Healthcare News & Insights

Thousands of hospitals receive fines from CMS for high readmission rates

The Centers for Medicare & Medicaid Services (CMS) has just released the data for this year’s hospital readmission prevention program – and it looks like many more hospitals will be receiving fines.

487250563While 30-day readmission rates have declined in recent years, hospitals still have some work to do if they want to avoid pay cuts from CMS, judging by this year’s numbers.

For the past three years, CMS has looked at hospitals’ performance when it came to readmissions for three conditions: pneumonia, heart failure and heart attacks. This year, two others were added to the list: elective knee and hip replacements, and chronic lung problems (e.g., bronchitis).

Hospitals who didn’t meet CMS’s standards stand to lose up to 3% of their Medicare payments as of Oct. 1. And close to 75% of hospitals reviewed this year will receive some sort of payment reduction because they fell short of CMS’s expectations — 2,610 in all — as discussed in an article from Kaiser Health News.

In part due to the two new conditions examined, 433 more hospitals will be subject to fines this year than last year. The average pay cut for this year, 0.63%, is larger than last year’s average of 0.38%. Almost 500 hospitals will receive payment reductions of 1% or more. And 39 hospitals will experience 3% pay cuts, the maximum allowed under the program.

CMS estimates the penalties will amount to around $428 million in lost payments to hospitals.

Potential changes

Some critics claim the fines aren’t fair to hospitals that primarily treat a more disadvantaged patient mix, such as safety-net hospitals. There’s good news on that front: Bills are currently pending in Congress that would require CMS to take patients’ socioeconomic status into consideration before fining a hospital.

And the Medicare Payment Advisory Commission has recommended that Congress consider passing a law requiring CMS to compare similar hospitals to each other, instead of lumping the performance of all hospitals together. This may give a clearer picture of a hospital’s actual performance in keeping readmissions low.

So while there’s potential relief coming down the pipeline, hospitals need to do whatever they can now to avoid financial penalties and make sure their readmission rates meet CMS’ standards, whether it’s placing a bigger focus on care coordination, improving the discharge process, or communicating health info in a way patients and their families can clearly understand.

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