A bipartisan group of senators has introduced legislation that would require CMS to take the financial status of a hospital’s patient population into account when deciding whether to financially penalize a hospital for excessive readmissions.

The Medicare Readmissions Reduction Program penalizes hospitals that have poor readmission rates.  Under the program, Medicare reduces payments made to hospitals that perform poorly in five readmissions measures.  A proposed rule would raise the maximum payment reduction penalty for hospitals from 2% to 3%.
CMS estimates that the program has reduced hospital readmissions for Medicare by 150,000 over 2012 and 2013.  However, studies have found that the program penalizes hospitals that serve large numbers of low-income patients most frequently.  As the bill’s sponsors explain, “low-income patients often lack the support to keep them out of the hospital and/or to help them become healthier due to weaker social networks, cultural and linguistic challenges, high levels of homelessness, high illiteracy rates, poor access to auxiliary health care services and pharmacies, and myriad other issues.”  These difficulties increase the likelihood that, after discharge from the hospital, a low-income patient will experience additional health issues that require readmission.

The bill would require CMS to consider the socio-economic status of a hospital’s patients prior to implementing the penalty.  The bill does not specifically dictate how the penalty program should be revised, leaving the details to CMS.  The American Hospital Association has endorsed the bill.

The full text of the proposed legislation may be reviewed here.  Comments on the proposed rule increasing the penalties are due June 30, 2014 and may be submitted here.