2.5k hospitals penalized by CMS for high readmissions: 10 things to know

In the fourth year of the Hospital Readmissions Reduction Program, 2,592 hospitals will face penalties to their Medicare reimbursements for a high number of 30-day readmissions.

Here are 10 things to know about the fines and the program.

1. The Hospital Readmissions Reduction Program was created under the Affordable Care Act, which required CMS to reduce payments to hospitals with excess readmissions.

2. This year's penalties are based on readmissions occurring between July 2011 and June 2014 for Medicare patients who were originally in the hospital for one of the following conditions: heart attack, heart failure, pneumonia, chronic obstructive pulmonary disease or elective hip and knee replacements.

3. There are 18 fewer hospitals penalized this year than last year (2,592 compared with 2,610, which was a record-high number of penalized hospitals). All but 209 hospitals punished this year were also punished last year, according to Kaiser Health News.

4. The penalties will take effect from Oct. 1 through Sept. 30, 2016, and are projected to cost the hospitals a combined $420 million.

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5. To determine the level of penalty levied against each hospital, CMS uses a formula to determine what the appropriate number of unplanned 30-day readmissions would be for each hospital. The formula involves the hospital's patient mix and now the nation's hospitals performed overall. The penalty is based on the difference between the projected rate of unplanned readmissions and the actual rate, according to KHN.

6. The maximum penalty this year is a 3 percent reduction in Medicare payments, which 38 hospitals will receive this year compared to 39 hospitals last year. The average penalty this year is 0.61 percent, KHN reported.

7. Four hospitals have received the maximum penalty each year under the program, according to KHN: Two in Kentucky, one in Louisiana and another in Tennessee.

8. A total of 506 hospitals will have Medicare reimbursements docked by 1 percent or more.

9. Not all hospitals are subject to the program. For instance, hospitals in Maryland cannot be penalized, because the state has a special payment arrangement with Medicare, according to KHN. Additionally, critical access hospitals and hospitals that specialize in certain types of patients, like children or veterans, are exempt.

10. The Readmissions Reduction Program is not without its fair share of controversy. Some organizations and experts have argued that the program is flawed. For instance, the Altarum Institute's Center for Elder Care and Advanced Illness noted that hospitals that reduce both readmissions and discharges are being penalized under the program. The National Quality Forum is looking into whether patient socioeconomic factors should be part of readmission measurement, according to KHN, and hospitals are lobbying CMS and Congress to include socioeconomic factors as well.

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