Policy & Regulation News

Medicare Payments Reduced for Hospital-Acquired Conditions

By Stephanie Reardon

721 hospitals will face a one-percent reduction in Medicare payments from the federal government.

- Despite incentives for hospitals to reduce hospital-acquired conditions (HACs), 721 hospitals will face a one-percent reduction in Medicare payments from the federal government as a result of high national HAC rates, according to the Centers for Medicare & Medicaid Services (CMS).

The HAC Reduction Program established by the Affordable Care Act of 2010 requires the Department of Health & Human Services (HHS) to adjust payments to hospitals that rank in the worst performing quartile. The Affordable Care Act (ACA) specifies blood clots, bed sores, catheter infections, and other health complications as avoidable HACs.

Stratishealth details how CMS determines which hospitals will be penalized, noting that the hospital is judged on the frequency of central-line bloodstream infections caused by tubes used to pump fluids intravenously, urinary tract infections caused by catheters, and rates of serious complications which include collapsed lungs, surgical cuts, tears and reopened wounds as well as other patient safety indicators (PSI).

CMS tallied the results of these judgments, giving each hospital a rank between one and 10. Hospitals with a total score above seven are penalized.

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  • Kaiser Health News reports that the penalties are estimated to total to approximately $373 million, with one 1 of every 7 hospitals in the nation having their Medicare payments lowered by 1 percent over the fiscal year that began Oct. 1, 2014 and continues through Sept. 30, 2015.

    Roughly 1,400 hospitals, including all hospitals in Maryland, are not included in Medicare’s assessment as they are excluded from the program. These hospitals are exempt because they provide specialized care or care to certain groups of patients. The hospitals in Maryland have a waiver in place with the federal government which allows them to be excluded.

    The report also indicated that 143 out of 292 teaching hospitals were penalized most heavily and about half of them will be penalized.

    “In evaluating hospitals for the HAC penalties, the government adjusted infection rates by the type of hospital. When judging complications, it took into account the differing levels of sickness of each hospital’s patients, their ages and other factors that might make the patients more fragile,” Jordan Rau reports. “Still, academic medical centers have been complaining those adjustments are insufficient given the especially complicated cases they handle, such as organ transplants.”

    The HAC penalties pile on top of the 30-day readmission penalties already applied by the ACA.

    A previous article on RevCycleIntelligence.com stated that Medicare fined 2,610 hospitals for readmission penalties this year, costing Medicare $17 billion in potentially avoidable readmissions. This is an increase from two percent to three percent from the previous year. Likewise, EHRIntelligence.com reported that Medicare collected $227 million from hospitals for patients suffering certain conditions from 2,225 hospitals in 2013.