Cognitive Impact

Readmissions Reduction Program

Reducing avoidable readmissions is a key goal for the Centers for Medicare & Medicaid (CMS).
There are good reasons why...
  • One in every five elderly patients discharged from the hospital is rehospitalized within 30 days
  • Medicare patients contributed to $20.1 billion on total hospital costs for potentially preventable hospitalizations
  • The estimated cost of unplanned hospital admissions made up $17.4 billion of the $102.6 billion total hospital payments made by Medicare
  • Patients under active readmission prevention programs are more likely to have an improved functional status and quality of life

The Hospital Readmission Program, part of the Affordable Care Act (ACA), requires CMS to reduce payments to hospitals that have demonstrated “excess readmissions.” This program applies to discharges that occur after October 1, 2012 and that are included in subpart I of 42 CFR part 412.

Hospital risk standardized readmission measures are included for:
  • Acute myocardial infarction (AMI)
  • Heart failure (HF)
  • Pneumonia (PN)

These initial conditions have been updated to include:
  • Chronic obstructive pulmonary disease (COPD)
  • Total hip arthroplasty (THA) and total knee arthroplasty (TKA)
  • Coronary artery bypass graft (CABG) surgery

So What's the Hit?

This year, hospitals can lose up to three percent of their Medicare payments under the penalty. Based on a hospital's 30-day readmissions performance on the conditions covered under the program, a penalty is determined. For each penalized hospital, CMS will reduce payments for inpatient stays between October 2014 and September 2015. This penalty applies to any condition.

For example, Kaiser Health News provided the following scenario:

“(I)f Medicare would normally pay a hospital $15,000 for a kidney failure patient, with a 1.5 percent penalty Medicare would deduct $225 and pay $14,775.”

** Currently, 2,597 hospitals (more than half of all hospitals in the United States) face fines. For more information on the Readmissions Reduction Program, visit the

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