Andrew Gonzalez, M.D., MPH, J.D., explains how the Hospital Readmissions Reduction Program penalties are calculated.
Transcript:
Ten years ago, under Obamacare, one of the provisions was the Hospital Readmissions Reduction Program, also known as the HRRP. Under this program, hospitals that had an excess readmission rate were penalized. So the hospital has a calculation that’s performed on Medicare’s side that predicts how many readmissions the hospital should have, known as the expected rate. And then they compare that to how many readmissions the hospital actually had, the observed rate. And then there’s a multiplication factor. And the maximum penalty that a hospital can receive is 3 percent of their revenue from Medicare, which can sometimes end up being millions of dollars.
Dr. Gonzalez says the funds saved by lowering Medicare penalties for safety-net hospitals could be fed back into more community-based programs.
Transcript:
Safety-net hospitals tend to have more programs designed to address socioeconomic disparities or social determinants of health compared to hospitals that do not have that. So I think that having less penalties at these hospitals would allow better patient care, one, because they would be able to provide more stuff because of the extra revenue. But in terms of where that extra revenue is going at safety-net hospitals in particular, it doesn’t just go toward more four by four bandages or fancy catheters or whatnot. A lot of that revenue would actually be fed back into more community-based programs.
