Healthcare News & Insights

Study: Hospitals face over $3,500 in HCAHPS and readmission penalties per bed over the next 3 years

Already dealing with significant revenue challenges, many hospitals will face new Medicare penalties, including a reduction in reimbursements for those with high readmission rates starting this October. 

Over the next three years, hospitals face a total of $1.6 billion in HCAHPS and readmission penalties, according to a recent study of 500 hospitals across the country by CipherHealth.

On average, those hospitals face penalties averaging over $3,500 per in-patient bed. That will make a big impact — especially because, as CipherHealth points out, 39% of hospitals operated at a loss in 2011.

For the readmission penalty, starting October 1 of this year, the Centers for Medicare and Medicaid Services will determine a hospital’s expected readmission rate based on the make-up of its patient population. Facilities that go over that rate will be penalized based on the ratio of actual to expected readmissions. During the first year, the maximum reduction will be 1% before increasing to 3%.

In fiscal year 2013, there will also be a potential 1% cut for hospitals based on their Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores.

The challenge for hospitals, CipherHealth says, is that they must comply with dozens of pieces of legislation and therefore must prioritize their compliance efforts.

When determining those priorities, it’s important to look at per-bed risks, rather than the average penalties faced per hospital, CipgerHealth says, because there’s often a big difference in those numbers. For example, the study found that West Virginia ranked 32nd out of all states in terms of total risk of penalties. However, hospitals in the state face average penalties of $3,600 per bed, among the highest in the country.

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