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Insights and Trends

Rising Readmission Penalties Expected in 2024: What Rehab Hospitals Can Do to Reduce its Impact

The Centers for Medicare and Medicaid Services (CMS) reported 2023 to be the lowest number of readmission penalties in nearly 10 years by the Hospital Readmissions Reduction Program (HRRP). However, this trend is expected to reverse for fiscal year (FY) 2024.1

If hospitals are not prepared, patient experience and outcomes, as well as hospital financial performance, could be negatively impacted.

What is the Hospital Readmissions Reduction Program?

The HRRP is a Medicare value-based purchasing program that encourages hospitals to improve communication and care coordination to better engage patients in discharge plans – all in an effort to reduce avoidable readmissions.2 It is one of three mandatory pay-for-performance (P4P) programs that the Affordable Care Act introduced and is managed by CMS.

The HRRP measures readmissions as:

      • Unplanned readmissions that happen within 30 days of discharge from the initial admission.
      • Patients who are readmitted to the same hospital, or another applicable acute care hospital, no matter the principal diagnosis (the measures exclude some planned readmissions).

The program penalizes hospitals up to 3% of their inpatient Medicare revenue for having worse-than-average readmissions rates for the following conditions:3

      1. Cardiac:
          1. Acute Myocardial Infarction (AMI)
          2. Heart Failure (HF)
          3. Coronary Artery Bypass Graft (CABG) Surgery
      2. Pulmonary:
          1. Chronic Obstructive Pulmonary Disease (COPD)
          2. Pneumonia
      3. Orthopedic:
          1. Elective Primary Total Hip Arthroplasty (THA)
          2. Elective Primary Total Knee Arthroplasty (TKA)

Causes of increased readmission penalties

Medicare pulls readmission data from a three-year period prior to the current year it is being assigned. Penalties distributed in 2024 will be pulled from 2019-2022.

Akin Demehin, senior director for quality and patient safety policy at the American Hospital Association (AHA) reported that the higher number of readmission penalties for FY 2024 were likely the cause of hardships experienced during peak pandemic months in 2021 and 2022.1

Although hospitals were experiencing increased readmission penalties prior to 2020, this was mostly due to new measures being added to the HRRP. These new measures, coupled with fluctuating COVID-19 cases, depleted staffing numbers, and rising resource costs that have arose in recent years, have placed an even bigger burden on hospitals to combat rising readmission rates.

How rehabilitation hospitals can rebound in 2024 and beyond

CMS predicts these readmission penalties will see a steady incline year-over-year. Hospitals that are not prepared could experience substantial impacts to their bottom line, resulting in even more patient readmissions.

Key resources hospitals can prioritize to combat future readmissions:

      • Integration of innovative technology solutions to streamline clinical diagnosis, treatment and discharge protocols.
      • Employing highly trained rehabilitation talent to help ensure the right care is being delivered to the right patient at the right time in their care journey.
      • Partnering with a qualified post-acute expert to not only provide access to the above resources, but also supply the necessary guidance and knowledge to help hospitals navigate the complex healthcare landscape, especially regular CMS updates like HRRP.

Contact us to learn how Lifepoint Rehabilitation can help your hospital reduce readmissions through service line optimization.



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