Starting in October, more than 2,500 hospitals will face punishment for their high readmission rates, according to data released by the Centers for Medicare and Medicaid Services (CMS). Reimbursement will drop by up to 3% for these hospitals for 1 year, saving Medicare about $600 million. In 2017, the average penalty will be 0.73%.
Created under the Affordable Care Act, the penalties hit hospitals when readmissions within a 30-day window climb above benchmarks. The program tracks readmissions for six common conditions: heart attacks, heart failure, pneumonia, chronic lung disease, hip and knee replacements, and coronary artery bypass graft surgery. Readmissions overall cost Medicare about $41 billion in healthcare spending each year, according to CMS.
The penalties have faced stiff criticism from hospitals, which have noted that the regulations do not distinguish between a patient who returns to the hospital for an unrelated reason or who actually receives better care because he or she returns instead of waiting. The number of hospitals being penalized is slightly lower than in 2016—2,573 versus 2,597—and most of these are the same institutions CMS penalized last year. The government has docked nearly 75% of all hospitals in at least 1 year since the program took effect in 2012. CMS said it spent $9 billion less on readmissions-related healthcare in 2014 than in 2013, yet since then readmissions have dropped by only 0.1% per year on average.