Last updated on: 10/24/2012 | Author:

Under Obamacare, Does Medicare Reduce Reimbursements to Hospitals with High 30-Day Readmission Rates? – YES

General Reference (not clearly pro or con)

The Patient Protection and Affordable Care Act, Section 3025, “Hospital Readmissions Reduction Program,” page 290, signed into law on Mar. 23, 2010, available at the Library of Congress website, states:

“IN GENERAL.—Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as amended by sections 3001 and 3008, is amended by adding at the end the following new subsection:


(1) IN GENERAL.—With respect to payment for discharges from an applicable hospital (as defined in paragraph (5)(C)) occurring during a fiscal year beginning on or after October 1, 2012, in order to account for excess readmissions in the hospital, the Secretary shall reduce the payments that would otherwise be made to such hospital under subsection (d) (or section 1814(b)(3), as the case may be) for such a discharge by an amount equal to the product of—

(A) the base operating DRG payment amount (as defined in paragraph (2)) for the discharge; and

(B) the adjustment factor (described in paragraph (3)(A)) for the hospital for the fiscal year.'”

Mar. 23, 2010 - Patient Protection and Affordable Care Act (HR 3590)

PRO (yes)


Julie Stone, Specialist in Health Care Financing for the Congressional Research Service, and Geoffrey J. Hoffman, Analyst in Health Care Financing for the Congressional Research Service, wrote in their Sep. 21, 2010 paper “Medicare Hospital Readmissions: Issues, Policy Options and PPACA,” available at

“Reductions in hospital readmissions (also referred to as rehospitalizations) have been identified by Congress and President Obama as a source for reducing Medicare spending. The Medicare Payment Advisory Commission (MedPAC) reported that in 2005, 17.6% of hospital admissions resulted in readmissions within 30 days of discharge, 11.3% within 15 days, and 6.2% within 7 days. In addition, variation in readmission rates by hospital and geographic region suggests that some hospitals and geographic areas are better than others at containing readmission rates…

Although readmitting a patient to a hospital may be appropriate in some cases, some policy makers and researchers agree that reducing readmission rates could help contain Medicare costs and improve the quality of patient care.”


Jordan Rau, Kaiser Health News Staff Writer, wrote in his Aug. 13, 2012 article “Medicare to Penalize 2,211 Hospitals for Excess Readmissions,” available at the Kaiser Health News website:

“More than 2,000 hospitals — including some nationally recognized ones — will be penalized by the government starting in October because many of their patients are readmitted soon after discharge, new records show.

Together, these hospitals will forfeit about $280 million in Medicare funds over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide.

With nearly one in five Medicare patients returning to the hospital within a month of discharge, the government considers readmissions a prime symptom of an overly expensive and uncoordinated health system. Hospitals have had little financial incentive to ensure patients get the care they need once they leave, and in fact they benefit financially when patients don’t recover and return for more treatment.

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.”

CON (no)


[Editor’s Note: Based upon a neutral reading of the Patient Protection and Affordable Care Act and bi-partisan third party analysis, this question seems to have a clear and obvious Pro (yes) answer, and has therefore presented the responses in a single column with no opposing perspective.]