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The Real Cost of Hospital Readmission Rates

an ambulance taking a patient to the ER is the cost of hospital readmissionStarting this year, the Centers for Medicare and Medicaid Services (CMS) fees are being strongly enforced and will affect many non-complying hospitals. The cost of hospital readmission is already extensive for health care payors and patients, and now hospitals will be financially impacted as well.

CMS’s hospital penalties are expected to reach $428 million in FY 2015, due to the increased fees and expanded medical conditions that are now counted as readmissions. This expense nearly doubles the fees collected in FY 2014, at $227 million.

But, CMS’s fees cover just a mere portion of what hospital readmissions cost annually.

The cost of hospital readmission varies by demographic.


Typically, patients age 62+

Medicare had the highest share of all hospital readmissions in 2011 at 55.9%. Each year, the cost of hospital readmission of Medicare patients alone equals $26 billion$17 billion of which could be avoided if care is provided properly the first time. The most common reasons for readmission among Medicare patients include congestive heart failure, septicemia and pneumonia.


Low-income and disabled patients

Medicaid accounts for the second largest share of all hospital readmissions at 20.6%. Medicaid readmissions account for 12.5% of all Medicaid hospitalizations and cost each state $77 million per year. The three most common—and costly—reasons for Medicaid readmissions include septicemia ($319 million), schizophrenia and other mental disorders ($302 million), and mood disorders ($286 million).

Privately Insured

Primarily, patients age 0-65 and of higher socioeconomic status

Privately insured patients account for a much smaller percentage of all hospital readmissions at just 18.6%, but make up the second largest cost share at 19.6%. In 2011, privately insured patients’ readmission costs totaled $8.1 billion. The three most common readmissions within that year consisted of maintenance of chemotherapy or radiation, mood disorders and complications of surgical procedures or medical care.


Patients without any personal insurance plan or government coverage

Uninsured patients make up the smallest share of hospital readmissions at a mere 4.9% and just 3.7% of total costs. In 2011, that percentage equated to $1.5 billion in hospital readmission costs. Uninsured patients are most commonly readmitted for mood disorders, alcohol-related disorders and diabetes mellitus complications.

The real cost of hospital readmission has nothing to do with currency—it has to do with the patients. Leaving one hospital stay just to be readmitted within 30 days is discouraging to both patients and their families. Not only is the patient battling illness for longer than they should be, but his or her trust of health care providers and their abilities can drop significantly.

General Medicine, The Post-Hospitalist Company partners with facilities to enhance the quality of care and reduce readmission rates. For 2013, our partners achieved better readmission rates than 95% of CMS’ national peer group. Avoid penalties, meet regulations and improve care—partner with General Medicine.

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Tom Prose