Readmission Reduction Program
Centers for Medicare & Medicaid Services



The 2010 Affordable Care Act (ACA) requires the Department of Health and Human Services (DHHS) to establish a Hospital Readmissions Reduction Program (RRP) to reduce Inpatient Prospective Payment System (IPPS) payments to hospitals for excess readmissions beginning on or after October 1, 2012 (Federal Fiscal Year 2013). The maximum reduction under this program, which was one percent of payment amounts in FY 2013, will increase to three percent of payment amount in FY 2015 as specified under the Affordable Care Act.

Scope of Report

Purpose of Report

The Readmission Reduction Program report data is derived from Hospital Compare, which allows consumers to select multiple hospitals and directly compare performance measure related to many conditions. Over 4,000 Medicare-certified hospitals across the country, including 236 hospitals in California, are sharing performance data in Hospital Compare.

Report’s Intended End Users

Eligible hospitals are receiving reduced payment for excess readmissions

Understanding the Score


The Excess Readmission Ratio, a measure of relative performance, is used to determine the payment adjustment for each eligible hospital. If a hospital performs better than an average hospital that admitted similar patients (that is, patients with similar risk factors for readmission such as age and comorbidities), the ratio will be less than 1.00. If a hospital performs worse than average, the ratio will be greater than 1.00.


Hospital Compare reports quarterly on the month after end of quarter: Apr, Jul, Oct, Jan. Measure date starts 3Q and ends 2Q of three consecutive years; for example 3Q2009-2Q2012. The Readmission Reduction Program report offers national-, state-, and hospital-level report for each measure


  • Patient is alive upon discharge;
  • Patient is not transferred to another acute care hospital upon discharge;
  • Patient is 65 or older (Medicare population);
  • Patient has at least 30 days of post-discharge enrollment in fee-sor-service (FFS) Medicare or died within the 30-day post-discharge period; and
  • The admission is not to a prospective payment system (PPS)-exempt cancer hospital.


  • Patient is not continuously enrolled in FFS Medicare for the 12 months prior to the index admission;
  • Patient is discharged against medical advice (AMA);or
  • Patient was admitted for a condition category with high competing mortality risk in the post-discharge period.


The Centers for Medicare & Medicaid Services (CMS) measures relative performance by calculating Excess Readmission Ratios for readmission measures based on the National Quality Forum (NQF)-endorsed methodology, using discharges from a prior period. Formulas to calculate the Readmission Adjustment Factor are:


Readmissions Adjustment Factor

  • For FY 2013, the higher of the Ratio or 0.99 (1% reduction)
  • For FY 2014, the higher of the Ratio or 0.98 (2% reduction)
  • For FY 2015, the higher of the Ratio or 0.97 (3% reduction)

Formulas to Compute the Readmission Payment Adjustment Amount
Wage-adjusted DRG operating amount* = (DRG weight) x [(labor share x wage index) + (non-labor share x cola, if applicable)]

If the case is subject to the transfer policy, then this amount includes an applicable payment adjustment for transfers under § 412.4(f).

Base Operating DRG Payment Amount = (Wage-adjusted DRG operating amount) + (new technology payment, if applicable).

Readmissions Payment Adjustment Amount = [(Base operating DRG payment amount) x (readmissions adjustment factor)] – (base operating DRG payment amount).

The readmissions adjustment factor is always less than 1.00; therefore, the readmissions payment adjustment amount will always be a negative amount (i.e. a payment reduction).


Measure Definition: an all-cause unplanned readmission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital for the applicable conditions as follows;

Improvement Tools

Improvement tools and resources can be found at