Hospitals lose $428M in Medicare payments

The federal government is levying a record number of fines against 2,610 hospitals for readmitting too many of their Medicare patients. 

A majority of hospitals in 29 states will lose money because their patients returned within a month of treatment, according to an analysis by Kaiser Health News. Medicare estimates that the hospitals will lose a total of $428 million in payments over the next year.

The penalties against hospitals are part of the Affordable Care Act’s effort to save costs and improve care by reducing the number of patients who check back into a hospital after treatment. The rule has now been in place for three years.


Under the law, the administration hoped that hospitals would be more vigilant in treating and prescribing patients, as well as advising them about outpatient care. Before the law, some hospitals made money when Medicare patients returned for additional treatment, which some health policy experts warned served as an incentive not to provide quality care. 

Under ObamaCare, hospitals receive steep penalties if they readmit “excessive” numbers of Medicare patients. That fine amounts to as much as 3 percent of a hospital’s Medicare reimbursement this year — the highest-ever penalty.

Nearly 40 hospitals will be hit with the largest-possible penalty, including Beth Israel Medical Center in Manhattan and Tufts Medical Center in Boston.

Nationally, the number of Medicare patients who are readmitted to the hospital after treatment is dropping. Still, about 18 percent of Medicare patients were readmitted last year.

Those patients, a total of about 2 million people, cost the federal government $26 billion a year.