Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Medicare Readmission Penalties Hit 2,610 Hospitals

By Elizabeth Snell

- Medicare fined 2,610 hospitals across the nation for readmission penalties, according to a report released last week. This is a record number of hospitals being fined for having patients returning within one month for additional treatment.

In 2013, approximately 18 percent of Medicare patients who had been hospitalized were readmitted within one month. Even though that’s a decrease from previous years, nearly 2 million patients return per year. According to the Centers for Medicare & Medicaid Services (CMS), those readmissions cost Medicare $26 billion and $17 billion is potentially avoidable.

This year, the maximum readmission penalty rate increased from 2 percent to 3 percent. Approximately 75 percent of hospitals subject to the Hospital Readmissions Reduction Program will receive lower payments for every Medicare patient stay from Oct. 1 through next Sept. 30. Medicare estimated that over the next year the fines will total about $428 million.

The fines are based on readmissions from July 2010 to June 2013, and more than 1,400 hospitals are exempted from the penalties. This includes certain cancer hospitals and critical access hospitals, as well as facilities dedicated to specific services such as psychiatry or rehabilitation, reported Kaiser Health News.

The increase in overall penalty amounts and the number of hospitals was partly driven by the addition total hip/total knee replacement and chronic obstructive pulmonary disease to the program, CMS said. These are in addition to heart attack, heart failure and pneumonia 30-day readmission rates.

“Every time they add conditions, the penalties go up,” Nancy Foster, a quality expert at the American Hospital Association, told Kaiser.

Specifically, every hospital but one in New Jersey will lose money this year, according to an analysis by the news source. Additionally, 28 other states will see the majority of their hospitals lose money. Maryland hospitals are excluded because the state has received a federal waiver.

Thirty-nine hospitals will have their payments lowered by 3 percent, including many specialty surgical hospitals, small community hospitals and the Pennsylvania Hospital, a major teaching facility. Moreover, 496 hospitals will lose 1 percent or more of their Medicare payments. The average penalty this year is 0.63 percent, up from 0.38 percent last year, according to the KHN analysis.

However, the national readmission rate has decreased each year since 2012, according to CMS. From 2007 to 2011, the rate held steady at 19 percent. In 2012 it dropped to 18.5 percent and then fell to 17.9 percent in 2013. CMS also estimates that 150,000 fewer readmissions occurred during 2012 and 2013 than if readmission rate had remained at 19 percent. However, the reduction in inpatient readmissions does not seem to be driven by substitution by outpatient emergency department visits or observation stays, CMS said.

Last year, Medicare fined 2,225 hospitals and the maximum of 2 percent was only applied to just 18 hospitals. 1,074 hospitals received a higher penalty last year, but the average penalty decreased from .42 percent in 2012 to .38 percent in fiscal year 2013.



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