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Examples of Hospital Readmissions Penalties Paid

hospital readmissions expensesAfter repeated miscalculations, the Centers for Medicare & Medicaid Services has discovered errors in the figures it initially reported as part of their effort to reduce hospital readmissions, otherwise known as the Hospital Readmission Reduction Program. Reimbursement penalties previously unaccounted for are estimated to total approximately $280 million that must be reimbursed to the government from 1,422 hospitals across 49 states.

The revised calculations show that only 55 hospitals will face fewer penalties than they had expected with previous calculations.

The Hospital Readmission Reduction Program, a notoriously complicated plan to reduce hospital readmission rates for Medicare patients, began as part of the Affordable Care Act in 2010. This Act was passed after studies showed hospital readmission rates of Medicare patients to be at nearly 20%–a rate that these studies also showed is as excessive as it is preventable, and cost the government over $17.5 billion annually.

The errors in CMS’s calculations averaged only two-hundreds of a percent of the Medicare reimbursements a hospital regularly faced. The most significant revision increase is a raise from 0.62% to 0.73%, which will effect the Florala Memorial Hospital in Florala, Alabama. Western Pennsylvania Hospital in Pittsburgh, Pennsylvania will receive the largest reduction of penalty, from 0.51% to 0.4%.

These numbers are illustrative of a disconcerting trend in the results of hospital readmission data, which shows a disproportionately high penalization rate for hospitals that treat mostly low-income patients. These hospitals include teaching, safety-net, and large hospitals, while only 28% of small hospitals are penalized.

Maryland, which operates under a federal waiver that provides relief from the general reimbursement system, is the only state that remains unaffected by these penalties.

One criticism of these penalties is that Medicare does not distinguish between planned readmissions and emergency readmissions. Medicare is working to refine their mode of analysis, but it is still expected that penalties will reach up to three percent by 2015.

Tom Prose
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