IPPS Hospital Readmission Reduction Program

Through the Hospital Readmission Reduction Program, the Centers for Medicare & Medicaid Services penalizes hospitals for “excess” readmissions when compared to “expected” levels of readmissions. Since the program began on Oct. 1, 2012, hospitals have experienced nearly $2.5 billion of penalties, including an estimated $564 million in fiscal year 2018.

Reducing readmissions improves quality and reduces spending. Since 2010, Medicare data show that hospitals have prevented more than 565,000 readmissions. However, numerous studies show that the likelihood of being readmitted to a hospital also is affected by socioeconomic issues, such as:

  • income,
  • insurance status, and
  • access to pharmacies, transportation to follow-up appointments and grocery stores.

Congress recognized the need to improve the fairness of readmission penalties. It passed AHA-supported legislation requiring Medicare to account for sociodemographic factors starting on Oct. 1, 2018. The AHA continues to urge other improvements to the HRRP, such as using more accurate measures and updating the penalty formula to ensure it provides the right incentive to improve.