HAC Reduction Program Penalties Kicking In

Hospital corridorThere are changes taking place this week in another mandated quality improvement program. Beginning Oct. 1, the Hospital-Acquired Condition (HAC) Reduction Program penalties begin. The Centers for Medicare and Medicaid (CMS) will reduce hospital payments by one percent for the lowest ranking hospitals for HACs. More than 750 Inpatient Prospective Payment System (IPPS) hospitals, provisionally identified by CMS in April, face the cuts, which amount to an estimated total of $330 million. Under The Hospital Acquired Condition Reduction Program, mandated by the Affordable Care Act, CMS will deduct one percent from each Medicare payment to the impacted hospitals between Oct. 1, 2014 and Sept. 31, 2015. The HAC reduction program has three measures for 2015:

  1. Patient safety indictors (PSI) 90 composite measure, which includes the following measures: Pressure ulcer rate, latrogenic pneumothorax rate, central venous catheter-related blood stream infection rate, postoperative hip fracture rate, postoperative pulmonary embolism or deep vein thrombosis rate, postoperative sepsis rate, wound dehiscence rate and accidental puncture and laceration rate.
  2. Central line-associated bloodstream infections (CLABSI) measure.
  3. Catheter-associated urinary tract infections (CAUTI) measure.

In October 2015, Medicare will add rates of surgical site infections to its analysis, and in October 2016 it will include incident rates of C. diff and MRSA.

Calculating the Penalties
HAC payment penalty adjustment would occur after base diagnosis-related group (DRG) payment adjustments have been calculated and made for the Value-Based Purchasing (VBP) and readmission reduction programs. Payment adjustment would impact hospitals that rank among the lowest-performing 25 percent with regard to HACs. They would receive 99 percent of the amount of payment that would otherwise apply to discharges. The final scores may differ from the preliminary ones because Medicare will be looking at infections over two years, not one. The preliminary scores are based on infections during the 12-month period from July 2012 through June 2013. Some types of hospitals are exempted from the penalties, including critical access hospitals, specially designated cancer hospitals and those devoted to rehabilitation, children, long-term care and psychiatric treatment. Every year, Medicare will reevaluate hospitals and assess penalties according to that year’s assessment.

Some hospitals harder hit
Kaiser Health News (KNH) reports that some types of hospitals, including teaching hospitals and those serving poorer populations, will get hit harder by the penalties. KHN asked Dr. Ashish Jha, a researcher at the Harvard School of Public Health, to analyze the preliminary penalties. Jha found that certain types of hospitals—including academic medical centers, those treating more poor patients and those in West and Northeast—were more likely to be assigned preliminary penalties. That stayed true even when Jha held other variables constant. The analysis included 3,203 hospitals. It omitted hospitals whose characteristics were not included in the American Hospital Association annual survey.

CMS: improving patient safety
CMS regards the program as an important step in improving patient safety. As reported by Kaiser Health News: “We want hospitals focused on patient safety and we want them laser-focused on eliminating patient harm,” said Dr. Patrick Conway, chief medical officer of the Centers for Medicare & Medicaid Services. The HAC Reduction Program builds on the existing HAC program, under which Medicare does not provide additional Medicare payment for treatment of certain conditions that are reasonably preventable when those conditions were acquired after the beneficiary has been admitted to the hospital for a different condition. CMS says that this existing HAC program is saving Medicare about $30 million annually.


ProVation Care Plans, powered by Lippincott Solutions, promote best practices that improve patient care and safety and help providers meet the challenge of the HAC Reduction Program. Click here to download samples of our care plans for review and comparison.