Expanding Health Care Coverage

Grantee Name

Mathematica Policy Research

Funding Area

Expanding Health Care Coverage

Publication Date

June 2012

Grant Amount


Grant Date:

September 1, 2009–December 5, 2011


Hospital readmissions—patients returning to the hospital within 30 days of an initial hospital stay—cost Medicare $15 billion a year.

Nearly one in five Medicare patients is readmitted within 30 days, and similar ratios persist for privately insured patients. Reducing the rate of hospital readmissions has great potential to reduce health care costs and improve the quality of health care in New York State, as its residents use nearly 50% more hospital days than the national average. With support from NYHealth, Mathematica Policy Research (Mathematica) estimated the cost of readmissions and the impact of clinical and payment interventions on the rate and cost of readmissions.

Outcomes and Lessons Learned

Mathematica accomplished the following:

  • Estimated the costs of readmissions and stratified readmission rates by type of stay, patient age, type of insurance coverage, geographic region, type of hospital, disproportionate share status, and type of diagnosis.
  • Developed an analysis of hospitals’ decisions to invest in reducing readmissions and their behavioral responses to payment strategies, estimating the impact of two clinical interventions and two payment interventions—pay-for-performance and episode-based payments—on costs and readmission rates.
  • Assessed the costs and benefits of an alternative payment approach, where public and private insurers directly paid the hospital to implement specific clinical interventions to reduce readmission rates.
  • Produced the report, “Reducing Hospital Readmissions in New York State: A Simulation Analysis of Alternative Payment Incentives,” that examined both the prevalence and cost of readmissions and the potential effectiveness of payment incentives to reduce readmissions.