SECTION 1: Notwithstanding chapter 118E of the General Laws, or any other general or special law or rule or regulation to the contrary, any financial penalty applied by the Executive Office of Health and Human Services related to hospital readmissions shall be assessed solely on the number of actual potentially preventable readmissions that exceed the number of expected potentially preventable readmissions as determined by the executive office using a statewide average and adjusting for individual hospital case-mix.  Such financial penalty shall not exceed the product of the number of discharges exceeding the expected number of potentially preventable readmissions multiplied by no more than 75 percent of the hospital’s Medicaid reimbursement rate for inpatient services. 

Provided further, for any hospital where the ratio of the number of actual potentially preventable readmissions compared to the number of expected potentially preventable readmissions is less than the ratio the executive office determined in the previous year, such financial penalty shall not exceed the product of the number of discharges exceeding the expected number of potentially preventable readmissions multiplied by no more than 37.5 percent of the hospital’s Medicaid reimbursement rate for inpatient services.