The policy to penalize hospitals for readmissions was an integral part of the Affordable Care Act.

By Steve Sternberg
Senior Writer
Dec. 27, 2016, at 2:18 p.m.

The Obamacare practice of penalizing hospitals for readmissions appears to work, according to research out Monday.

Hospitals that most commonly readmitted newly discharged patients showed the greatest reductions after Medicare imposed stiff financial penalties, researchers reported in the journal Annals of Internal Medicine.

The policy’s effectiveness highlights a dilemma facing the incoming Trump administration, which has vowed to repeal and replace Obamacare, notes senior author Dr. Robert W. Yeh, Director of the Smith Center for Outcomes Research in Cardiology at Beth Israel Deaconess Medical Center in Boston.

“The President-elect’s inclination to hold people accountable for the work they do seems to be in line with this kind of scheme,” Yeh says. “Paying hospitals for how well they do, and not how much they do, is one of few elements [of Obamacare] that can carry bipartisan support.”

Medicare’s Hospital Readmissions Reduction Program was signed into law in 2010 and implemented two years later. It was an effort to reduce the numbers of patients hospitalized again within 30 days of their initial admission. Some of these admissions were necessary, but wide variation in readmission rates – with little difference in how patients fare – suggested that many patients could have been cared for just as effectively at home.

The federal government focused on penalties for common conditions, including heart attack, heart failure, pneumonia, chronic lung disease and bypass surgery. The penalties are significant, trimming the revenues of nearly 2,600 hospitals – half the nation’s total – by $528 million in 2016, topping last year’s total by about 20 percent, according to a Kaiser Health News analysis of Medicare data released in August.

In the new study, Yeh and his colleagues asked whether readmissions in patients suffering from heart attacks, heart failure and pneumonia were higher in “poor-performing” hospitals because they, or the communities they serve, lack resources to care for the disadvantaged.

The researchers examined Medicare data for 15 million discharges between 2000 and 2013 at 2,868 hospitals. They divided the hospitals into four groups based on the magnitude of the penalties imposed by Medicare, from zero to the maximum of 1 percent of total Medicare reimbursements. Then they looked to see whether losing money motivated hospitals to cut their readmissions.

Yeh’s team found that readmissions that steadily increased in the years before the law was passed dropped by 77 per 10,000 after it went into effect. Readmissions at poor-performing hospitals, those that were penalized most, dropped by 95 per 10,000 discharges, Yeh said.

The study’s biggest limitation is that Medicare data lacks the information needed to determine how patients fared once they were discharged from the hospital. Internal data from Beth Israel Deaconess and other institutions suggests, however, that keeping newly discharged patients out of the hospital usually doesn’t make them sicker, Yeh says.

Many readmissions occur because hospitals are extra-vigilant when patients who’ve had scary episodes, such as heart attacks or severe pneumonia, have setbacks and turn up again in the emergency room, he says. Rather than providing the needed care and sending patients home, emergency staff often admit them to the hospital.

Many of those admissions can be avoided by putting in place new emergency-room procedures for diagnosing and treating newly discharged patients. To make sure these practices don’t put patients at risk, Yeh says, he and his colleagues plan to examine readmission rates through another prism – to see if there’s any link to higher mortality.

Steve Sternberg, SENIOR WRITER
Steve Sternberg is a senior writer for U.S. News and a data journalist covering health care performance, health policy, clinical medicine and public health. You can follow him on Twitter (@stevensternberg), connect with him on LinkedIn or email him at