CMS Imposes Penalties for High Readmission Rates

October 30th, 2014 - By PrognoCIS Marketing

Hospitals with high readmission rates for the period of July 2010 to June 2013 are facing penalties from The Centers for Medicare and Medicaid Services (CMS) for the next year. Those who are penalized will receive lower reimbursements for Medicare patients admitted from October 1st, 2014 to September 30th, 2015. According to Kaiser Health News, 2,610 hospitals are being fined. This is about 80% of the approximately 3,400 hospitals that are being assessed. Medicare believes the fines will be approximately $428 million in total. 

CMS introduced the Readmissions Reduction Program to encourage providers to put forth their best efforts to prevent those readmissions that can be avoided. Some steps they can take include following up with their patients and coordinating care with other providers if necessary. The program requires CMS to lower the reimbursement payment amount to hospitals with high readmission rates. According to Kaiser Health News, it is estimated that $17 billion of Medicare readmission costs are preventable.

The Kaiser Heath News report showed a chart (some of which is reproduced here) of how many hospitals in each state were affected. States in the New England area seem to have the largest number of penalized hospitals, with almost all of New Jersey’s hospitals (98%) losing money.


% Hospitals Penalized

Average Penalty




New York









New Jersey



The FY 2012 final rule posted by CMS “defined readmission as an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.” Based on this rule, patients with heart failure, acute myocardial infarction, or pneumonia were assessed for readmission. The FY 2015 final rule, however, has added two new measures: chronic obstructive pulmonary disease and total hip arthroplasty/total knee arthroplasty. 

Author: Apoorva Anupindi

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