CMS: The 2,225 hospitals that will pay readmissions penalties next year

18 hospitals will face the maximum penalty

Topics: Performance Improvement, Quality, Readmissions, Medicare, Reimbursement, Finance

August 5, 2013

CMS has named the thousands of hospitals that will lose up to 2% of their Medicare reimbursement as part of an Affordable Care Act program that aims to curb hospital readmission rates.

The 2,225 hospitals—which span 49 states—were identified through new CMS data and Kaiser Health News analysis.

What happened in year one

In fiscal year (FY) 2013, the Hospital Readmissions Reductions Program withheld up to 1% of regular reimbursements for hospitals that had too many patient readmissions within 30 days of discharge because of three medical conditions: heart attack, heart failure and pneumonia. Under the ACA, the maximum penalty will increase to 3% by 2015 and be expanded to include readmissions for other medical conditions.

From the archives
CMS: We underestimated the penalties
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CMS: We miscalculated penalties ... again

According to data calculations released earlier in 2013 for the first year of the program, CMS charged a total of 2,213 hospitals about $280 million in readmission penalties. The total was about $10 million less than originally estimated, because CMS had to repeatedly recalculate reimbursement rates after making a series of miscalculations.

Which hospitals paid the most?

The latest data calculation showed that hospitals treating mostly low-income patients were penalized disproportionately, reviving hospitals' concerns about uneven penalty distributions, Jordan Rau reports for Kaiser Health News .

Medicare during the second round of penalties has made some refinements to its calculation process, such as excluding from its analyses cases where physicians planned for a readmission. Medicare estimates that doctors plan for readmissions in about 12% of heart attack cases, 6% of heart failure cases, and 4% of pneumonia cases.

What will happen in year two—and which hospitals will pay?

Medicare will penalize hospitals in all states but Maryland—which operates under a unique reimbursement system designed under a federal waiver—for a total of $227 million in fines, according to a KHN analysis of the new Medicare data.

    How did your hospital fare? KHN outlines the penalties for each facility

      The average fine per hospital will decrease from 0.42% in the first year to 0.38% during the second year, meaning the program will collect $53 million less than it did in year one. Specifically, Medicare will:

      • Decrease fines for 1,371 hospitals;
      • Increase fines for 1,074 hospitals; and
      • Fine 283 hospitals that were not fined in the first year of the program.

      According to KHN, Medicare will penalize 18 hospitals with the maximum 2% reduction in reimbursement rates. Of the hospitals that received the maximum 1% reduction in reimbursement rates this year, 141 will receive lower penalties next year.

      Overall, 1,154 hospitals—about one-third of all hospitals included in the readmissions program—have kept their readmission rates low enough to avoid fines, KHN reports.

      What to expect in year three

      According to a final rule released Friday, CMS will launch the third phase of the HRRP on Oct. 1, 2014, raise the maximum penalty to 3%, and expand the number of conditions for which readmissions are penalized to include chronic lung disease and elective hip and knee replacements.

      In addition, CMS also might include in its calculations a measurement that takes into account all of a hospital's readmissions, KHN reports.

      "Many of the hospitals we work with are scrambling to put measures in place to reduce their rate of readmissions, to the extent they can," according to the Advisory Board's Chief Research Officer Chas Roades. "The financial penalties aren’t huge right now, but hospital leaders recognize that the penalties will get bigger, and that scrutiny over readmissions rates will continue to grow" (Rau, Kaiser Health News, 8/2).

      Performance data from around the nation

      Pay-for-performance mapEver wondered how pay-for-performance programs like value-based purchasing and readmissions would affect U.S. hospitals and health systems?

      Check out our interactive map to find out.

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