CMS: Initial penalties for hospital readmissions were set too low

Hospitals posting high rates of Medicare patients readmitted for preventable conditions within 30 days of discharge will have to pay higher penalties than previously thought.

In a notice published last Friday, the Centers for Medicare & Medicaid Services said that it made an error when calculating the penalty rates. The penalties should be based on the readmission rates and reimbursements for patients who were discharged from July 2008 through June 2011. However, CMS inadvertently included Medicare claims before July 1, 2008, in its penalty evaluations.

The recalculation is unlikely to have a meaningful impact. According to a Kaiser Health News analysis of the revised rates, the penalties for one Florida hospital will increase from 0.62% to 0.73% of its reimbursements. Another Pennsylvania hospital will see its penalty fall from 0.51% to 0.4%, Kaiser reported.

Penalties for readmissions tied to pneumonia, heart failure and heart attacks went into effect on Oct. 1. Nursing homes stand poised to benefit from the policy as it encourages hospitals to work closely with post-acute care providers to bring down readmission rates. Medicare expects the penalties to recoup $280 million from hospitals with high readmission rates.