Published November 3, 2020
Follow our Medicare Coronavirus News page for related information on coronavirus (COVID-19) and its impact on Medicare beneficiaries.
Many hospitals in the U.S. will get reduced Medicare funding in fiscal year 2021.
Join our email series to receive your free Medicare guide and the latest information about Medicare and Medicare Advantage.
By clicking "Sign me up!” you are agreeing to receive emails from MedicareAdvantage.com.
Speak with a licensed insurance agent
Federal records released as part of the 9th annual Hospital Readmissions Reduction Program audit show that nearly half of all hospitals will be penalized because of their high patient readmission rates.
A total of 2,545 hospitals will receive lower Medicare payments for one full year due to their poor performance. The average payment reduction is 0.69% per hospital, and 613 hospitals will receive a penalty of 1% or more. 39 hospitals will receive the maximum penalty of a 3% reduction in Medicare payments.
2,176 hospitals were exempt from the program’s penalties because of critical access status or because they specialize in children, veterans, psychiatric care, long-term care or rehabilitation. That means 83% of the hospitals that were eligible for a penalty (not exempt for the reasons listed above) will be penalized in 2021.
The total dollar amounts of those penalties will not be known until the end of the fiscal year on July 30, 2021.
The program was created as part of the Affordable Care Act (often called Obamacare) to improve hospital care quality and to lower federal costs. The goal is to neutralize any economic benefits that a hospital might get from a patient readmission under the Medicare fee-for-service payment model.
The 2020 surge of COVID-19 patients had no bearing on the results, as the period measured was from July 2016 to June 2019.
Penalties are based on the readmission rates of Medicare patients with:
Any such patient who is readmitted within 30 days of discharge (except those who have a planned return to the hospital) are counted as a readmission. Penalties are assessed if a hospital’s readmission rate is higher than expected according to national trends.
Beneficiaries can use this tool to see if their local hospitals are being penalized.
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.
His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.
Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.
Where you've seen coverage of Christian's research and reports: