GE Healthcare Camden Group Insights Blog

The Bottom Line Impact of Hospital Readmissions

Posted by Matthew Smith on Sep 18, 2015 10:03:14 AM

Yes, there is controversy surrounding the Hospital Readmissions Reduction Program (“HRRP”). Many hospitals feel that the costs to effectively manage readmissions are more than the penalty that is incurred, thus making readmission reduction efforts a net loss; and still others feel that the formula is flawed and disproportionately impacts certain facilities such as academic medical centers and those hospitals serving communities of lower socioeconomic status.

While either of these scenarios may be true, the reality is that reducing readmissions is in the best interest of all hospitals as an initial step in transitioning to a more population health-based delivery system. Potentially avoidable readmissions result in approximately $17 billion in excess spending by Medicare alone. Additionally, potentially avoidable readmissions are a reflection of the quality of care provided across the continuum. Understanding your hospital’s current performance, the performance of care providers in the delivery network, and identifying solutions to reduce readmissions are of significant importance. Acting now will prevent larger revenue impacts in the future and will position the hospital for success.

Although readmission rates have been declining overall, 75 percent of all hospitals eligible for the HRRP (i.e., 2,610 hospitals) are receiving a penalty this year, which is an increase of 433 hospitals receiving penalties over the previous year. The average penalty is .63 percent of their Medicare reimbursement for every Medicare stay, not just those readmitted. Overall, the hospitals receiving penalties will experience an estimated $428 million reduction in Medicare reimbursements, with the largest readmissions penalty to any hospital being approximately $13.3 million.

While the financial implications are important, hospitals need to be aware of the data collection and reporting periods that impact their penalty. This year brings the maximum penalty allowed by law (3 percent) as well as additional measures, but the data for this year’s penalty was collected July 1, 2010 through June 30, 2013. This means that hospitals cannot impact their penalty for 2016 at this point in time and have only four months remaining to make any impact for 2017, which will bring a new diagnosis (Coronary Artery Bypass Graft [“CABG”]). Of importance is taking action now to protect revenue in 2018 and beyond.


If a hospital is subject to a penalty and/or attempting to improve current performance, a detailed analysis stratifying readmitted patients by payer, diagnosis, and source of the readmission should be completed in order to identify priority areas. From there, hospitals should assess the internal organizational processes related to care delivery and care management. This not only includes assuring high quality care during the hospitalization, but incorporates the preparation, planning, and communication needed for a successful transition of care to a post-acute or home-based setting. 

Paths_ReadmissionsDetermination of process effectiveness includes incorporating patient goals into discharge planning and instructions, including medication reconciliation with easy to use patient tools, as well as other tailored patient and caregiver education and programs focused on certain medical conditions. Coordination with community physicians for follow-up visits is imperative. Qualitative factors such as short patient or caregiver interviews at the time of readmission may also shed light on non-obvious reasons for readmission. Additionally, the hospitalist program should be assessed from a coordination perspective with care management, discharge planning, and primary care physicians. Paths for controlling readmissions include: pre-discharge processes internal to the hospital, performance of the post-acute network, and factors associated with discharge to home. Assessing and improving these pathways is recommended.

As the U.S. healthcare system continues its transition from volume to value, readmissions penalties appear to be here to stay. The penalties will impact each hospital in a different manner, and the costs and benefits of reduction efforts must be weighed. However, controlling and reducing avoidable readmissions is a solid first step toward delivering more accountable care. Hospitals should be aware of the penalties, the impact to their facility, and the drivers of potentially avoidable readmissions. Deploying proactive and effective strategies for improvement is necessary for success in today’s healthcare marketplace.

The Camden Group, Hospital Readmissions, Readmissions Reduction

Topics: Hospital Readmissions, Readmissions Reduction, HRRP, Hospital Readmissions Reduction Program

New White Paper Download: What is Your Plan for Avoiding Readmissions?

Posted by Matthew Smith on Mar 19, 2015 2:55:00 PM

As the U.S. healthcare system continues its transition from volume to value, readmissions penalties appear to be here to stay. The penalties will impact each hospital in a different manner, and the cost/benefit of reduction efforts must constantly be weighed. However, controlling and reducing avoidable readmissions is a solid first step toward delivering more accountable care.

The latest White Paper from GE Healthcare Camden Group, titled, What is Your Plan for Avoiding Readmissions? Understanding the Penalty and Solutions, examines:

  • Readmissions penalty history and trends
  • Distribution of HRRP penalties
  • Readmissions results vs. U.S. national rate
  • Readmissions measures and maximum penalty by fiscal year
  • States with the highest percentage of hospitals receiving penalties
  • Readmissions penalty calculations and projections (including CMS formula)
  • Solutions for controlling readmissions

To download the PDF White Paper, please click the button below:

The Camden Group, Hospital Readmissions, Readmissions Reduction

Topics: Readmissions, Hospital Readmissions, Readmissions Reduction, Hospital Readmissions Reduction Program

Infographic: 7 Cities With Highest Hospital Readmission Rates

Posted by Matthew Smith on Oct 22, 2014 3:23:00 PM

Infographic, Healthcare, GraphicThe seven cities with the highest hospital readmission rates include: Chicago, Brooklyn, Philadelphia, Baltimore, Manhattan, Boston and Los Angeles, according to a new analysis by Kaiser Health News, depicted in an infographic by Becker's Healthcare.

Nineteen hospitals in Chicago exceeded the national average readmission rate. The infographic details how many hospitals in each of the other cities exceeded the average.

Hospitals, Readmissions, Hospital Readmissions, Population Health

Topics: Infographic, Hospital Readmissions

Big Hospitals to Be Biggest Losers of Federal Medicare $$

Posted by Matthew Smith on Jan 30, 2013 4:26:00 PM
Via MedPage Today, Published: January 22, 2013

Hospital ReadmissionsLarge, teaching, and safety-net hospitals are those most likely to be penalized for failing to reduce hospital readmissions, researchers found.

In the federal Hospital Readmissions Reduction Program (HRRP), 40% of large hospitals will likely see big cuts in their fiscal 2013 Medicare reimbursements compared with 28% of small hospitals, according to Karen Joynt, MD, of Brigham and Women's Hospital in Boston, and Ashish Jha, MD, of the Harvard School of Public Health.

In addition, major teaching hospitals are more likely to be highly penalized than nonteaching hospitals (44% versus 33%) as are safety-net hospitals compared with hospitals that do not have the safety net designation (44% versus 30%), they wrote in a research letter in the Journal of the American Medical Association online.

The HRRP took effect on Oct. 1, 2012; under the program, CMS determines whether a hospital's readmission rates were higher than would be predicted by its models. Those with higher-than-predicted rates will have their total 2013 Medicare reimbursement cut by up to 1%.

The authors noted that prior studies "have shown that readmission rates are related to severity of illnesses and socioeconomic status."

To measure penalty risks under HRRP, Joynt and Jha analyzed publicly available data on 3,282 Medicare reimbursement-eligible hospitals and calculated the odds of receiving any penalties for each hospital type.

Hospitals were categorized as having received high, low, or no penalties, based on whether their penalty size was greater or less than the top half of penalties. The authors linked this data to 2011 American Hospital Association survey data to identify hospitals that are likely to care for sicker patients (large hospitals with 400 beds and major teaching hospitals with membership in the Council of Teaching Hospitals), along with safety-net hospitals.

The authors identified safety net hospitals as sites "in the highest quartile of the disproportionate share hospital index."

Roughly two-thirds of hospitals in the sample (66.7%) will receive pay cuts under HRRP. Almost half (47%) of small hospitals in the analysis won't suffer Medicare payment cuts compared with 24% of large hospitals.

Compared with nonteaching hospitals, teaching hospitals were less likely to avoid a penalty (19% versus 33%).

A small percentage of safety-net hospitals will avoid penalties compared with nonsafety-net hospitals (20% versus 37%).

In a multivariate analysis of all hospital types, safety-net hospitals were more likely than other sites to receive a high penalty under the new reimbursement regulations (odds ratio 2.38, 95% CI 1.91 to 2.96, P<0.001).

"It is unclear exactly why [large, teaching, and safety-net] hospitals have higher readmissions rates than their smaller, nonteaching, nonsafety-net hospital counterparts," the authors noted, but added that "prior research suggests that differences between hospitals are likely related to both case mix and socioeconomic mix of the patient population."

They also noted that there was "less evidence that differences in readmissions are related to measured hospital quality."

The study was limited by the inability to identify institutions that care for the sickest patients. The authors also found that missing data for fiscal years 2014 and 2015 in the current study limits whether penalties will persist past the first year of the HRRP.

Topics: Medicare, Hospitals, Hospital Readmissions

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