Over 2,000 hospitals will be targeted for readmission penalties starting Oct. 1

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Hospital observation stays increased more than 100%, AARP study finds
Hospital observation stays increased more than 100%, AARP study finds
In about six weeks, more than 2,000 U.S. hospitals will be subject to financial penalties for preventable readmissions, making their relationships with post-acute providers more important than ever.

As dictated by the Affordable Care Act, Medicare will penalize hospitals for failing to reduce preventable readmissions, a Kaiser Health News analysis of government data found. Hospitals that don't meet targeted rates will face a maximum penalty worth 1% of their base Medicare reimbursement. That rate will be effective Oct. 1, 2012. In 2013, the rate jumps to 2% of base Medicare reimbursements, then 3% the next year.

States that will bear the brunt of the penalties include New Jersey, New York, the District of Columbia, Arkansas, Kentucky, Mississippi, Illinois and Massachusetts. States with the lowest penalties are: Utah, South Dakota, Vermont, Wyoming and New Mexico. According to the Kaiser analysis, 278 hospitals will pay the maximum amount, while 1,933 hospitals will pay penalties of less than 1%.

Long-term care experts have stressed that Medicare's hospital readmission penalties — which target readmissions for heart attacks, pneumonia and chronic heart failure — make forming partnerships with quality long-term care providers a crucial part of their operations.

Currently, one out of five Medicare beneficiaries is back in the hospital within 30 days of discharge at a cost to Medicare of $17.5 billion in annual hospital bills, according to data from the Centers for Medicare & Medicaid Services.

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