CMS eases readmission penalties for safety-net hospitals

Partially because of a push from Congress, CMS is easing its penalties for 30-day readmissions for hundreds of safety-net hospitals, according to NPR.

The penalties were established in 2012 under the ACA in an effort to boost patient care. CMS estimates hospitals will lose $566 million in the latest round of penalties that will be assessed over the next 12 months because patients ended up back in their facilities.

Safety-net hospitals, which serve a large number of low-income patients, have argued for years that these sanctions adversely affect them. They have argued that their patients are more likely to suffer complications and have a readmission through no fault of the institution, but rather because the patients can't afford necessary medications or don't have primary care physicians to monitor their recovery.

However, effective Oct. 1, lawmakers mandated that CMS consider the long-standing argument from safety net hospitals: that they shouldn't be penalized or held to the same standard of readmission as other hospitals. 

In a major change to its evaluation of readmission rates that took effect this year, CMS stopped judging each hospital's readmission performance against all other hospitals. Rather, the agency assigned hospitals to one of five peer groups with similar percentages of low-income patients. To assess the penalties, Medicare compared each hospital's readmission rates from July 2014 to June 2017 against the readmission rates of its peers to determine whether a penalty should be assessed and how much the penalty would be.

CMS will assess penalties or dock payments to 2,599 hospitals in fiscal year 2019, which begins Oct. 1.  The penalties resulted from fiscal year 2018 readmissions.

However, the new evaluation method has shifted the burden of those punishments away from safety-net hospitals. Penalties levied against safety-net hospitals in fiscal year 2019 will drop by a fourth on average from fiscal year 2018, according to NPR.

"It's pretty clear they were really penalizing those institutions more than they needed to," Atul Grover, MD, executive vice president of the Association of American Medical Colleges, told NPR. "It's definitely a step in the right direction."

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