More Than Half of Hospitals Penalized for Medicare Readmissions

In the fourth year of the Hospital Readmissions Reduction Program, which makes hospitals pay closer attention to their patients after discharge, half of the nation’s hospitals will be penalized by Medicare because of their readmissions, according to an analysis from Kaiser Health News (KHN).

Since the program’s inception, readmission rates have dropped overall, but 1 in 5 hospitalized Medicare patients are still readmitted to the hospital within 30 days. Last year 18% of hospitalized Medicare patients were readmitted.

A total of 2592 hospitals (54%) will receive lower payments for Medicare patient stays, losing a combined $420 million, according to KHN. Of the hospitals facing penalties, all but 209 were also punished last year, the analysis found.

A total of 2232 hospitals were exempted from penalties because they specialized in certain types of patients, they were designated “critical access” hospitals, or they had too few cases for Medicare to accurately assess.

Last year, 39 hospitals received the largest penalty allowed and in the fourth year of the program 38 hospitals will receive the maximum cut of 3%. A total of 506 hospitals will lose at least 1% of their Medicare payments.

Over the full 4 years of the program, 4 hospitals have received the maximum penalty every year: Harlan ARH Hospital and Monroe County Medical Center in Kentucky; Regional Hospital in Tennessee; and Franklin Medical Center in Louisiana.

According to KHN’s analysis, 4 states reported that 80% or more of their hospitals were being penalized: Connecticut (28 hospitals penalized), Florida (154 hospitals penalized), New Jersey (63 hospitals penalized), and Virginia (68 hospitals penalized). Only 5 states had less than 20% of their hospitals penalized: Idaho (4 hospitals), Montana (5 hospitals), Nebraska (14 hospitals), North Dakota (3 hospitals), and South Dakota (8 hospitals).

There have been concerns about the Hospital Readmission Reduction Program. In March, the Medicare Payment Advisory Committee, which advises Congress on Medicare issues, recommended altering the readmission penalties. One of the concerns regards socio-economic status, with hospitals serving the highest shares of poor Medicare patients having a higher average readmission penalty. MedPAC also highlighted a key problem with the penalty formula itself, notably that the penalties for conditions with low readmission rates are much higher than penalties for conditions with higher readmission rates.

“The Commission’s refinements would provide clearer targets, eliminate the problem of high penalties for low readmission rate conditions, maintain budget neutrality, and provide a more equitable treatment of hospitals with large share of poor Medicare beneficiaries,” MedPAC wrote.