Medicare Readmission Penalties and Their Socioeconomic Correlates in Urban Hospitals

In 2013, 2,200 U.S. hospitals forfeited more than $280 million in Medicare funds due to readmission penalties (RPs) for heart failure, pneumonia and myocardial infarction stipulated by the Affordable Care Act. This study evaluated the RPs in the hospitals of large cities, in comparison with other areas within and between states. Methods: Medicare RPs for 2013 (ranging 0 to 1%) were compared along with census and socioeconomic data for the largest city in each of 49 states in the United States, excluding Maryland due to its ongoing Medicare demonstration project. Improvements in RPs for 2014 in each urban area were tabulated. Results: There was a significant correlation between RPs and the size of the population of the cities (r = 0.37, p<0.01), with larger cities receiving higher penalties. For example, Detroit, MI’s 5 hospitals and Newark, NJ’s 3 hospitals have the highest average RPs (0.9%) than the hospitals in other largest cities. The RPs correlated moderately with a higher percentage of low-educated people in the city (r=0.53, p<0.001), and weakly but negatively with the percentage of high-educated people (r= -0.29, p<0.05) in the city. The rate of unemployment also correlated positively and significantly with the RPs (r=0.50, p<0.001). Conclusion: RPs reduce Medicare payments to inner-city hospitals, such as those in Detroit, MI and Newark, NJ, and disproportionately lower payments to large cities with poorer, underemployed and undereducated populations. This may have the unintended consequence of further reducing access care from safety-net hospitals.