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Kaiser Health News Report: Three-Quarters of Hospitals Subject to Readmissions Penalties Are Being Penalized This Year

October 2, 2014
by Mark Hagland
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Three-quarters of hospitals subject to avoidable readmissions penalties are being penalized this year

As the Kaiser Health News service reported on Thursday afternoon, Oct. 2, the Medicare program is fining a record number of hospitals—2,610—for readmissions within 30 days for a wide range of reasons, even as readmission rates are dropping nationwide. What’s more, the KHN report notes, “Medicare’s average fines will be higher, with 39 hospitals receiving the largest penalty allowed, including the nation’s oldest hospital, Pennsylvania Hospital in Philadelphia. The fines are based on readmissions documented from July 2010 through June 2013.

As the KHN report notes, “The federal government’s penalties, which begin their third year this month, are intended to jolt hospitals to pay attention to what happens to their patients after they leave.”

Further, the report notes, “Last year, nearly 18 percent of Medicare patients who had been hospitalized were readmitted within a month. While that is lower than past years, roughly 2 million patients return a year, costing Medicare $26 billion. Officials estimate $17 billion of that comes from potentially avoidable readmissions. Under the new fines, three-quarters of hospitals that are subject to the Hospital Readmissions Reduction Program are being penalized. That means that from Oct. 1 through next Sept. 30, they will receive lower payments for every Medicare patient stay —  not just for those patients who are readmitted. Over the course of the year, the fines will total about $428 million, Medicare estimates."

The report further notes that "More than 1,400 hospitals are exempted from the penalties, including certain cancer hospitals and critical access hospitals, as well as facilities dedicated to specific services such as psychiatry or rehabilitation. Maryland hospitals are also excluded because the state has a unique payment arrangement with Medicare. The fines are based on readmissions from July 2010 through June 2013.”

As KHN’s state-by-state analysis showed, penalization rates varied dramatically by state. In North Dakota, only two hospitals received penalties, representing 4 percent of that state’s hospitals. But in New Jersey, every hospital in the state but one received penalties this year, leading to a 98-percent rate. Overall, a majority of hospitals in 29 states, as well as the District of Columbia, will receive penalties this year, including several of the most populous states: California, Texas, New York, Florida, Illinois, Pennsylvania, and Ohio.

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