MedPAC: 67% of Hospitals Face Readmissions Penalty

A report, recently released by the Medicare Payment Advisory Commission, reveals that approximately two-thirds of hospitals will be penalized under healthcare reform's readmissions reduction program.


This is the first year of the readmission program, which considers readmissions from AMI, heart failure and pneumonia. Hospitals that do not curb high readmission rates face a maximum 1 percent cut from base Medicare reimbursements. Starting in October 2013, the maximum penalty will increase to 2 percent of base Medicare reimbursements, and it will be capped at 3 percent in October 2014.

The MedPAC report reveals the following key points:

Readmission rates
•    Overall readmissions have fallen over the last three years.
•    All-cause readmissions fell from 15.6 percent in 2009, to 15.5 percent in 2010 and 15.3 percent in 2011.

Readmission factors
•    There is greater variation in 2011 readmission rates by race and income.
•    There is limited variation in readmission rates across hospital types.

Readmission penalties
•    Of the 67 percent of hospitals that will be penalized, 9 percent will face the penalty cap.
•    The remaining 33 percent of hospitals have no penalty. Of these, 6 percent will not be penalized because they do not have enough cases.
•    The average penalty for hospitals will be approximately $125,000.
•    In aggregate, the penalties will total approximately 0.24 percent of total inpatient hospital payments in 2013.

MedPAC also discussed four long-term issues with the readmissions reduction program:

1.    Computation of the penalty multiplier
2.    Random variation and small numbers of observations
3.    Unrelated and planned readmissions
4.    Socioeconomic status and risk adjustment

More Articles on Readmissions:

Hospital and Health System Strategy in 2012: 6 Key Initiatives
Healthcare Data Guides Tri-City Medical Center's Decisions in Quest for Top Quality
Leveraging Technology to Collaborate With the Community on Reducing Readmissions

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