Most Philadelphia hospitals will be spared thousands of dollars in federal penalties after regulators updated a policy that critics said was unduly harsh on hospitals that treat a high number of low-income patients.

Medicare penalizes hospitals when too many of their patients return to the hospital within 30 days of being discharged. The initiative, which began in 2012 as part of the Affordable Care Act, is intended to get hospitals to take better care of patients so that they don't need to be hospitalized again so soon.

But beginning Oct. 1, the start of fiscal year 2019, regulators will assess the penalties differently, by evaluating hospitals' readmission rates against others with a similar proportion of low-income patients, according to a report by Kaiser Health News. The change, ordered by Congress, addresses a longstanding criticism of the readmission penalty program: Hospitals that treat lots of low-income patients are likely to have higher readmission rates not because of anything the hospital did wrong, but because of the other challenges their patients face in maintaining their care plan, such as paying for medications.

Instead of evaluating all hospitals against each other, the Centers for Medicare and Medicaid Services divided hospitals into five "peer groups." Group 5 has the greatest proportion of low-income patients; Group 1 has the least.  Hospitals with the most poor patients will see their penalties decrease.

About 2,599 hospitals will be penalized a total of $566 million during the fiscal year, according to Kaiser Health News.

The number of hospitals penalized and the average penalty, 0.7 percent of each payment, are about the same as last year, KHN found.

In Philadelphia, seven of the 13 hospitals assessed readmission penalties fall into Group 5 and all will see their penalty decline in the coming year. They are:

  • Chestnut Hill Hospital
  • Temple University Hospital
  • Albert Einstein Medical Center
  • Nazareth Hospital
  • Penn Presbyterian Medical Center
  • Hahnemann University Hospital
  • Roxborough Hospital

Readmission penalties declined the most, by about 0.59 percentage points, at Chestnut Hill Hospital (which has a penalty of 0.79 percent of each payment) and Penn Presbyterian Medical Center (0.77 percent).

"The CMS readmission penalty program provides only one snapshot of an individual hospital's performance, based on a limited number of patient conditions," said Patrick J. Brennan, Penn Medicine's chief medical officer, in a statement.

The hospital system "continuously evaluates" its quality metrics to ensure best practices are followed and to develop new approaches to reduce readmissions, such as enhancing home care and using telemedicine to monitor patients, Brennan said.

Across all hospitals in Philadelphia, penalties increased for only two. Pennsylvania Hospital, a Group 4 hospital that is part of Penn Medicine, has a readmission penalty of 1.23 percent of each payment, up 1.18 percentage points from last year. The readmission penalty at Jefferson Torresdale Hospital, which is part of Aria-Jefferson Health, increased 0.31 percentage points to 2.31 percent of each payment. Torresdale Hospital has the highest readmission penalty in the city.

Maria Slade, a spokeswoman for the hospital, said in a statement that the three Aria-Jefferson hospitals in Northeast Philadelphia, which also include Jefferson Bucks Hospital and Jefferson Frankford Hospital, have taken a number of steps to improve patient care and reduce readmissions. Examples include adding staffers dedicated to patients' transition from the hospital to their home or a skilled nursing facility, scheduling primary care follow-up appointments for patients, and bringing on registered nurses to focus on reducing hospitalizations and readmissions among high-risk patients.

You can find an interactive chart, searchable by state and city, at