The hospital readmission reduction program unfairly penalizes large hospitals and hospitals that serve a large proportion of Medicaid patients, according to the author of a letter in the Nov. 22 issue of the New England Journal of Medicine.

Independent healthcare consultant James Graham Atkinson, DPhil, of Washington, D.C., took the initiative established under the Patient Protection and Affordable Care Act (PPACA) to task, arguing that the program skewed against certain types of hospitals. The program, which started in October, withholds 1 percent in Medicare reimbursement in fiscal year 2013 to hospitals with worse-than expected rates for preventable readmission for acute MI, heart failure and pneumonia. The percentage increases to 2 percent in 2014 and 3 percent in 2015.

Atkinson described the program as “a good idea gone wrong” because of flawed methods. He noted that Medicaid patients have a higher readmissions rate than patients with private insurance, even after case-mix adjustments, and but that Medicare chose to maintain the current formula. “This is incredibly bad social policy, discouraging hospitals from admitting Medicaid patients,” he wrote. “Objections to it are not merely theoretical—the published penalties show the results of this decision.”

Based on his calculations, the percentage of hospitals penalized was larger based on bed size and disproportionate share of Medicaid patients. He warned that the problem will become more acute as the penalty progresses to 2 percent and 3 percent over the next few years.  

For more on readmission penalties and strategies to avoid them, please read “Getting a Gauge on Readmission Penalties” in the September issue of Cardiovascular Business.