Medicare under the Hospital Readmissions Reduction Program (HRRP) will reduce reimbursement for 2,573 hospitals for fiscal year (FY) 2018, according CMS data released Wednesday, Jordan Rau reports for Kaiser Health News. 

The latest penalties are based on readmissions between July 2013 and June 2016. The penalties will apply to Medicare payments that CMS makes to the affected hospitals between Oct. 1, 2017 and Sept. 30, 2018.

Under HRRP, CMS withholds up to 3 percent of regular reimbursements for hospitals if they have a higher-than-expected number of readmissions within 30 days of discharge for six conditions:

• Chronic lung disease;
• Coronary artery bypass graft surgery;
• Heart attacks;
• Heart failure;
• Hip and knee replacements; and
• Pneumonia.

According to Kaiser Health News, more than 1,500 hospitals were exempt from the program this year, including veterans' hospitals, children's hospitals, critical access hospitals, and psychiatric hospitals. Hospitals in Maryland also were exempt because the state has a federal waiver related to how it distributes Medicare funding.

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Penalties for FY 2018

According to a Kaiser Health News analysis of the data, about 80 percent of the 3,241 hospitals CMS evaluated this year will face penalties. The number of penalized hospitals in FY 2018—2,573—marks a slight decline from FY 2017, when Medicare reduced reimbursements for 2,597 hospitals.

According to KHN, all but 174 of the hospitals that were docked for FY 2018 faced penalties in FY 2017 as well.  

The KHN analysis of the data also showed CMS under HRRP will withhold $564 million in payments over the next year—up slightly from the $528 million withheld for FY 2017.

According to KHN, the average penalty in FY 2018 held steady at 0.73 percent. Forty-eight hospitals in FY 2018 will receive the maximum 3 percent penalty.

Discussion

Since the readmissions penalties took effect, hospital readmissions for related conditions have dropped nationwide, KHN reports.

A study last year in the New England Journal of Medicine (NEJM) conducted by Obama administration health policy experts found that readmissions for the conditions Medicare focuses on fell from 21.5 percent in 2007 to 17.8 percent in 2015. A separate study found that readmissions fell more quickly at hospitals that could face the readmission penalty than at other hospitals.

Susannah Bernheim, the director of quality measurement at the Yale/Yale-New Haven Hospital Center for Outcomes Research and Evaluation, said, "The sum of the evidence really suggests that this program is helping people."

However, other research has found declines in readmission rate reductions stopped between 2012 and 2015, which could suggest that the potential for further improvements is limited, KHN reports.

Nancy Foster, vice president for quality at the American Hospital Association, said, "It could be that there is further room for improvement, but we just don’t know what the technique is to make that happen." (Rau, Kaiser Health News, 8/3).