The Center for Medicare and Medicaid Services’ Readmission Reduction Program establishes reimbursement penalties for hospitals with excessive preventable readmissions. Penalties can amount to up to a three percent reduction in a hospital’s Medicare reimbursement. Since its launch in 2012, total savings to CMS have totaled about $927 million, not including an estimated $528 million in reimbursement cuts for FY 2017.
The hospitals with the highest estimated revenue losses due to penalties for FY 2017 under the Readmission Reduction Program are shown in the table on the next page. While a hospital’s readmission rate target is determined on an individual basis, all but three of the hospitals had an all-cause readmission rate higher than 15.6 percent, the average rate of all other hospitals that were assessed. Most of the top 20 hospitals also had higher-than-average case mixes, which are associated with more readmissions but are adjusted for in the Readmission Reduction Program.
The number of hospitals penalized under the Readmission Reduction Program has grown steadily from 2012 to 2016, with a significant jump between 2014 and 2015. Starting in 2015, CMS introduced two new readmissions measures for COPD and total joint replacement, which is a likely explanation for the increase. Despite the rising number of penalized hospitals, CMS has credited the program with a nationwide eight percent reduction in readmission rates from 2010 to 2015. A review of the data also shows that 1,722 hospitals, or about half of hospitals in the program, received penalties for all five years. The total number of hospitals receiving the maximum penalty has also increased since 2014, reaching 63 for FY 2017, as seen in the graph below. The number is far below that of 2013, but the original maximum penalty was only a one percent reimbursement cut, growing to two percent in the second year, and was applied to hospitals that would currently face a deeper cut.
The hospitals with the highest estimated revenue losses due to penalties for FY 2017 under the Readmission Reduction Program are shown in the table on the next page. While a hospital’s readmission rate target is determined on an individual basis, all but three of the hospitals had an all-cause readmission rate higher than 15.6 percent, the average rate of all other hospitals that were assessed. Most of the top 20 hospitals also had higher-than-average case mixes, which are associated with more readmissions but are adjusted for in the Readmission Reduction Program.
The number of hospitals penalized under the Readmission Reduction Program has grown steadily from 2012 to 2016, with a significant jump between 2014 and 2015. Starting in 2015, CMS introduced two new readmissions measures for COPD and total joint replacement, which is a likely explanation for the increase. Despite the rising number of penalized hospitals, CMS has credited the program with a nationwide eight percent reduction in readmission rates from 2010 to 2015. A review of the data also shows that 1,722 hospitals, or about half of hospitals in the program, received penalties for all five years. The total number of hospitals receiving the maximum penalty has also increased since 2014, reaching 63 for FY 2017, as seen in the graph below. The number is far below that of 2013, but the original maximum penalty was only a one percent reimbursement cut, growing to two percent in the second year, and was applied to hospitals that would currently face a deeper cut.
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