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August 4, 2016

The 2,597 hospitals facing readmissions penalties this year

Daily Briefing

Medicare will reduce reimbursements for 2,597 hospitals due to readmissions penalties in fiscal year (FY) 2017, according to data released Tuesday by CMS.

The agency released the readmissions penalty data for its Hospital Readmissions Reduction Program (HRRP) in conjunction with its final rule for the inpatient and long-term care hospital prospective payment systems for the upcoming fiscal year. The latest penalties are based on readmissions between July 2012 and June 2015.

Under HRRP, CMS withholds up to 3 percent of regular reimbursements for hospitals if they have a higher-than-expected number of readmissions within 30 days of discharge for six conditions:

  • Chronic lung disease;
  • Coronary artery bypass graft surgery;
  • Heart attacks;
  • Heart failure;
  • Hip and knee replacements; and
  • Pneumonia.

Penalties for FY 2017

The number of penalized hospitals in FY 2017—2,597—represents a decline from FY 2016, when Medicare reduced reimbursements for 2,665 hospitals.

However, according to a Kaiser Health News analysis of the latest data, CMS under HRRP will withhold $528 million in payments over the next year—an all-time high and an increase of about $108 million from FY 2016. The increase is partially due to changes in how CMS measures pneumonia readmissions and the addition of coronary artery bypass grafts to the program's procedure list, Modern Healthcare reports.

According to Kaiser Health News, the average penalty will increase from 0.61 percent in FY 2016 to 0.73 percent in FY 2017. Forty-nine hospitals in FY 2017 will receive the maximum 3 percent penalty.

See our map of readmissions penalties

Ongoing debates

The readmissions penalties come amid continued debate over whether HRRP is penalizing hospitals based more on the kind of patients they see than the quality of care they provide.

Currently, CMS adjust hospitals' readmissions data for certain patient demographic factors, including age, gender, past medical history, and comorbidities when they arrived at the hospital.

But some argue that the agency also should adjust the data to account for patients' socioeconomic status.

Beth Feldpush, SVP of policy and advocacy at America's Essential Hospitals, said, "We are disappointed CMS missed another opportunity to adjust for the social and economic challenges of vulnerable patients in its quality improvement and reporting programs." She added, "The evidence is clear that these programs disproportionately penalize hospitals that serve disadvantaged patients and communities."

Meanwhile, while hospital readmissions have fallen in recent years under HRRP, some experts have raised concerns that the reduction has resulted largely from hospitals placing more patients under observation status to avoid readmission penalties. A study published in February in the New England Journal of Medicine found no correlation between the recent increase in observation unit stays and the decrease in readmission rates, which caused some experts to change their view but left others unconvinced (Rau, Kaiser Health News, 8/2; Whitman, Modern Healthcare, 8/3).

How to avoid readmissions at your facility

Reducing your hospital's readmission rates can seem like an overwhelming task—but it doesn't have to be.

Our Readmission Reduction Toolkit includes resources from across Advisory Board that will help you isolate and correct patient and systemic issues in the four critical stages of care: transition planning during inpatient stay, discharge education, post-acute care coordination, and transitional care support.


Hospital Readmissions Penalties Map
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