47% of U.S. Hospitals Penalized for High Readmissions

Medicare is reducing payments to 2,499 hospitals, or 47% of all U.S. facilities, as a penalty for high readmission rates. The average penalty was a 0.64% reduction in Medicare payments per patient from the beginning of October 2021 through September 2022. Medicare estimates that these penalties will total $521 million over the fiscal year.

The Hospital Readmissions Reduction Program (HRRP) was established in 2012 under the Affordable Care Act as an effort to counteract the financial incentives of increased business from frequent hospital readmissions. In 2008, nearly a quarter of Medicare beneficiaries with heart failure were readmitted to the hospital within 30 days.

A recent Medicare Payment Advisory Commission analysis found that “the HRRP has been successful in reducing readmissions, without causing an adverse effect on beneficiary mortality.” From 2008 to 2017, after adjusting for the overall health condition of patients, readmission rates decreased from 24.8 to 20.5%, 19.7 to 15.5%, and 20 to 15.8% for patients with heart failure, heart attack, and pneumonia, respectively.

Out of 3,046 hospitals included in HRRP, 82% were penalized, with 39 hospitals receiving the maximum 3% penalty, while 547 hospitals had so few readmissions that they received no penalty. A total of 2,216 hospitals are exempt from the program because they specialize in the treatment of children, psychiatric patients, or veterans. In addition, rehabilitation centers, long-term care facilities, and critical access hospitals are excluded from HRRP.

Source: Kaiser Health News, October 28, 2021.