Law on Medicare's Readmission Penalties
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Wording of Law - Section
1886(q) of the Social Security Act - http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/html/PLAW-111publ148.htm
or http://www.ssa.gov/OP_Home/ssact/title18/1886.htm |
Wording of Medicare
Website - http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Readmissions-Reduction-Program.html |
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(paragraphs ordered to correspond to list of items
at right; all are from Section 1886(q); emphasis added) |
Wage-adjusted DRG operating amount* = DRG weight x [(labor
share x wage index) + (non-labor share x cola, if applicable)] *Note, If the case is subject to the transfer policy, then this amount
includes an applicable payment adjustment for transfers under
§ 412.4(f). |
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(2)(A) In
general.—Except as provided in subparagraph (B), in this subsection, the term "base
operating DRG payment amount" means, with respect to
a hospital for a fiscal year— (i)
the payment amount that would otherwise be made under subsection (d)
(determined without regard to subsection (o)) for a discharge if this
subsection did not apply; reduced by (ii) any portion of
such payment amount that is attributable to payments under paragraphs (5)(A),
(5)(B), (5)(F), and (12) of subsection (d). (2)(B)
Special rules for certain hospitals.— (i) Sole community hospitals and medicare-dependent, small rural hospitals.—In the case of
a medicare-dependent, small rural hospital (with
respect to discharges occurring during fiscal years 2012 and 2013) or a sole
community hospital, in applying subparagraph (A)(i),
the payment amount that would otherwise be made under subsection (d) shall be
determined without regard to subparagraphs (I) and (L) of subsection (b)(3)
and subparagraphs (D) and (G) of subsection (d)(5). (ii) Hospitals paid under section 1814.—In the case of a hospital that is
paid under section 1814(b)(3), the Secretary may exempt such hospitals
provided that States paid under such section submit an annual report to the
Secretary describing how a similar program in the State for a participating
hospital or hospitals achieves or surpasses the measured results in terms of
patient health outcomes and cost savings established herein with respect to
this section. |
Base Operating DRG Payment Amount = Wage-adjusted DRG operating amount +
new technology payment, if applicable. |
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(4)(C)(i) In
general.—Subject to clause (ii),
the term "excess readmissions ratio" means, with respect to
an applicable condition for a hospital for an applicable period, the ratio
(but not less than 1.0) of— (I) the risk adjusted
readmissions based on actual readmissions, as determined consistent with a
readmission measure methodology that has been endorsed under paragraph (5)(A)(ii)(I), for an applicable hospital for
such condition with respect to such applicable period; to (II) the risk adjusted expected
readmissions (as determined consistent with such a methodology) for such
hospital for such condition with respect to such applicable period. (4)(C)(ii)
Exclusion of certain readmissions.—For purposes of clause (i), with respect to a hospital, excess readmissions shall
not include readmissions for an applicable condition for which there are
fewer than a minimum number (as determined by the Secretary) of discharges
for such applicable condition for the applicable period and such hospital. (5)(A)(ii)
measures of such readmissions— (I) have been endorsed by the entity with a contract under section
1890(a); and (II) such endorsed measures have exclusions for
readmissions that are unrelated to the prior discharge
(such as a planned readmission or
transfer to another applicable hospital). |
Excess readmission ratio = risk-adjusted predicted readmissions /
risk-adjusted expected readmissions [Web page and regulations
are silent on defining "unrelated to the
prior discharge." A reply to comments in the Federal
Register Aug. 19, 2013 said "we incorporated both examples of unrelated readmissions cited by the
statute ... Regarding other
types of unrelated readmissions, we currently do not seek to differentiate between related and unrelated
readmissions because readmissions not directly related to the index condition
may still be a result of the care received during the index hospitalization.
... creating a comprehensive list of potential complications related
to the index hospitalization would be arbitrary, incomplete, and, ultimately,
extremely difficult to implement."] |
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(4)(A) Aggregate
payments for excess readmissions.—The term 'aggregate payments for
excess readmissions'' means, for a hospital for an applicable period, the sum, for
applicable conditions (as defined in paragraph (5)(A)), of the product, for
each applicable condition, of-- (i) the base operating DRG
payment amount for such hospital for such
applicable period for such condition; (ii) the
number of admissions for such condition for such hospital for such applicable
period; and (iii) the
excess readmissions ratio (as defined in subparagraph (C)) for such hospital
for such applicable period minus 1. |
Aggregate payments for excess readmissions =
[sum of base operating DRG payments for
AMI x (excess readmission ratio for AMI–1)] +
[sum of base operating DRG payments for HF
x (excess readmission ratio for HF–1)] +
[sum of base operating DRG payments for PN
x (excess readmission ratio for PN–1)] *Note, if a hospital’s excess readmission ratio for a condition is
less than/equal to 1, then there are no aggregate payments for excess
readmissions for that condition included in this calculation. |
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(4)(B) Aggregate
payments for all discharges.—The term "aggregate payments for all
discharges" means, for a hospital for an applicable period,
the sum of the base operating DRG payment amounts
for all discharges for all conditions from such hospital for such applicable
period |
Aggregate payments for all discharges = sum of base operating DRG payments for all discharges |
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(3)(B) Ratio.—The
ratio described in this subparagraph for a
hospital for an applicable period is equal to 1 minus the ratio of— (i)
the aggregate payments for excess readmissions
(as defined in paragraph (4)(A)) with respect to an applicable hospital for
the applicable period; and (ii) the aggregate payments for all discharges (as
defined in paragraph (4)(B)) with respect to such applicable hospital for
such applicable period. |
Ratio = 1 – (Aggregate payments for excess
readmissions/ Aggregate payments for all
discharges) |
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(3)(A) In general.—For
purposes of paragraph (1), the adjustment factor under
this paragraph for an applicable hospital for a fiscal year is equal to the greater
of— (i)
the ratio described in subparagraph (B)
for the hospital for the applicable period (as defined in paragraph (5)(D))
for such fiscal year; or (ii) the floor
adjustment factor specified in subparagraph (C). (3)(C)
Floor adjustment factor.—For purposes of subparagraph (A), the floor
adjustment factor specified in this subparagraph for— (i) fiscal year 2013 is 0.99; (ii) fiscal year 2014 is 0.98; or (iii) fiscal year 2015 and subsequent fiscal years is 0.97. |
Readmissions Adjustment Factor =
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Readmissions Payment Adjustment Amount = [Base operating DRG payment amount x readmissions
adjustment factor] – base operating DRG
payment amount. *The readmissions adjustment factor
is always less than 1.0000, therefore, the readmissions payment adjustment
amount will always be a negative amount (i.e., a payment reduction). |