FY 2026 IPPS/LTCH PPS Final Rule: Hospital Readmissions Reduction Program Supplemental Data 						
Variable Name	Variable Description 					
Hospital CCN	Medicare Provider Number or CMS Certification Number (CCN). The file only includes open subsection (d) hospitals with measure results for at least one measure in the Hospital Readmissions Reduction Program. Maryland hospitals and hospitals that are not open as of the October 2025 public reporting open/closed list (published on 4/9/2025) are excluded. 					
Payment adjustment factor 	"The FY 2026 payment adjustment factor is based on discharges between July 1, 2021 to June 30, 2024 (that is, the data period used for the FY 2026 Hospital Readmissions Reduction Program). The methodology to calculate the payment adjustment factor was finalized in the IPPS/LTCH PPS Final Rule and is based on excess readmission ratios (ERRs) for six conditions or procedures: acute myocardial infarction (AMI), chronic obstructive pulmonary disease (COPD), heart failure (HF), pneumonia, coronary artery bypass graft (CABG) surgery, and elective primary total hip/total knee arthroplasty (THA/TKA). The payment adjustment factor corresponds to the percentage a hospital's payments will be reduced. The minimum payment adjustment factor is 0.97 (that is, 3 percent maximum payment reduction). The maximum payment adjustment factor is 1.0 (that is, no payment reduction). Hospitals with higher payment adjustment factors have lower payment reductions. "					
Payment reduction percentage	The payment reduction percentage is the percentage a hospital's payments will be reduced based on its performance in the program. The minimum payment reduction percentage is 0% and the maximum payment reduction percentage is 3%.					
Dual proportion	"The dual proportion is the proportion of Medicare fee-for-service (FFS) and managed care stays in a specific hospital, where the patient was dually eligible for Medicare and full Medicaid benefits during the data period used for the FY 2026 Hospital Readmissions Reduction Program (July 1, 2021 to June 30, 2024). CMS identifies dual eligible status using data from the Beneficiary Information in the Cloud enrollment database in the Claims Data Repository (CDR), which is sourced from the State Medicare Modernization Act files. Stays for dual eligible patients are stays where the patient was eligible for both Medicare and full Medicaid benefits for the month the beneficiary was discharged from the hospital. For patients who died during the discharge month, dual eligible status is determined using the month prior to death. CMS identifies Medicare FFS and managed care stays using Medicare Provider Analysis and Review (MedPAR) files from FY 2021 to FY 2024."					
Peer group assignment	"Hospitals are sorted into five peer groups, or quintiles, based on the dual proportion. Hospital peer group assignments are numbered 1 through 5. Hospitals in the first peer group (peer group assignment 1) have the lowest dual proportions and hospitals in the fifth peer group (peer group assignment 5) have the highest dual proportions relative to other Hospital Readmissions Reduction Program hospitals. As of FY 2019, hospital performance for each measure is assessed relative to hospitals within the same peer group."					
Neutrality modifier	The neutrality modifier is the calculated value that equates total Medicare savings under the peer grouping methodology (used from FY 2019 and onward) and the non-peer grouping methodology (used from FY 2013 to FY 2018). 					
Number of eligible discharges 	"The number of eligible discharges for a measure cohort during the FY 2026 data period (discharges from July 1, 2021 to June 30, 2024).  Measures with fewer than 25 eligible discharges are not eligible to contribute to the payment reduction calculation. The payment adjustment factor formula will not include these measures.
                                                                                                                                                                                                                                                                                                                                                                                                          This field shows a ""."" if a hospital has no eligible discharges for a measure."					
ERR	"The ratio of the predicted readmission rate to the expected readmission rate for a given measure. CMS uses the excess readmission ratio (ERR) to assess hospital performance in the Hospital Readmissions Reduction Program. 

This field shows a ""."" if a hospital has no eligible discharges for a measure."					
Peer group median ERR	The median ERR for the hospital’s peer group for the measure. The peer group median ERR is the threshold CMS uses to assess excess readmissions relative to other hospitals within the same peer group. All hospitals in the same peer group will have the same peer group median ERR for a measure.					
Penalty indicator	"If the penalty indicator equals ""Y"", the hospital has 25 or more eligible discharges and an ERR greater than the peer group median ERR for the measure. When the penalty indicator equals ""Y"", the ERR will contribute to the payment adjustment factor formula and the hospital could receive a payment reduction. If the hospital has fewer than 25 eligible discharges or the ERR is less than the peer group median ERR for that measure, the penalty indicator equals ""N"", and the ERR will not contribute to the payment adjustment factor formula."					
DRG payment ratio	"The ratio of total base operating diagnosis-related group (DRG) payments for each measure to the total among all base operating DRG payments for all stays. This is the weight attributed to excess readmissions for each measure (that is, ERR minus peer group median ERR) in the payment adjustment factor formula. The data source to identify the DRG payment ratio is the FY 2021-FY 2024 MedPAR files. 

This field shows a ""."" if a hospital has no eligible discharges for a measure.

If a hospital has few eligible discharges for a given measure, the ratio of DRG payments to total payments may be missing. This is the result of minor discrepancies between the data sources CMS used to identify eligible discharges and calculate payments. In these cases, the number of eligible discharges is too small for the ERR for that measure to contribute to the hospital's payment adjustment formula. 
"					
"As clarified in the FY 2022 IPPS/LTCH PPS final rule, CMS excluded claims from ERR calculations and DRG payment ratio calculations for hospitals with approved individual extraordinary circumstance exceptions (ECEs) for any period between quarter (Q)3 2021 and Q2 2024, inclusive. Data was not removed from dual proportion calculations or the 1-year data period used to calculate the neutrality modifier."						
"More information about the Hospital Readmissions Reduction Program measures and payment reduction percentage is included in the Hospital-Specific Report user guide, which can be found here:"						
https://qualitynet.cms.gov/inpatient/hrrp/reports#tab1						
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