Readmission Penalties Set to Take Effect

Readmissions penalties are calculated based on the frequency of Medicare patients readmitted within 30 days between July 2008 and June 2011.

Starting October 1, 2012, hospitals will face a 1% penalty for readmissions related to acute myocardial infarction, heart failure, or pneumonia. A year later the penalty will increase to 2% and then 3% in 2014. Moreover, as of next month, hospitals will be penalized or rewarded based on their level of adherence to basic standards of care and how patients rate their experience.

The hospitals that stand to fare the worst are those in New Jersey, New York, the District of Columbia, Arkansas, Kentucky, Mississippi, Illinois, and Massachusetts, according to CMS data on overall readmissions rates.

Readmissions penalties will be lightest in hospitals in Utah, South Dakota, Vermont, Wyoming, New Mexico, and Idaho. Idaho is the only state in which Medicare will not penalize any hospital under the initial metrics.

The readmissions penalty may hit some of the nation's top-rated hospitals hardest.  In calculating the amount of a provider's penalty, Medicare will weigh the severity of patients' illness, but not racial or socio-economic background. CMS data indicates that providers that care for the lowest-income patients are 2.7 times more likely to have high readmissions rates.