How to Prevent Hospital Readmissions

How Medicare works to keep you out of the hospital

Most people want to avoid going to the hospital, never mind going more than once. Unfortunately, as many as one in six people on Medicare gets readmitted to the hospital within 30 days.

This article will discuss hospital readmissions and what steps Medicare is taking to decrease them.

Medicare hospital readmissions

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What Is a Readmission?

Staying overnight in a hospital does not necessarily mean you were admitted to the hospital. The word “admission” refers to a hospital stay when your doctor puts an inpatient order on your medical chart. When you are placed under observation instead, you continue to receive care in the hospital but you have not been admitted.

The distinction between inpatient and observation orders affects how much you will pay. Generally speaking, Part A pays for inpatient care and Part B for observation. Part B also covers physician fees whether you are an inpatient or placed under observation. Inpatient and observation status also affects how Medicare tracks hospitalizations.

Readmission, for the purposes of Medicare, is a hospital stay that has inpatient orders and that happens within 30 days of another hospital admission. Medicare focuses on readmissions that are related to the first admission and that are potentially avoidable.

Inpatient vs. Observation

You will likely spend less on an inpatient stay than an observation stay, especially if you are in the hospital for two or more days. For an inpatient admission, you will pay the Part A deductible, $1,484 in 2021, plus 20% of the cost of physician fees.

For an observation stay, you will pay the 20% Part B coinsurance for each service you receive, including room and board. No one service can cost you more than the Part A deductible, but these costs add up quickly.

Preventable Hospital Readmissions

When someone returns to the hospital within a short period of time, especially if it is for the same problem, it raises questions. Did they receive quality care while they were in the hospital? Were they discharged from the hospital too early? Did they receive adequate follow-up when they left the hospital?

If the answer to any of those questions is no, the readmission may have been preventable. The Medicare Payment Advisory Commission estimated in 2007 that 13.3% of hospital readmissions may be avoidable.

Looking closer, a 2009 study found as many as 50% of people who were readmitted did not have a follow-up visit at a doctor’s office after their first hospital stay. Improving care coordination after someone leaves the hospital could potentially reduce those admissions.

There are times when readmission is unavoidable, no matter how good the care was. For example, someone at the end of life or someone who has advanced disease may require more frequent care based on the nature of their condition. People with end-stage renal disease have nearly twice the rate of hospital readmissions as those without the condition.

The Hospital Readmissions Reduction Program

In 2007, the Medicare Payment Advisory Commission estimated that potentially avoidable readmissions cost Medicare $12 billion every year. The Hospital Readmission Reduction Program (HRRP) was created as a way to reduce those costs.

The Affordable Care Act created the HRRP to penalize hospitals if they have higher-than-expected readmission rates when compared to other hospitals with a similar proportion of Medicare and/or Medicaid patients.

Those penalties would decrease Medicare payments to hospitals by as much as 3% for each Medicare patient they care for. The program looks at both raw data and risk-adjusted data to make their calculations. A patient’s age and sociodemographics are also taken into consideration.

These penalties are meant to incentivize hospitals to improve the quality of care they provide for their patients. Unfortunately, the HRRP does not provide guidelines on how to do it. Each hospital needs to look closely at their individual policies and decide whether to change or develop new ones to address issues surrounding readmissions.

You may be interested to find out if hospitals in your area have been hit with a penalty this year. It’s important to know you are getting care from a hospital that is meeting quality standards.

Medical Conditions to Watch For

Not all readmissions are penalized by the Hospital Readmission Reduction Program. Medicare only looks at readmissions that happen after an initial admission for the following medical conditions and surgeries:

The HRRP has effectively reduced readmissions for these conditions. Readmission rates for heart attack, heart failure, and pneumonia decreased by 3.7% from 2007 to 2015. This was higher than the 2.2% decrease in readmissions for other medical conditions.

Was Your Stay a Readmission?

If you were hospitalized for one of the medical conditions or surgeries above, it is important to ask about your order status. This will determine whether or not your hospital stay counts as a readmission.

Results of the HRRP

The Hospital Readmissions Reduction Program has proven beneficial for at-risk populations. This includes people with low incomes, people who go to hospitals that have a high proportion of low income or Medicaid patients, and people with multiple chronic conditions.

Generally speaking, the more medical conditions someone has, the greater their risk for medical complications and hospital readmissions.

Prior to the HRRP, these vulnerable groups had higher rates of readmission than those in non-vulnerable groups, namely people with higher incomes, people who went to hospitals with more resources, and people with fewer medical conditions.

After the HRRP, readmission rates improved for everyone, but even more for these at-risk groups. For heart attacks, readmissions decreased by 2.1% in hospitals that saw the smallest proportion of low-income patients but improved to 2.6% for hospitals with the largest proportion.

People living in nursing homes are at risk too. They tend to be older, frail, or have multiple medical conditions. After the HRRP, readmission rates from skilled nursing facilities decreased by 1.4%. The effect was greatest for facilities that had more registered nurses, were nonprofit, had hospital affiliations, or were located in rural areas.

Controversy Over the HRRP

The Hospital Readmissions Reduction Program decreased readmissions, but questions remain as to whether that has actually improved patient outcomes.

Mortality rates for heart attacks, heart failure, and pneumonia were high before the HRRP. That was one of the reasons they were chosen for the program in the first place.

After the program was implemented, mortality rates for heart attack improved, but those for heart failure and pneumonia somehow got worse. Concerns have also been raised that this could be caused by hospitals possibly gaming the system.

For example, if a patient needed hospital care, they could be put under observation instead of being admitted as an inpatient. This would prevent the hospitalization from being flagged as a readmission and could decrease their risk for penalties. Unfortunately, that practice would also unfairly shift costs onto the patient.

One study found a 2.1% increase in observation stays after a heart attack, heart failure, or pneumonia compared to a 1.7% increase for conditions not addressed by the HRRP. Another study noted that readmissions after hip and knee replacements decreased by 0.66%, but related observation stays increased by 0.08%.

There has been controversy over how hospital penalties are calculated too. One study looked at Medicare readmissions for heart attack, heart failure, and pneumonia in nearly 7,000 hospitals.

For those three diagnoses, researchers found that 20.9%, 13.5%, and 13.2% of those hospitals should have faced penalties but did not. Meanwhile, 10.1%, 10.9%, and 12.3% were penalized when they should not have been. Some hospitals may be unfairly punished because their readmissions were not labeled correctly.


The Hospital Readmission Reduction Program has reduced readmissions for several conditions. It has even decreased mortality rates for heart attacks. Still, it’s not perfect. Some hospitals avoid penalties by putting people under observation when they really need an inpatient stay. Other hospitals have been unfairly penalized for things outside of their control.

A Word From Verywell

Hopefully, the Hospital Readmission Reduction Program will adapt and provide more guidance to hospitals in the future to assure that everyone gets the quality care they need. After all, your health is what matters most. In the meantime, you will want to go to a hospital that has a good standing with Medicare.

11 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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  8. Wadhera RK, Joynt Maddox KE, Wasfy JH, Haneuse S, Shen C, Yeh RW. Association of the Hospital Readmissions Reduction Program with mortality among Medicare beneficiaries hospitalized for heart failure, acute myocardial infarction, and pneumonia. JAMA. 2018;320(24):2542-2552. doi:10.1001/jama.2018.19232

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By Tanya Feke, MD
Tanya Feke, MD, is a board-certified family physician, patient advocate and best-selling author of "Medicare Essentials: A Physician Insider Explains the Fine Print."