C-Suite Cheat Sheet: Readmissions Reduction Program

Educational Briefing for Suppliers and Service Providers

Executive Summary

The Hospital Readmissions Reduction Program (RRP), introduced in 2012 under the Affordable Care Act (ACA), is a Medicare incentive program intended to lower hospital readmission rates. The program penalizes hospitals up to 3% of total inpatient Medicare revenue for having worse-than-average readmissions rates for select conditions. A readmission occurs when a patient returns for unscheduled inpatient hospital care within 30 days of a prior acute care stay.

In FY 2016, nearly 77% of all eligible hospitals received some degree of readmissions penalty, losing a combined total of $420 million in Medicare reimbursement. The program will expand to include more conditions in the future, increasing the likelihood that many hospitals will continue to receive Medicare inpatient penalties.


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