The High Cost of Avoidable Readmissions

In the constant quest to put more incentives on quality of care instead of volume of care, the Medicare program will penalize hospitals for excessive readmissions on a certain number of conditions. Which sounds logical-- readmissions are expensive to Medicare, and hospitals should be doing all they can to avoid them. But hospitals are arguing the current Hospital Readmissions Reduction program, mandated by the Affordable Care Act, does more harm than good, and Congress is beginning to take notice.

A bipartisan group of House members in a June 10 letterurged CMS to work with Congress to ensure the readmissions program doesn't harm hospitals that serve low-income seniors and dual-eligible beneficiaries. The 34 lawmakers, led by Rep. James B. Renacci (R-Ohio), said the agency needs to ensure hospitals aren't being penalized for readmissions unrelated to the initial reason for admission. In the letter, the lawmakers cited studies that found the program's readmission rates are tied more to community factors than hospital quality and penalize hospitals that care for the sickest and poorest Americans. Renacci also has a bill, the Establishing Beneficiary Equity in the Hospital Readmission Program Act (H.R. 4188) that would require the Readmissions Reduction program to account for socioeconomic status, as well as dual-eligible beneficiaries.

For their part, providers say it’s not that they don’t want to improve quality and save Medicare money. They just don’t want to be unfairly penalized-- and those penalties are expensive. Penalties for each readmission above the average in 2015 will range from $33,000 for each patient readmission after COPD treatment to $285,000 for each readmission after hip or knee replacement.All told, hospitals in FY 2015 face a maximum penalty of three percent of their base payment.

Providers have also pointed out that while the overall number of readmissions in the country has been declining, the number of hospitals being penalized has increased. A recent analysis of Medicare data by Paul Burke, an independent researcher and editor of found more than 2,600 hospitals would be penalized for excessive readmissions if a proposed FY 2015 payment rule is finalized. At the same time, a report released through the CMS's Center for Medicare and Medicaid Innovation in May also found that readmissions for Medicare beneficiaries fell 8 percent between January 2012 and December 2013. CMS hasn't indicated it will change the policy, but it appears lawmakers are beginning to listen to what hospitals have to say.