CMS: We underestimated more than 1,400 hospitals' readmissions penalties

Readmission penalties launched this week

The Affordable Care Act's (ACA) readmissions penalties—which launched this week—will take a larger-than-expected toll on 1,422 hospitals because of an error in CMS's initial calculations.

  • Was the estimated penalty for your hospital wrong? Find out now using the Advisory Board's readmissions penalty estimator, which has updated its numbers to reflect CMS's correction.

The readmissions penalties are one of two ACA payment programs launched Monday intended to improve quality of care and save taxpayer dollars.

Under the Hospitals Readmissions Reductions Program, CMS will withhold up to 1% of regular reimbursements for hospitals that have too many 30-day readmissions for heart attack, heart failure, and pneumonia patients.

A Kaiser Health News analysis of CMS data released in August outlined the percentage of payments that each U.S. hospitals was expected to lose under the program.

However, in a notice published over the weekend, CMS said it "inadvertently" included in its initial calculations Medicare claims from before July 1, 2008. The agency had previously said that the penalties would be calculated based on readmission rates and reimbursements for patients who were discharged from July 2008 through June 2011.

CMS updated its penalty calculations using the correct data. According to an analysis by KHN, 1,422 hospitals will receive less reimbursements than they were expecting, while 55 hospitals will receive slightly more. Two hospitals that previously were told that they would not be penalized will lose 0.01% of their reimbursements, KHN reports.

Altogether, the updated data show that 2,217 hospitals will be penalized this year, and 307 will lose 1% of base Medicare payments, the maximum penalty. (The earlier data showed that 2,211 hospitals would be penalized, and 278 hospitals would face the maximum penalty.)

    The new fiscal year has begun. The Advisory Board rounds up critical resources to help you protect your organization from the new ACA penalties. 

Atul Grover, chief lobbyist for the Association of American Medical Colleges, described the correction as "disconcerting, particularly with a policy that's bad to begin with" (Rau, Kaiser Health News, 10/2).

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