As of October 1, 2012, the beginning of fiscal year 2012, the Hospital Readmissions Reduction Program is in effect.  The Program is an Affordable Care Act quality improvement initiative that reduces inpatient prospective payments to hospitals that have excess rates of preventable Medicare readmissions on select conditions. 

The selected readmission measures include acute myocardial infarction, heart failure, and pneumonia.  In the fiscal year 2013 IPPS final rule, CMS finalized the hospitals subject to the Program as well as the methodology to calculate the readmission adjustment factor and readmission adjustment amount.

More information on the Program methodology and the IPPS rules are available via the CMS website.