Hospital Readmissions Reduction Program
About the Hospital Readmissions Reduction Program
The Hospital Readmissions Reduction Program is a Medicare value-based purchasing program that reduces payments to hospitals with excess readmissions. The program supports the Centers for Medicare & Medicaid Services’ (CMS’) goal of improving health care for Americans by linking payment to the quality of hospital care. CMS includes readmission measures for specific conditions or procedures that significantly affect the lives of many Medicare patients. Under the Hospital Readmissions Reduction Program, CMS reduces payments to hospitals with higher-than-expected rates of readmission following treatment for select conditions and procedures, encouraging hospitals to provide high-quality care to reduce avoidable returns to the hospital.
Section 1886(q) of the Social Security Act sets forth the statutory requirements for the Hospital Readmissions Reduction Program, which required the U.S. Department of Health and Human Services to reduce payments to subsection (d) hospitals for excess readmissions beginning October 1, 2012 (that is, fiscal year [FY] 2013). In addition, the 21st Century Cures Act (Cures Act) directs CMS to assess a hospital’s performance relative to other hospitals with a similar proportion of stays for beneficiaries who are dually eligible for Medicare and full Medicaid benefits. The Cures Act changed the way CMS calculates payment reductions from using a non-peer grouping methodology (FY 2013 to FY 2018) to a peer grouping methodology (FY 2019 and onward). The peer grouping methodology assesses hospitals’ performance relative to that of other hospitals with a similar proportion of stays for beneficiaries who are dually eligible for Medicare and full Medicaid benefits. In addition, the peer grouping methodology is required to produce the same amount of Medicare savings that would have been generated under the non-peer grouping methodology to maintain budget neutrality.
CMS calculates the payment reduction and component results for each hospital based on its performance on the readmission measures during the performance period. More information on the payment reduction calculations and methodology is available on the Payment page of the QualityNet website.
Hospitals can review their data, submit questions about their payment reduction and component results, and request a correction, as necessary, during each year’s Review and Correction period. More information is available on the Review & Correction page of the QualityNet website.
CMS releases hospitals’ payment reduction percentage and component results in the Inpatient Prospective Payment System/Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) Final Rule Hospital Readmissions Reduction Program Supplemental Data File after the Review and Correction period. CMS will report hospitals’ measure results for the Hospital Readmissions Reduction Program on an annual basis on the data catalog on Data.cms.gov.
General Q & A
1. What is the FY 2027 performance period for the Hospital Readmissions Reduction Program?
The FY 2027 performance period is July 1, 2023, to June 30, 2025. The Centers for Medicare & Medicaid Services (CMS) uses hospital discharges that occurred during the performance period to assess hospitals’ performance and calculate all components of the payment reduction (such as excess readmission ratios, diagnosis-related group [DRG] payment ratios, and dual proportion).
Beginning in FY 2027, CMS reduced the performance period from three years to two years (FY 2026 IPPS/LTCH PPS final rule [pages 36931-36932]). This update allows for more timely data to be used for performance measurement to better reflect hospitals’ more recent quality improvement and care practices.
2. How is Medicare Advantage (MA) data included in Hospital Readmissions Reduction Program calculations?
Beginning in FY 2027, the Centers for Medicare & Medicaid Services (CMS) includes MA stays in excess readmission ratio (ERR) calculations (FY 2026 IPPS/LTCH PPS final rule (pages 36923–36929). In addition, CMS includes MA stays in the calculation of the hospital’s dual proportion, which is used to assign peer groups under the peer grouping methodology.
CMS does not include MA data in the calculation of diagnosis-related group (DRG) payment ratios. Additionally, the Hospital Readmissions Reduction Program payment reduction continues to only be applied to Medicare fee-for-service (FFS) base operating DRG payments. Payment reductions are not applied to MA payments.
3. What types of patients are included in the readmission measures?
Patients are included in the readmission measures if they meet, at minimum, the following criteria:
- Are age 65 or older
- Have been hospitalized for one of the following conditions or procedures included in the Hospital Readmissions Reduction Program during the performance period: acute myocardial infarction (AMI), chronic obstructive pulmonary disease (COPD), heart failure (HF), pneumonia, coronary artery bypass graft (CABG) surgery, or total hip arthroplasty and/or total knee arthroplasty (THA/TKA).
- Enrolled in Medicare fee-for-service (FFS) (Part A and Part B) OR Medicare Advantage (MA) (Part C) OR a combination of Medicare FFS and MA for the full 12 months prior to the index stay (that is, the initial admission) and for 30 days post-discharge, as well as enrolled in Medicare FFS (Part A) or MA during the index stay.
4. How can I figure out which hospitals have received a payment reduction under the Hospital Readmissions Reduction Program and which hospitals are in each Hospital Readmissions Reduction Program peer group?
The Centers for Medicare & Medicaid Services (CMS) publicly reports hospitals’ Hospital Readmissions Reduction Program payment reduction percentages, peer group assignments, dual proportions, and other component results for a given fiscal year in the Inpatient Prospective Payment System/Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) Final Rule Hospital Readmissions Reduction Program Supplemental Data File, posted on that fiscal year’s IPPS/LTCH PPS Final Rule page on CMS.gov. This file includes hospitals subject to the Hospital Readmissions Reduction Program that have measure results for at least one measure in the program and can be filtered to show only hospitals receiving a payment reduction or only hospitals in a specific peer group.
For the Hospital Readmissions Reduction Program, hospitals with a payment reduction percentage greater than zero percent are penalized for that fiscal year. Hospitals with a payment reduction equal to zero percent are not penalized for that fiscal year. A peer group is a group of hospitals with similar patient populations based on the hospitals’ dual proportions. The dual proportion is the proportion of Medicare fee-for-service (FFS) and Medicare Advantage (MA) stays in a hospital during the performance period in which the beneficiary was dually eligible for Medicare and full Medicaid benefits.
5. Do admissions to LTCHs, rehabilitation, and hospice facilities count as a readmission?
Under the Hospital Readmissions Reduction Program, only stays in subsection (d) hospitals (that is, general short-term acute care hospitals) can be considered as index admissions, and only inpatient readmissions to short-term acute care hospitals can be considered as readmissions. Admissions to facilities other than short-term acute care hospitals, such as inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), and hospice facilities, are not considered readmissions in the Hospital Readmissions Reduction Program. If a patient has an index stay for one of the readmission measures and then is admitted to an IRF, LTCH, or hospice facility within 30 days of discharge from the index stay, this is not considered a readmission.
However, if a patient has an index stay for one of the readmission measures, and then is admitted to an IRF, LTCH, or hospice facility and later has an unplanned readmission to a short-term acute care hospital—all within 30 days of discharge from the index stay—the readmission to the short-term acute care hospital would be captured in the readmission outcome, regardless of the IRF/LTCH/hospice admission between the two acute care admissions.
Resources
Key Documents
Spotlight
For FY 2027, the 30-day Review and Correction period extends from September 2, 2026, to October 1, 2026.
Visit the General Q&A below for fundamental program information.
Support Contact
For all questions related to the Hospital Readmissions Reduction Program, please use the online QualityNet Question and Answer Tool. Select “Ask a Question,” then select “HRRP - Hospital Readmissions Reduction Program” from the program list and choose the appropriate topic from the list.