Under programs set up by the Affordable Care Act, the federal government has cut payments to hospitals that have high rates of readmissions and those with the highest numbers of infections and patient injuries. . For the readmission penalties, Medicare cuts as much as 3 percent for each patient, although the average is generally much lower. The patient safety penalties cost hospitals 1 percent of Medicare payments over the federal fiscal year, which runs from October through September.

The Hospital Readmissions Reduction Program has been a mainstay of Medicare’s hospital payment system since it began in 2012. Created by the Affordable Care Act, the program evaluates the frequency with which Medicare patients at most hospitals return within 30 days and lowers future payments to hospitals that had a greater-than-expected rate of return. Hospitals can lose up to 3% of each Medicare payment for a year.

Section 1886(q) of the Social Security Act sets forth the statutory requirements for HRRP, which required the Secretary of the U.S. Department of Health and Human Services to reduce payments to subsection (d) hospitals for excess readmissions beginning October 1, 2012.

In addition, the 21st Century Cures Act directs CMS to assess a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full Medicaid benefits beginning in FY 2019.

The legislation requires estimated payments under the peer grouping methodology (that is, FY 2019 and onward) equal payments under the non-peer grouping methodology (that is, FY 2013 to FY 2018) to maintain budget neutrality.

California Healthline has established a searchable database searchable by state or hospital name. It is available on their website, and is open to the public.

But the federal government has eased its annual punishments for hospitals with higher-than-expected readmission rates in an acknowledgment of the upheaval the COVID-19 pandemic has caused, resulting in the lightest penalties since 2014.

The pandemic threw hospitals into turmoil, inundating them with covid patients while forcing many to postpone elective surgeries for months. When the Centers for Medicare & Medicaid Services evaluated hospitals’ previous three years of readmissions, as it does annually, the government decided to exclude the first half of 2020 because of the chaos caused by the pandemic. CMS also excluded from its calculations Medicare patients who were readmitted with pneumonia across all three years because of the difficulty in distinguishing them from patients with covid.

Akin Demehin, senior director of quality and patient safety policy at the American Hospital Association, said the changes were warranted. “The covid pandemic did a lot of really unprecedented things to care patterns of hospitals,” he said.

After making those changes, CMS evaluated 2½ years of readmission cases for Medicare patients who’d had heart failure, heart attacks, chronic obstructive pulmonary disease, coronary artery bypass grafts, and knee and hip replacements. As a result of its analysis, CMS penalized 2,273 hospitals, the fewest since the fiscal year that ended in September 2014, a KHN analysis found.

To limit penalties, many hospitals in recent years have instituted new strategies to keep former patients from needing a return visit.