Thursday, October 3, 2019

Cocktail Party Question: How Big Are Medicare Readmissions Penalties?

This week, Seema Verma, head of CMS, published a long article in Health Affairs about CMS's successes with Accountable Care Organizations (ACOs).    Of course, in some circles how much money ACOs save and way is pretty hotly disputed (here); see a news roundup on the topic at Kaiser Health News, here.

Average Hospital see 0.7% Average Annual Penalty Related to Readmissions

One related topic that I find often confuses clients is how much hospitals lose under readmissions penalties.   Some new data today at MedCityNews (here).  Medicare charges a penalty for readmissions within 30 days, and if the readmission is to Hospital "B", then Hospital "A" is charged the penalty.   However, the penalty is far less than the payment for the readmission.  According to MedCityNews, the average penalty is 0.7% and the maximum is 3%  (The penalty is charged against next-year-revenues from CMS to the hospital).   Only about 1% of US hospitals reach the 3% penalty cap.


Readmissions penalties are also controversial, with some analyses even showing they hurt patients (here) or concerns that they encourage gaming (also here).


The CMS homepage for readmissions policy is here.  For an overview of CMS readmissions policy at NEJM Catalyst, here. (Noting also that readmissions for targeted conditions fell from about 21% in 2007 to about 18% in 2015.)   For an open access article by USC's Spellberg on how these issues look from the CFO's suite, here.


Seema Verma's September article in Health Affairs was on readmissions.  Her prior August article was on CMS antibiotics policies - here.