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Hospitals face Medicare penalties for excess patient readmissions

Beginning today, US hospitals that discharged too many patients with certain conditions and then readmitted them within 30 days for related complications will face penalties totaling $280 million from Medicare, according to government estimates.

The Hospital Readmissions Reduction Program, established as part of the 2010 Patient Protection and Affordable Care Act, went into effect today as the 2013 fiscal year begins. The government estimates that more than 2,200 hospitals, representing 66% of the facilities that serve Medicare recipients, each will be fined an average of $125,000. That equates to 1% of their regular Medicare reimbursements, according to CMS estimates.

The penalties, capped at 1% this year, will apply to hospitals that had the highest readmission rates for acute myocardial infarction, heart failure and pneumonia. For the 2013 fiscal year, the excess readmission ratio is based on discharges that occurred from July 1, 2008 through June 30, 2011. CMS is adhering to risk adjustment methodology endorsed by the National Quality Forum for readmission measures for the three conditions to determine excess readmission ratios. About 12% of Medicare beneficiaries who are hospitalized are later readmitted for a potentially preventable problem, according to the Medicare Payment Advisory Commission.

Maximum Medicare penalties will grow to 2% in fiscal 2014 and 3 percent in October 2015, and Medicare may hold hospitals accountable in the future for four other readmission measures: joint replacement, stenting, heart bypass and stroke treatment.

Later this month the Hospital Compare page on Medicare’s website will provide information on the performance of community hospitals.