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Background  Medicare’s Hospital Readmissions Reduction Program (HRRP), implemented beginning in 2013, seeks to incentivize Inpatient Prospective Payment System (IPPS) hospitals to reduce 30-day readmissions for selected inpatient cohorts including acute myocardial infarction, heart failure, and pneumonia. Performance-based penalties, which take the form of a percentage reduction in Medicare reimbursement for all inpatient care services, have a risk of unintended financial burden on hospitals that care for a larger proportion of Medicare patients. To examine the role of this unintended risk on 30-day readmissions, we estimated the association between the extent of their Medicare share of total hospital bed days and changes in 30-day readmissions.    Methods  We used publicly available nationwide hospital level data for 2009–2016 from the Centers for Medicare and Medicaid Services (CMS) Hospital Compare program, CMS Final Impact Rule, and the American Hospital Association Annual Survey. Using a quasi-experimental difference-in-differences approach, we compared pre- vs. post-HRRP changes in 30-day readmission rate in hospitals with high and moderate Medicare share of total hospital bed days (“Medicare bed share”) vs. low Medicare bed share hospitals.    Results  We grouped the 1904 study hospitals into tertiles (low, moderate and high) by Medicare bed share; the average bed share in the three tertile groups was 31.2, 47.8 and 59.9%, respectively. Compared to low Medicare bed share hospitals, high bed share hospitals were more likely to be non-profit, have smaller bed size and less likely to be a teaching hospital. High bed share hospitals were more likely to be in rural and non-large-urban areas, have fewer lower income patients and have a less complex patient case-mix profile. At baseline, the average readmissions rate in the low Medicare bed share (control) hospitals was 20.0% (AMI), 24.7% (HF) and 18.4% (pneumonia). The observed pre- to post-program change in the control hospitals was − 1.35% (AMI), − 1.02% (HF) and − 0.35% (pneumonia). Difference in differences model estimates indicated no differential change in readmissions among moderate and high Medicare bed share hospitals.    Conclusions  HRRP penalties were not associated with any change in readmissions rate. The CMS should consider alternative options – including working collaboratively with hospitals – to reduce readmissions.    Supplementary Information  The online version contains supplementary material available at 10.1186/s12913-021-06253-2.

Association between Medicare’s Hospital Readmission Reduction Program and readmission rates across hospitals by medicare bed share