Medicare's Hospital-Acquired Condition Reduction Program

Nurse taking notes

What’s The Issue?

As part of its efforts to become a more prudent purchaser of health care services, Medicare has worked to create incentives for hospitals to avoid making patients sicker, instead of healthier, during their inpatient stay. These so-called hospital-acquired conditions (HACs) can lead to poor patient outcomes and higher spending on health care.

The latest effort is the implementation of a new program, the Hospital-Acquired Condi­tion Reduction Program, for fiscal year 2015 that reduces Medicare payments by 1 percent for the poorest-performing hospitals on qual­ity measures that track the occurrence of spe­cific preventable HACs. This brief provides an overview of this program and efforts by Congress and the Centers for Medicare and Medicaid Services (CMS) to reduce these pre­ventable conditions.

What’s Next?

CMS expects to provide hospitals with infor­mation about the calculation of their HAC score for the fiscal year 2016 adjustment in late summer 2015. Under the law, up to 25 percent of hospitals will be subject to the HAC penalty, but which hospitals are affected may change over time for multiple reasons. In fu­ture years, CMS is increasing the number of NHSN measures and using measures that a wider array of hospitals may report. For exam­ple, CMS will begin using refined versions of the current NHSN measures that expand the scope to include additional locations within the hospital. (The current measures are spe­cific to intensive care units [ICUs], and a hos­pital without an ICU can request an exemption from the measures.)

In addition, the CDC is updating the as­sumptions used in calculating the NHSN measures, and the National Quality Forum is continuing to review the components and weight of the PSI-90 measure. CMS has also finalized a modest change to the methodol­ogy for calculating the HAC total for fiscal year 2017 that will assign a maximum value of 10 for hospitals for each NHSN measure that a hospital fails to report.