Medicare Fines Hospitals for High Number of Readmissions: Is Your Hospital on the List?

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If the nation’s hospitals have not been hit hard enough this year from the pandemic, Medicare is now fining nearly half of America’s hospitals for their high number of readmissions. The Centers for Medicare and Medicaid Services (CMS) announced early in September that they might suspend the penalty program in the future, but as of now, hospitals will be receiving lower payments for all Medicare patients.

“It’s unfortunate that hospitals will face readmission penalties in fiscal year 2021,” said Akin Demehin, director of policy at the American Hospital Association. “Given the financial strain that hospitals are under, every dollar counts, and the impact of any penalty is significant.”

Reason for penalties

Of the 3,080 hospitals, 83 percent of them received a penalty. The reason for the fines is based on the number of readmissions of Medicare patients. Common reasons why Medicare beneficaries initially go to the hospital are congestive heart failure, heart attack, pneumonia, chronic obstructive pulmonary disease, hip or knee replacement, or coronary artery bypass graft surgery, to only return within 30 days due to complications with recovery. 

Medicare defines a “readmission” as a patient who returns to any hospital within 30 days of discharge, except for planned returns like a planned follow-up visit or surgery. This means that a hospital will be penalized if its readmission rate is higher than expected according to the national trends in any one of those categories.

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Of course, the hospital industry remains against the rule, arguing that the measures are not accurate nor is it fair to punish hospitals that treat low-income patients, who often don’t have the resources to ensure their recoveries are successful, not to mention amid the additional crisis of the pandemic. 

“Every industry complains the penalties are too harsh,” said Michael Millenson, a health quality consultant who focuses on patient safety. “If you’re going to tell me we don’t need any economic incentives to do the right thing because we’re always doing the right thing — that’s not true.”

The numbers

For the rest of the year, the penalties remain in effect. Retroactive to the federal fiscal year that began October 1, Medicare will lower a year’s worth of payments to 2,545 hospitals. The average reduction is 0.69 percent, with 613 hospitals receiving a penalty of 1 percent or more.

As of now, 2,176 out of 5,267 hospitals in the country, have been exempted from the penalties. Exempted hospitals must be found critical to public health, such as defined as the only inpatient facility in an area or hospitals that specialize in psychiatric patients, children, veterans, rehabilitation, or long-term care.

CLICK HERE to see if your hospital is being penalized by Medicare.

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