Readmission penalties set to drop in 2025

According to preliminary CMS data, the agency's Hospital Readmissions Reduction Program will include 100 fewer facilities in fiscal year (FY) 2025 than it did in FY2021, marking the lowest number of hospitals included in the program in five years.

The readmissions performance period for FY2025 pulls claims data from July 2020 through June 2023 and is based on a rolling three-year period, meaning the most recent data is the first to only include the period after the start of the COVID-19 pandemic.

For FY2025, 7% of hospitals will be charged a penalty reducing Medicare fee-for-service payments by 1% or more, compared to 7.5% last year.

In addition, 71.6% of hospitals will be charged a penalty of less than 1% based on their readmissions, compared to 70.1% last year, and 21.4% of hospitals will not see any penalties at all, compared to 22.4% last year.

The average readmission penalty for hospitals with the highest proportion of Medicare/Medicaid dual-eligible patients is 0.31%, compared to 0.29% last year, while the average penalty for hospitals with the lowest number of dual-eligible patients is 0.32%, compared to 0.34% last year.

CMS' final data will be released on Oct. 1.

Discussion

Since CMS didn't make significant changes to its measures or penalty calculation formulas, it's not a surprise the most recent round of penalties is similar to last year, according to Akin Demehin, senior director for quality and patient safety policy at the American Hospital Association.

Still, Demehin said it's impressive that readmissions rates and penalties haven't gotten worse.

"Hospitals have continued to proactively identify risks for readmissions and try to mitigate them," he said. "They've worked very closely with their post-acute care partners to provide the right kinds of discharge instructions and care coordination to try to reduce that risk."

Demehin added that next year, hospitals will likely see some improvement in penalties as elective procedure volumes improve and there's more available data on how facilities are reducing readmissions following those procedures.

Health system executives are also likely to explore the use of artificial intelligence and predictive technologies to identify potential risks to patients, including risks that could contribute to readmissions, which could affect hospital performance, Demehin said. (Devereaux, Modern Healthcare, 9/23)

Download our cheat sheet to learn about the RRP and how it impacts hospitals, the benefits of reducing readmissions, and what penalties are assigned to which hospitals.