Medicare to Fine More Than 2,000 Hospitals for Potentially Avoidable Readmissions

Medicare will be assessing $227 million in fines against hospitals in 49 states as part of the federal government’s campaign to reduce the number of patients readmitted within a month of discharge. The program, which launched in October 2012, was initiated to combat the financial incentives hospitals formerly earned when patients were readmitted as a result of worsened health. The government estimated that 12 percent of Medicare patients may be readmitted for potentially avoidable reasons, and if one of every 10 readmissions were averted, then Medicare could save $1 billion.

In the second round of Medicare penalties, two-thirds of eligible hospitals were assessed fines, including 1,371 hospitals that received lower penalties compared to last year and 1,074 hospitals that received higher penalties. However, this year's average hospital fine will be slightly smaller, as it decreased from 0.42 percent in the program's first year to 0.38 percent in its second year. Additionally, the national total will be $53 million less than last year.

Nevertheless, 2,225 hospitals will see their Medicare payments reduced for one year beginning on October 1, 2013. Of that group, 18 hospitals will receive the top penalty of a 2 percent reduction, and 154 hospitals will lose 1 percent or more of every payment for patient stay. Based on last year’s penalty figures, some large hospitals may lose more than $1 million.

According to an August 2, 2013, article from Kaiser Health News, hospitals that treated a large number of low-income patients are more likely to be fined than those treating the fewest poor people. However, Medicare does not believe that there is a need to take socioeconomic populations of hospitals into account in the penalties, due to the fact that the differing health of those populations is already factored into the government's assessment. Among hospitals with the most low-income patients, 77 percent were penalized, while only 36 percent of hospitals with the fewest low-income patients were penalized. Kaiser Health News found that penalties will be given to at least four out of five hospitals in Alabama, Arkansas, Florida, Kentucky, Illinois, Massachusetts, New York, New Jersey, Tennessee, West Virginia, and the District of Columbia.

The penalties account for readmissions of Medicare patients who were originally hospitalized for at least one of three conditions: Myocardial infarction, heart failure, and pneumonia.

Individual hospital penalty data and state averages of readmission rates are available from Kaiser Health News.