The passage of health care reform and current efforts in payment reform signal a significant transformation of the United States health care system. An entire set of structures is being developed to facilitate increased access to care that is cost-effective and of high-quality. Pursuing high-value health care is the ultimate goal, and health care leaders across the country are faced with the daunting challenge of succeeding—and perhaps just surviving—while delivering care to an increasingly diverse population. One major part of the move towards value-based care—paying for quality, not quantity of services—is a set of financial incentives and disincentives that target hospitals and are focused on driving quality improvement and controlling cost. Preventing avoidable hospital readmissions has become one such cost-controlling target, given the implications for quality improvement and the potential savings associated with addressing them. For example, research has demonstrated that unplanned readmissions cost Medicare $17.4 billion in 2004.1 This study found that 20 percent of Medicare fee-for-service patients were readmitted within 30 days of discharge.1 As a result, in 2012, the Centers for Medicare & Medicaid Services (CMS)—through Congressional direction and Administration initiatives—implemented the Hospital Readmission Reduction Program (HRRP), which penalizes hospitals with relatively higher rates of Medicare readmissions.

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