Medicare’s hospital readmissions reduction program will move in a new direction beginning in FY 2019 after Congress directed the Centers of Medicare & Medicaid Services to compare hospitals’ performance on readmissions to similar hospitals instead of to all hospitals.

The policy change, driven by a belief that safety-net hospitals were harmed by the program and excessive penalties because their patients are more challenging to serve, results in all hospitals being divided into peer groups based on the proportion of low-income patients they serve.  The readmissions performance of hospitals is then compared only to other hospitals within each peer group.

As a result of this new approach, readmissions penalties against safety-net hospitals are expected to decline 25 percent in FY 2019 while the average penalty for hospitals serving the fewest low-income patients will rise.

NAUH was among the loudest and most persistent voices calling for reform of the program to better reflect the special challenges private safety-net hospitals face in working to prevent the readmission of their low-income Medicare payments to the hospital.

Kaiser Health News has published a detailed story describing the policy change and its implications for hospitals, which face penalties of up to three percent of their Medicare revenue for what is considered “excessive” readmissions of Medicare patients within 30 days of their discharge from the hospital.  Included in the article is a searchable database of every hospital in the country that lists the peer group for each hospital, its FY 2018 and FY 2019 readmissions penalties by percentage of Medicare revenue, and the change in readmissions penalty expected from FY 2018 to FY 2019.  Go here to see the article “Medicare Eases Readmission Penalties Against Safety-Net Hospital.”