• Jennifer Meddings, Shawna N Smith, Timothy P Hofer, RogersMary A MMAM, Laura Petersen, and Laurence F McMahon.
• University of Michigan, 2800 Plymouth Rd, Bldg 16, Room 430W, Ann Arbor, MI 48109-2800. Email: meddings@umich.edu.
• Am J Manag Care. 2018 Dec 1; 24 (12): e399e403e399-e403.

ObjectivesTo (1) compare the 2015 hospital grades reported on Medicare's Hospital Compare website for heart failure (HF) and acute myocardial infarction (AMI) readmissions with the HF- and AMI-specific scores for excess readmissions used to assess Medicare readmission penalties and (2) assess how often hospitals were penalized for excess readmissions in only 1 or 2 conditions, given that hospitals received a penalty impacting all Medicare payments based on an overall readmission score calculated from 5 conditions (HF, AMI, pneumonia, chronic obstructive pulmonary disease, and total hip/knee arthroplasty).Study DesignRetrospective secondary data analysis.MethodsDescriptive analyses of hospital-specific, condition-specific grades and excess readmission scores and hospital-level penalties downloaded from Hospital Compare.ResultsOf the 2956 hospitals that had publicly reported HF grades on Hospital Compare, 91.9% (2717) were graded as "no different" than the national rate for HF readmissions, which included 48.6% that were scored as having excessive HF admissions, and 87% received an overall readmission penalty. Of 120 (4.1%) hospitals graded as "better" than the national rate for HF, none were scored as having excessive HF readmissions and 50% were penalized. AMI data yielded similar results. Among 2591 hospitals penalized for overall readmissions, 26.6% had only 1 condition with excess readmissions and 27.5% had 2 conditions.ConclusionsMany hospitals with an HF and AMI readmission grade of "no different" than the national rate on Hospital Compare received penalties for excessive readmissions under the Hospital Readmissions Reduction Program. The value signal to consumers and hospitals communicated by grades and penalties is therefore weakened because the methods applied to the same hospital data produce conflicting messages of "average grades" yet "bad enough for penalty."

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