitals will receive the largest penalty allowed, according to Kaiser.

However, the nation’s readmission rate is dropping. Last year, 18% of hospitalized Medicare patients were readmitted within 30 days, which cost Medicare $26 billion. Approximately $17 billion of that total is potentially avoidable, according to CMS data.

At the end of last year, CMS had reported that readmissions for Medicare beneficiaries had fallen for the second year in a row.

As a result of the fines being levied, the penalized hospitals will receive lower payments for every Medicare patient stay from October 1, 2014, through September 30, 2015. Some fines are as small as a hundredth of a percent, but others are losing 3% of each payment, according to Kaiser.

The analysis explained that part of the reason for higher and more widespread fines is that Medicare began evaluating readmissions for 2 new categories of patients. Since the beginning of the penalties in 2012, Medicare has assessed readmission rates for heart failure, heart attack, and pneumonia patients. Now, Medicare is examining those initially admitted for elective knee or hip replacements and those suffering lung conditions, in addition to the original 3 categories.

Read the full report on Kaiser: http://www.kaiserhealthnews.org/Stories/2014/October/02/Medicare-readmissions-penalties-2015.aspx