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Medicare and Medicaid News

Fewer Medicare Patients Return to Hospital in First Year of Medicare Penalties

Medicare targeting rehospitalizations as a significant indicator of gaps in medical quality in the nation’s hospitals

By Jordan Rau, Kaiser Health News Blog

Dec. 9, 2013 - During the first eight months of this year, fewer than 18 percent of Medicare patients ended up back in the hospital within a month of discharge, the lowest rate in years, the government reported Friday. This drop occurred during the first year that Medicare financially penalized hospitals for their readmission rates, and the government seized on the decrease as evidence the incentives are having an effect.

The government is targeting rehospitalizations as a significant indicator of gaps in medical quality in the nation’s hospitals. While some elderly patients inevitably return to the hospital, the government and some researchers believe many of those returns are avoidable if hospitals monitor patients after their release to ensure they get appropriate medications and follow-up visits with doctors.


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In the first year of the program, which began in August 2012, Medicare fined 2,213 hospitals—about two-thirds of those it evaluated— for higher than anticipated readmission rates. Last August, Medicare issued a second year of penalties against 2,225 hospitals. The maximum penalties created by the health law have risen from 1 percent of regular Medicare payments to 2 percent, and they will increase for a third and final time next August to 3 percent.

The new data reported by Medicare show that readmission rates for the first eight months of 2013 dropped below 18 percent, half a percentage point below 2012’s rate of 18.5 percent. From 2007 to 2011, hospitals had been readmitting 19 percent of patients

Medicare said this year’s decrease translated into 130,000 fewer readmissions nationally. Three out of every four local hospital markets experienced a decrease in readmission rates of a half-percent or more. Only one state—Utah—did not see a drop, and Medicare noted that state’s rates were already among the lowest in the country.

“We can see that the decline in all-cause readmission rates that began in 2012 is continuing this year on a widespread basis,” the Centers for Medicare & Medicaid Services wrote on the agency blog. “While we continue to monitor and study these encouraging reductions, what is clear is that intense focus on reducing hospital readmissions through improved processes of care and new tools in the Affordable Care Act are having a demonstrably positive impact.”

The penalty program has not been particularly welcome among hospitals, with many complaining that it unfairly hits facilities that treat large numbers of low-income patients. Dr. Atul Grover, the chief public policy offer of the Association of American Medical Colleges, questioned whether the drop in readmissions was due to improvements in patient care or hospital efforts to avoid formally admitting return patients who show up in their emergency rooms, and instead keeping them for a day or two for “observation.” Medicare does not count those patients when tallying rehospitalization rates.

“If you think about the growth in observation status that’s been reported over the last six months, I think it’s potentially an issue,” Grover said.

Medicare did not publish the individual readmission rates for hospitals that were used in this analysis, and its public listing of rates on its Hospital Compare website has not been updated since July 2012. Medicare’s new analysis looked at readmissions of patients with any kind of problem within 30 days of discharge, while Hospital Compare only reports 30-day readmission rates for three common conditions: heart failure, heart attack and pneumonia.

Because Medicare decides penalties by comparing a hospital’s rate to how many patients their peers readmit, it is likely that many hospitals will still be penalized next year even if their record has improved. Kaiser Health News has published the first two years’ readmission penalties for individual hospitals, which can be found in this interactive tool

>> Kaiser Health News Blog - Capsules

>> Jordan Rau, Kaiser Health News Blog

Some of this information is reprinted from with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.


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