The 2,665 hospitals facing readmissions penalties this year

514 hospitals will be penalized 1% or more

Medicare will reduce reimbursements for 2,665 hospitals in fiscal year (FY) 2016, an uptick from FY 2015, according to a Modern Healthcare 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.

Tracking readmissions is good—but not for the reason you might think

Under the readmissions program, 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. After increasing the maximum penalty to 2% in 2013, CMS beginning in FY 2015 increased the maximum penalty to 3% and added assessments of two additional conditions: chronic lung problems and elective hip and knee surgery.

For the latest round of penalties, CMS examined the readmission rates for all five conditions that occurred between July 1, 2011, and June 30, 2014. More than 1,000 hospitals were exempt from the program because they are critical access hospitals, specialize in particular types of patients, or treated an insufficient number of Medicare beneficiaries for CMS to perform data analysis.

Details of the penalties for FY 2016

The 2,665 hospitals will lose a combined $420 million in Medicare payments.

According to the new CMS data, of the more than 3,400 hospitals subject to HRRP:

  • 799 will not be penalized; and
  • 514 will face a penalty of 1% or more.

Thirty-eight hospitals will face the maximum 3% penalty.

The penalties will be applied to all Medicare payment for beneficiary stays between Oct. 1, 2015, and Sept. 30, 2016 (Rice, Modern Healthcare, 8/3; Rau, Kaiser Health News, 8/3; Federal Register, 7/31; CMS data, accessed 7/31).

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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