CMS Set To Penalize Hospitals With High Readmission Rates

More than 2,000 hospitals nationwide will lose about $280 million in Medicare payments over the next year under an Affordable Care Act provision intended to curb readmission rates, the Kaiser Health News/Chicago Tribune reports.

The penalties account for about 0.3% of total Medicare reimbursements to hospitals.

According to the KHN/Tribune, nearly one out of five Medicare beneficiaries -- or about two million annually -- treated at hospitals return within 30 days of discharge, costing Medicare $17.5 billion in additional claims. Despite efforts by some hospitals to reduce excessive care, the nationwide readmission rate has remained steady at slightly above 19% for several years.

Beginning on Oct. 1, CMS will reduce payments to hospitals with high readmission rates. The penalties are part of a multifaceted effort by Medicare to reward facilities based on how they meet certain care quality and patient satisfaction metrics.

According to CMS data, the agency this year plans to levy penalties on two-thirds of the hospitals -- or 2,211 total -- whose readmission rates it evaluated, including:

• 278 hospitals that will lose the maximum penalty of 1% of their base Medicare reimbursements;
• 1,933 that will receive penalties of less than 1%;
• 50 hospitals that will receive the smallest penalty of one-hundredth of a percent.

The maximum penalty will increase to 2% of regular payments starting in October 2013 and then to 3% the following year, according to the KHN/Tribune.

Penalties Debated

The payment penalties have been "intensely debated," KHN/Tribune reports. Some studies have indicated that black patients are more likely to be readmitted than other patients, which some experts have interpreted to mean that hospitals that treat more blacks will experience undue penalties.

Meanwhile, a number of "top-ranked" hospitals will be penalized, including Beth Israel Deaconess Medical Center in Boston, according to KHN/Tribune.

Kenneth Sands, senior vice president for quality at Beth Israel, said, "A lot of places have put in a lot of work and not seen improvement" in readmission rates. He added, "It is not completely understood what goes into an institution having a high readmission rate and what goes into improving" it (Rau, Chicago Tribune/Kaiser Health News, 9/13).