CMS: The 2,610 hospitals facing readmission penalties this year

39 hospitals will face the maximum penalty

Medicare will reduce reimbursements for 2,610 hospitals in fiscal year (FY) 2015, and 39 of those hospitals face the maximum penalty, according to a Kaiser Health News analysis of federal data.


The payment reductions are part of the third phase of the Hospital Readmissions Reductions Program (HRRP), which was launched in October 2012 to rein in costs by curbing hospital readmission rates.

Under HRRP, CMS in the first year withheld up to 1% of regular reimbursements for hospitals that have too many patient readmissions within 30 days of discharge because of three medical conditions: heart attack, heart failure and pneumonia. The penalty increased to a maximum of 2% in 2013.

For the latest round of penalties, CMS increased the maximum fine to 3% and assessed two additional conditions: chronic lung problems and elective hip and knee surgery.

Specifically, CMS examined the readmission rates for all five conditions that occurred between July 1, 2010, and June 30, 2013. About 1,400 hospitals were excluded from the program, including certain critical access hospitals and cancer hospitals.

How the penalties change in year three

Details of the penalties in FY 2015

About 18% of Medicare patients were readmitted last year, which is lower than in previous years. However, the federal government paid about $26 billion in health care costs for those individuals. According to Kaiser Health News, health care experts believe about $17 billion of that came from potentially avoidable readmissions.

CMS in the latest round of fines penalized roughly three-quarters of hospitals subject to the program. Specifically, CMS penalized about 400 more hospitals than in prior years, up from 2,225 in FY 2014 and 2,217 in FY 2013.

"Roughly 12% of hospitals set to receive a readmissions penalty wouldn't have gotten a penalty if not for these new conditions."

 Of hospitals included in the program:

  • 39 will be fined the maximum penalty of 3%;
  • 496 will lose 1% or more in Medicare reimbursements; and
  • 769 will not experience any reduction related to readmission rates.

Overall, the penalized hospitals will miss out on an estimated $428 million in reimbursements. CMS penalized hospitals an average of 0.63% in this round, up from 0.38% in 2014, KHN reports (Ferris, The Hill, 10/2; Rau [1], Kaiser Health News, 10/2; Rau [2], Kaiser Health News, 10/2; Rice, Modern Healthcare, 10/ [subscription required]).

Find out how your hospital will fare


See where your organization stands in the readmission penalty program using our Customized Readmissions Penalty Estimator tool, which replicates CMS's scoring methodology and factors in the impact of new measures and modifications to scoring.

Then, check out our customized assessment portal to access all your organization-specific analyses in one location.


How to avoid readmissions at your facility

Reducing your hospital's readmission rates can seem like an overwhelming task—but it doesn't have to be.

 Knowing where to focus is half the battle. We've found that the best strategies target four stages of care with significant potential to influence patient outcomes. The other half is knowing what improvements to make.

That's where our Readmission Reduction Toolkit comes in. We've compiled resources from across the Advisory Board that will help you isolate and correct patient and systemic issues in the four critical stages of care:

Get the toolkit now.

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