Table A. Readmission Penalties, Paid by Hospitals, for Six Conditions Column A. Each "Penalty" is the cost of Initial Treatment in Column B multiplied by the US ratio of admissions to readmissions (Column D).
Column B. The "Average Base Payment" is an average of Medicare's detailed payments, by diagnosis from October 2014 to September 2015 (FY 2015). There are different payment levels for patients with and without other unrelated illnesses, and the average payment here is weighted by the number of patients having each payment level. Column C. "US Average Readmissions" above were updated in Hospital Compare 26 July 2017.
Column D. "US Ratio of Admit to Readmit" is one divided by Column C.
Column E. "Each Condition" is the total of Medicare's counts of admissions, by diagnosis Note F. Medicare does not provide as much detail as this table, but its data support an estimate of $52,000 average penalty per excess readmission in 2016, $36,000 in 2014 and $40,000 in 2013:
Note G. Medicare adjusts readmission rates for patient mix at each hospital, to level the playing field, but the adjustments have a very poor fit, explaining only 3-5% of the variation in readmissions. Note H. MedPAC looked at the multipliers (shown in Column D), and recommended the law should change to:
Note J. Penalties for each hospital depend on constants in Table 1, and factors for each hospital in the Impact file each year.
6 Comments
Matt Erickson
7/1/2014 04:19:25 am
Hey! Great work here ... I have been trying to figure this out for a few days and had a question. Do you have a reference for what DRG's you picked to be related to AMI, PN, and HF? For instance your sample calculations spreadsheet lists 193, 194 and 195 as the DRGs related to PN? I can't find where CMS published that ... just trying to work out the math. Thanks!
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Medicare defines the conditions subject to penalties by ICD-9-CM codes in the Federal Register. For $700 they sell a database which groups these into DRG codes. Medicare labels all DRG codes in "Table 5-List of Medicare Severity Diagnosis-Related Groups (MS-DRGs)" which they distribute with the same Federal Register notice. So I treat these DRG labels as consistent with the Federal Register notice, and use the DRGs labeled for COPD, Pneumonia, etc. Thanks to your question I added this explanation to the spreadsheet.
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Matt
7/3/2014 01:13:20 am
Thanks for the response! That makes sense ... once I reviewed all the DRGs it makes sense as to which ones applied. Do you know if CMS sells (in that $700 data set or others?) the reimbursement amounts to providers by DRG or in total? I have seen data sets similar but never exactly what I want ... for instance I have average reimbursement and number of cases ... but not sure if that can be multiplied to actual reimbursement. 9/16/2014 05:19:23 am
Recently the question has come up as to how Medicare and the Hospitals will record or keep track of their re-hospitalizations when it comes to dates. I have seen it done two ways and was wondering if you know how Medicare looks at it. The two ways are basically to record the 30 day re-hospitalization based on the date it occurs, or do you record a 30 day re-hospitalization going back to the day the patient was admitted? Any Thoughts?
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Hossein
11/21/2017 11:37:32 am
Thank you for the very usefull and easy-to-go calculations. Did you calculate 2013 and 2014? The excel file only provides 2015-2017. Also do you have the "Readmission penalties are based on operating cost+new technology+transfers without the other adjustments. Operating as % of "average" i.e. operating plus capital, teaching, disproportionate share and outlier payments:", as I see 73% reported for 2017.
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