In 2014, hospitals could lose as much as 3 percent of their Medicare payments under the Hospital Readmissions Reduction Program. The fines are based on readmissions from July 1, 2010 through June 30, 2013.
A staggering 2,610 hospitals in FY2015 will be penalized by Medicare for having excess readmissions. These hospitals will receive lower payments for every Medicare patient stay - not just for those patients who are readmitted, from October 1, 2014 through September 30, 2015.
To determine each hospital’s penalty, Centers for Medicare & Medicaid Services (CMS) looked at the readmissions rates of patients who initially went into the hospital for one of five conditions but returned within 30 days of discharge. The initial three conditions include: heart failure, heart attack, and pneumonia. Two new conditions were added this year: chronic lung problems, and elective hip and knee replacements.
CMS took into account the age of the patient, the severity of illness, any additional medical conditions, and other factors. An estimate was then decided by officials based on what they believed was an appropriate readmission rate, given how hospitals nationally were performing and the mix of patients. The penalty is based on the difference between the projected rate and the actual rate.
If a hospital had less than 25 cases for any of the five conditions, that condition was omitted in CMS’ analysis.
Certain cancer hospitals and critical access hospitals, as well as facilities dedicated to specific services such as psychiatry or rehabilitation are exempt from the penalties (a total of more than 1,400 hospitals). Maryland hospitals are also excluded because the state has a unique payment arrangement with Medicare.
Studer Group research proves that hospitals with higher quality HCAHPS patient experience of care results will also have lower readmission penalties in FY2015.