Medicare Changes Have Reduced Hospital Readmissions, but More Reforms Are Needed

In 2012, Medicare began to penalize hospitals that readmitted too many patients. For a small number of targeted conditions, the program compares actual readmissions within 30 days to what an acceptable readmission rate should be. This measure is an important part of the drive to “pay for value, not volume.” The problem it was meant to address was one of perverse incentives. For example, if a patient who had a knee replacement is readmitted within 30 days because the implant was poorly implanted, the hospital used to profit from that readmission, because the extra costs would just be submitted to

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