To better understand the financial implications of readmission after radical cystectomy, an expensive surgery coupled with a high readmission rate. Currently, whether hospitals benefit financially from readmissions after radical cystectomy remains unclear, and potentially obscures incentives to invest in readmission reduction efforts.

Using a 20% sample of national Medicare beneficiaries, we identified 3544 patients undergoing radical cystectomy from January 2010 to November 2014. We compared price-standardized Medicare payments for index admissions and readmissions after surgery. We also examined the variable financial impact of length of stay and the proportion of Medicare payments coming from readmissions based on overall readmission rate.

Medicare patients readmitted after cystectomy had higher index hospitalization payments ($19,164 readmitted vs $18,146 non–readmitted, P = .03) and an average readmission payment of $7356. Adjusted average Medicare readmission payments and length of stay varied significantly across hospitals, ranging from $2854 to $15,605, and 2.0 to 17.1 days, respectively (both P <.01), with longer length of stay associated with increased payments. After hospitals were divided into quartiles based on overall readmission rates, the percent of payments coming from readmissions ranged from 5% to 13%.

Readmissions following radical cystectomy were associated with increased Medicare payments for the index hospitalization, and the readmission payment, potentially limiting incentives for readmission reduction programs. Our findings highlight opportunities to reframe efforts to support patients, caregivers, and providers through improving the discharge and readmission processes to create a patient-centered experience, rather than for fear of financial penalties.