Here’s what you need to know about new hospital readmission penalties

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at

Emergency department

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Since 2012, the federal Centers for Medicare & Medicaid Services has had a logical approach to getting hospitals to decrease high readmission rates within 30 days of discharge: It penalizes hospitals whose rates for patients with six specific conditions are higher than expected. Those conditions are chronic lung disease, coronary artery bypass graft surgery, heart attacks, heart failure, hip and knee replacements and pneumonia.

Given that the number of hospitals getting such fines has declined, it is possible to say that by at least one measure, the program has been successful. While readmission rates have dropped since 2012, almost a quarter of all heart failure patients return to the hospital within a month of discharge. Why is that? You would think after five years of addressing this problem that hospitals would have learned what works and what doesn’t when sending these patients home.

In a new tip sheet, Jordan Rau, a senior correspondent for Kaiser Heath News, explains that evaluating whether a hospital is managing readmissions within 30 days of discharge effectively or not is a complex undertaking.

CMS announced in August that readmission penalties will reach a new high this the new fiscal year that began in October. Medicare will withhold more than $500 million in payments to hospitals that have higher than expected readmission rates for patients with the six conditions. The increase is due in part to the fact that CMS raised the bar when it added CABG surgery for 2016.

The penalties are based on the number of Medicare patients who left the hospital from July 2012 through June 2015, Rau explained. “For each hospital, the government calculated how many readmissions it expected, given national rates and the health of each hospital’s patients. Hospitals with more unplanned readmissions than expected will receive a reduction in each Medicare case reimbursement for the upcoming fiscal year that runs from Oct. 1, 2016 through September 2017,” he wrote.

Rau points out in this tip sheet that about one of every six hospitalized Medicare patients is readmitted within 30 days, and researchers believe about one-third of those readmissions may be preventable.

While penalties may be preventable, such prevention involves understanding many factors, some of which may be beyond a hospital’s control. “Readmission rates can be a reflection not only of the quality of a hospital but also the quality of the broader health care system in a community,” Rau wrote.

For journalists covering hospitals, Rau outlines many of the complex factors that go into readmissions and the steps that hospitals take to prevent then. “You can do stories about ‘hot spotting’ efforts to keep ‘frequent flyer’ patients out of the hospital,” Rau explained. These stories can provide many human-interest angles as well as plenty of fodder for anyone interested in health policy.

“Look at the particular health challenges facing low-income patients and the strategies hospitals employ to treat them,” he suggested. “Examine which hospitals are improving and which are not; or see how hospitals in your city, county, region or state compare to those in other places.

2 thoughts on “Here’s what you need to know about new hospital readmission penalties

  1. Norman Bauman

    Make sure you appreciate the significance of the following sentence from Jordan’s tip sheet:

    “Medicare does not, however, consider social and economic factors such as patients’ income levels or ability to follow instructions on how to care for themselves.”

    I have discussed this on the AHCJ-l list and posted links to articles in the core peer-reviewed journals about it.

    Think about it. Suppose you have 2 hospitals serving 2 patient populations. One population can afford prescribed medication, and can return for followup visits. The other population can’t afford prescribed medication, and has poor access to transportation so they miss followup visits. How can you judge both hospitals without considering socioeconomic factors?

    I’ve been asking that question of speakers at AHCJ meetings who were promoting these penalties. As I discussed on the list, my answers were: (1) It’s the hospital’s responsibility to subsidize low income patients if necessary, and if they get penalized for bad outcomes, too bad. (2) Socioeconomic factors don’t make any difference. It all cancels out. (3) It’s true, but some day we’ll get it working.

    The fundamental problem is that these ratings assume 2 hypotheses: (1) These ratings actually correspond to good outcomes and (2) Penalizing hospitals for low ratings will improve outcomes. No study in the peer-reviewed journals has demonstrated this with good evidence, and several studies in the NEJM and elsewhere have found that they don’t work. Sometimes, the ratings defy common sense. Are Harlem Hospital and Metropolitan Hospital the only good hospitals in Manhattan? There are about a dozen rating systems, and they give wildly different results. This is like high-stakes school testing, which has been discredited (at least by the American Statistical Association).

    If you do a story on hospital readmission penalties, I recommend that you read the studies (which I summarized on the list), talk to one of the supporters of these policies and ask them how they respond to those criticisms. The question should be: (1) What is your published evidence that these ratings accurately reflect hospital outcomes? (2) What is your published evidence that penalties improve outcomes? The tough question, if you can do it, is, “What is the quality of your evidence?” Give these policy decisions the same critical examination you would give to any medical study, by using for example the Health News Reviews checklist If they come up with anything that holds up, please pass it on to me.

    Actually, there is one hospital system that does evaluate their outcomes and use that data to improve clinically meaningful outcomes — the Veterans Health Affairs system, which has a quality improvement program. I found this out when I did PubMed searches for high-quality evidence on different treatments, such as surgery for colorectal cancer, prostate cancer or treatment for benign prostatic hyperplasia. Importantly, the VHA program is a non-punitive system. They use the results to improve care, not penalize people. And they do have good outcomes, reported in the medical literature.

  2. Karen Bouffard

    I wonder if we can be sure that hospitals don’t fail to readmit patients, sometimes when they should, in order to keep their rates low and avoid penalties.

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