C-Suite Cheat Sheet: Hospital Readmissions Reduction Program

Educational Briefing for Suppliers and Service Providers

Executive Summary

The Hospital Readmissions Reduction Program (HRRP) adjusts hospital inpatient Medicare payments based on readmission rates of a set list of procedures. It is one of three mandatory pay-for-performance (P4P) programs that the Affordable Care Act introduced and is managed by the Center for Medicare and Medicaid Services (CMS). A readmission occurs when a patient returns the hospital for unscheduled inpatient care within 30 days of a prior stay. The program penalizes hospitals up to 3% of their inpatient Medicare revenue for having worse-than-average readmissions rates for six conditions listed below. Since the policy's implementation, readmissions rates have decreased for each condition, though some studies link the program to an unintended increase in mortality rates, calling into question the overall effectiveness of this program.

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