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The Affordable Care Act, often known as Obamacare, has caused a lot of controversy. Much of the act could be repealed soon. But in making decisions about future health policy, the act’s successes shouldn’t be overlooked. One of these is reducing the percentage of people who, after being discharged from the hospital, end up back there within 30 days.

After a hospital stay, many patients are still recovering and often facing new illnesses. As they heal, they must struggle to cope with and understand new symptoms and new medications, and often face an array of doctor office visits. Some doctors call this the post-hospital syndrome. Before the ACA, nearly a fifth of all Medicare patients were readmitted to the hospital within 30 days of leaving it, at a cost of $15 billion per year. Some — perhaps many — of these readmissions are preventable.

Helping patients avoid problems that send them back to the hospital can improve their quality of life while also reducing costs. Before the ACA, though, there were no real incentives to help patients avoid a return to the hospital.


That has started to change. One part of the ACA, the Hospital Readmissions Reduction Program, instituted financial penalties for hospitals with high readmission rates. The initial round of penalties was for readmissions after heart attacks, congestive heart failure, or lung infections. As readmission rates go up, so do penalties. The penalties can be substantial. New York-Presbyterian Hospital in New York City, for example, lost more than $1 million due to this penalty last year.

Several elements of the Affordable Care Act, such as Medicaid expansion and tax penalties for not having health insurance, have prompted much debate. But payment reform to improve quality and value — including this quieter but critically important element of health reform — has attracted support from both parties.


We often don’t have rigorous evidence to support what policies work best to improve quality of life, quality of care, and value for patients covered by Medicare. Based on research we and other colleagues published in today’s Annals of Internal Medicine, we believe that penalties for high readmission rates are working.

We analyzed discharge and readmission data for 15 million patients at nearly 3,000 hospitals between 2000 and 2013 and used advanced statistical methods to estimate the effect of financial penalties on readmissions. During the first decade of the 21st century, we found that readmission rates had been increasing for two of the three penalized conditions. But the moment hospitals knew that financial penalties were coming, real change began to occur. Based on our experiences working at large academic medical centers, we believe the knowledge that financial penalties were looming motivated doctors and hospitals to implement changes to help prevent readmissions.

After the ACA became law, readmission rates for all of three of the penalized conditions declined dramatically.

Our study could not identify exactly how doctors and hospitals reduced readmissions. We and others believe that better educating patients about their conditions before leaving the hospital, better coordinating their care, and providing access to office visits after leaving the hospital have helped improve patient safety and reduce readmissions.

In that sense, our results show more than the effectiveness of penalties for high 30-day readmission rates. More generally, they point to how Medicare can improve the care that patients receive through innovative payment models. Before the penalty plan was put in place, Medicare had disclosed readmission rates of hospitals on its Hospital Compare website. Disclosure alone did not appear to have much of an effect. Penalties did.

The connection between penalties and declines in 30-day readmissions is far from obvious. Whenever the government imposes penalties on hospitals, unintended consequences can easily occur. For example, penalizing low-performing hospitals might make them do even worse. Data released earlier this year showing overall improvement in readmission rates might have been driven by hospitals that were already doing better, and that the poor performers might have been getting worse.

Our research suggests that did not happen. In fact, hospitals with the highest readmission rates — and which were due to incur the largest financial penalties — generally showed the greatest improvement. So the policy has not only appeared to cause the overall readmission rate to improve nationally, but the improvements have been relatively concentrated among the lowest-performing hospitals.

Many drugs have what’s called a dose-dependent effect. The higher the dose, the more effectively it fights disease. Penalties for readmission may have a similar dose-dependent effect. Hospitals with bigger penalties appear to have reduced readmissions more than those with smaller penalties. Such a relationship increases our confidence that the penalties are actually causing the improvement, instead of being associated with some other factor that is actually driving the change.

In 2010, health reform started to change the structure of Medicare payments in several key ways. Our research suggests that penalties such as those imposed by the Hospital Readmissions Reduction Program can play important roles in improving performance, lowering costs, and reducing the differences between high- and low-performing hospitals — all essential goals for American health care.

Jason H. Wasfy, MD, is the director of quality and outcomes at the Massachusetts General Hospital Heart Center and an instructor in medicine at Harvard Medical School. Francesca Dominici, PhD, is senior associate dean for research and professor of biostatistics at the Harvard T.H. Chan School of Public Health. Robert W. Yeh, MD, is the director of the Smith Center for Outcomes Research at Beth Israel Deaconess Medical Center and an associate professor of medicine at Harvard Medical School.

  • Improving quality and containing costs are something all realize has to happen if we want a sustainable healthcare system. Thanks for this article and I look for more data that shows strategies put in by the ACA can and will work. We need patience and leaders who will help show others the way.

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