Medicare begins to penalize hospitals for readmissions beginning in October

Over 2000 hospitals across the country stand to lose approximately $280 million in Medicare reimbursement dollars beginning in October 2012, as Medicare begins to penalize hospitals for readmissions within 30 days of hospital discharge, according to an analysis by Kaiser Health News.

For the analysis, Kaiser analyzed rates of readmission within 30 days of discharge for heart failure, heart attack and pneumonia patients between July 2008 and June 2010 from the Hospital Compare website.  Researchers then broke the hospitals down into categories based on the number of low-income patients treated.  Key findings include:

  • 12 percent of hospitals in the group that treats the highest percentage of low-income patients will receive the maximum penalty from CMS: a 1 percent decrease in their reimbursements starting in October 2012.
  • Only 6 percent in the group with the fewest poor patients will receive the maximum penalty.
  • Hospitals with lots of low-income patients were generally more likely to receive a penalty of any size.
  • Hospitals in New Jersey, New York, the District of Columbia, Arkansas, Kentucky, Mississippi, Illinois and Massachusetts fared the worst in the analysis, and will be faced with the highest penalties.
  • Idaho was the only state where Medicare did not penalize any hospital. 

The maximum penalty will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year.  Leaders at many hospitals say they are devoting increased attention to readmissions in concert with other changes created by the health law.

(Sources: Kaiser Health News,, August 13, 2012; The Advisory Board Daily Briefing,, August 13, 2012)