See if your hospital faces readmissions penalties

Topics: Reimbursement, Finance, Medicare, Readmissions, Quality, Performance Improvement, Health Policy, Market Trends, Strategy

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Sruti Nataraja, Clinical Advisory Board

What will CMS’ readmission penalties mean for your institution?

Since last year’s release of the Patient Protection Affordable Care Act (PPACA), many hospital executives have been concerned about the potential impact of CMS’ Hospital Readmissions Reduction Program, which will impose financial penalties on facilities with high readmission rates for select conditions.

In response, we have developed the Customized Readmissions Penalty Estimator to give members visibility into the legislation’s potential revenue impact.

Payment penalties slated for FY 2013

As mandated by the health reform law, acute care hospitals with higher-than-average 30-day risk-adjusted readmission rates for heart failure, acute myocardial infarction, and pneumonia cases between July 1, 2008, and June 30, 2011, will receive reduced Medicare payments starting in FY 2013, capped at a maximum of 1% of inpatient payments.

These penalties will increase in subsequent years to a maximum of 2% of inpatient payments in FY 2014 and 3% from FY 2015 onwards. Unlike CMS’s other high-profile quality initiative, the Hospital Inpatient Value-Based Purchasing Program, which allows high-performing hospitals to earn a bonus payment, the Hospital Readmissions Reduction Program is a penalty-only plan designed to retrieve payments from hospitals that have received additional revenue associated with readmitted patients.

Three-quarters of all hospitals in line for some degree of penalty

Our analysis indicates that around 3,100 hospitals will be included in the readmissions program, with more than 2,300 expected to see some degree of reduced payment due to “worse-than-average” readmission performance.

26% of hospitals likely will not see any readmissions penalty in FY 2013, while nearly 60% will see payment reductions of between $10,000 and $500,000.

Based on this data, we expect to see an average penalty of around 0.30% of inpatient payments—or, approximately $88,000 per facility.

Estimate your facility-specific impact with our customized tool

To help members prepare, our Data and Analytics Group has developed a pre-populated, institution-specific analysis.

This web-based tool displays the legislation’s estimated financial impact for acute inpatient facilities and obviates the need for any uploads or data entry by utilizing historical quality data derived from Hospital Compare and Medicare inpatient payment data to display the estimated impact on payments in FY 2013, 2014, and 2015.

Please note that future versions of the tool will be updated as CMS releases new Hospital Compare, MEDPAR, and methodological information.

Access the tool.  

Learn more

The Clinical Advisory Board has compiled its extensive resources on preventing avoidable readmissions including publications, on-demand webconferences, and customizable tools for your reference.