Medicare hits half of U.S. hospitals with readmission penalties

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More than half of U.S. hospitals will be dinged for excessive 30-day readmission rates, according to a Kaiser Health News analysis.

Medicare will withhold more than half a billion payments this year, according to the analysis of figures released Tuesday, with the penalties set to take effect with the new fiscal year in October. More than 2,500 hospitals will receive penalties, a figure in line with last year’s report. The average penalty will increase by a fifth, KHN reported. 

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The penalties will mean hospitals will lose more than $520 million in payments--an increase of more than $100 million from last year due to changes in how Medicare measures readmissions, according to the KHN analysis. For example, this year it considered rates for coronary artery bypass graft surgery in addition to heart attacks, heart failure, pneumonia, chronic lung disease, and hip and knee replacements.

KHN’s analysis also found:

  • The average penalty is 0.73 percent per patient stay, the highest ever
  • Forty-nine hospitals will receive the maximum cut of 3 percent
  • More than 1,600 hospitals have been penalized every year since the program began in 2012

Medicare’s readmission penalties are controversial. Leading organizations like the American Hospital Association have argued that there are some factors beyond a hospital’s control, like a patients' socioeconomic situation, which may lead a person to return to the hospital.

The fear of penalties, though, has pushed hospitals to take action to reduce their readmission rates. Though about half of eligible hospitals will receive penalties this year, in 2012 and 2013, the program’s first two years, about two-thirds were slapped with penalties. The number of readmission penalties hit a record high in 2014.

- read the KHN analysis