CMS to save millions by increasing hospital readmission fines

With spending on inpatient hospital services expected to increase by $746 million next year, CMS is in need of new ways to save and raise revenue. On August 2, the agency announced a change that will help ease some of its money woes.

At the beginning of the 2017 fiscal year in October, CMS will add new criteria to the Hospital Readmissions Reduction Program that’s expected to save CMS $538 million; $108 million over the previous fiscal year. The new criteria will increase the number of hospitals that are penalized for high readmission rates, as well as the amount for which they are penalized.

CMS has added coronary artery bypass grafts as a surgery for which hospitals can receive a readmission penalty, as well as alter how it calculates readmissions for pneumonia. Other readmission penalty procedures include heart failure, heart attacks, chronic obstructive pulmonary disease, and hip and knee replacements. It’s estimated that 2,588 hospitals will be fined next year due to the update, losing 0.73% of their Medicare payments on average. Only 49 hospitals are expected to receive the maximum penalty of 3% according to Kaiser Health News.

Readmissions have been a major point of contention between hospital groups and CMS. Many argue that since CMS’ program doesn’t take socioeconomic factors into account, hospitals that serve poorer or sicker patients are disproportionately fined for high readmissions.

“We are disappointed CMS missed another opportunity to adjust for the social and economic challenges of vulnerable patients in its quality improvement and reporting programs,” said Beth Feldpush, senior vice president at America's Essential Hospitals, in a statement. “The evidence is clear that these programs disproportionately penalize hospitals that serve disadvantaged patients and communities.”