Medicare Penalizes 758 Hospitals for Safety Deficiencies

Ken Terry

December 10, 2015

Seven hundred fifty-eight hospitals are losing 1% of their Medicare reimbursement in fiscal year (FY) 2016 because they are in the worst performing quartile in the hospital-acquired conditions (HAC) reduction program, the Centers for Medicare and Medicaid Services (CMS) announced today.

A total of 3308 hospitals were subject to the HAC program for the measurement period from October 1, 2015, to September 30, 2016. Because of an adjustment in the total HAC score cutoff, 22.9% of the hospitals fell into the bottom quartile in FY 2016 compared with 21.9% the previous year.

In FY 2015, 724 hospitals were subject to the HAC penalty. But they weren't necessarily the same hospitals as those penalized in FY 2016: only about 54% of those facilities were in the penalty box last year.

Hospitals that fell into the lowest quartile this year will forgo about $364 million in Medicare payments during FY 2016, CMS estimated.

The HAC program uses a composite group of measures and three individual metrics to score hospitals on the prevalence of hospital-acquired conditions, which is a proxy for patient safety. The composite measure is the Patient Safety Indicator (PSI) 90 Composite Index, which includes eight metrics and uses claims data. The mean performance on that index improved this year across all hospitals.

Data on the other measures, for central-line infections, catheter-associated urinary tract infections (UTIs), and surgical-site infections, is derived from chart reviews. The mean national score for central-line infections improved this year, while that for catheter-related UTIs declined. The surgical-site infection measure is new.

Some hospitals and experts say that the HAC reduction program "disproportionately affects hospitals that serve poorer and sicker patient populations," notes Modern Healthcare. In addition, a Health Affairs brief points out, central line-associated infections are also measured in CMS' value-based purchasing program, potentially exposing hospitals to double penalties.

The HAC program, which was authorized by the Affordable Care Act, is the latest in CMS' efforts to increase patient safety in hospitals and reduce the amount of needless complications that generate additional costs for Medicare. Since 2009, CMS has no longer assigned patients to higher diagnosis-related groups for billing purposes when they develop hospital-acquired conditions. And, since FY 2015, hospital data on the PSI-90 composite patient safety index has been part of payment determinations under the Inpatient Quality Reporting program.

Hospital-acquired conditions are a major factor in patient safety. According to the Partnership for Patients, in 2010 adult patients experienced about 4.8 million HACs in 32.8 million hospitalizations. The Agency for Healthcare Research and Quality estimates that the additional cost of HACs ranges from $1,000 for treating a catheter-associated UTI to $17,000 for treating central-line infections and $21,000 to treat surgical-site infections and ventilator-associated pneumonia.

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