A Path Forward on Medicare Readmissions

Abstract

October 1, 2012, marked the beginning of the Hospital Readmissions Reduction Program (HRRP), an ambitious effort by the Centers for Medicare and Medicaid Services (CMS) to reduce the frequency of rehospitalization of Medicare patients. The program consists primarily of financial penalties levied against hospitals with readmission rates that are deemed to be excessive. To assign penalties, CMS calculated expected readmission rates for all hospitalizations for acute myocardial infarction, congestive heart failure, and pneumonia from July 2008 through June 2011, adjusting for age, sex, and coexisting conditions such as diabetes and hypertension. These expected rates were then compared with the actual readmission rates over the same period, and penalties were assessed against hospitals whose observed rate exceeded the expected rate. According to CMS, approximately two thirds of U.S. hospitals will receive penalties consisting of up to 1% of their reimbursement for Medicare patients; these penalties will increase to 3% by 2015. CMS expects to recoup $280 million from the 2217 hospitals penalized in 2013 alone.