Readmission fines in 2023 lower than expected

CMS also excludes pneumonia readmission measures from its review and eliminates diagnosis-related group payment policies and excess readmission rate calculations for hospitals with emergency exceptions.

Because hospitals must have a minimum number of cases to evaluate against various readmission rates, the exclusion of six-month claims could mean some hospitals are not meeting the data threshold, Demekhin said.

“When hospitals fail to score on certain metrics, it can lead to a reduction in their penalty,” he said.

In FY 2022, 17.81% of hospitals had no readmission fines. In the coming year, 25.33% of hospitals will not be subject to readmission penalties, and the number of hospitals paying fines above 1% will decrease by 57%.

The average penalty for hospitals with the highest proportion of patients eligible for dual Medicare-Medicaid programs – the fifth group – is 0.23%. For hospitals with the fewest number of patients eligible for dual treatment – the first group – the average penalty is 0.37%. In fiscal year 2022, the fifth and first groups were fined 0.60% and 0.42%, respectively, on readmission.

The higher rate of hospitals without fines this year is not unprecedented, Demekhin said, though the industry hasn’t seen similar numbers since fiscal 2014 and 2015. Penalties have been on the rise since CMS began adding additional measures to the readmission program.

While the lower share of fines may be partly due to hospitals’ progress in reducing readmissions, Demekhin said health systems had substantially improved pre-pandemic measures and the level of fines continued to rise.

“Progress does not always seem to be rewarded,” he said. “While the number of hospitals receiving a fine this fiscal year is less than in previous years, it is important to note that about three-quarters of hospitals are still receiving readmission fines.”

“In addition to stakeholder uncertainty about the fee penalty formula and its ability to drive improvement, it is clear that many hospitals throughout the pandemic have been focused on managing readmissions and maintaining their quality record,” said Rick Kees, senior healthcare analyst at RSM. .

“I think we could continue to see improvements in these areas, even though the headwind of labor and costs is growing much faster than hospital revenues,” he said.

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