The 761 hospitals likely to face penalties for patient harm

The last of the ACA's three penalty programs launches in October

CMS expects to penalize 761 hospitals in the first year of its Hospital-Acquired Condition (HAC) Reduction Program, according to a Kaiser Health News analysis of Medicare data.

The HAC program is the latest ACA program to impose Medicare penalties on hospitals that do not meet performance benchmarks. (The two other ACA penalty programs—the Hospital Readmission Reduction Program and the Hospital Value-Based Purchasing Program—are already in their second year.)

Are you in the penalty zone for CMS's HAC program?

How the HAC penalties are determined

For the HAC program, CMS has assessed rates of 10 patient injuries at hospitals, including blood stream infections, patient falls, bed sores, urinary tract infections, collapsed lungs, cuts that occur during or after surgery, and blood clots.

CMS calculates each facility's HAC score on a scale from one to 10, with 10 being the greatest rate of patient harm. Hospitals that scored a seven or higher will be penalized, and starting on Oct. 1, 2014, CMS will withhold 1% of each Medicare payment made in fiscal year (FY) 2015.

Earlier this year, CMS released a preliminary assessment and identified 761 facilities that could be penalized under the program, or about one quarter of hospitals.

However, CMS created the preliminary list based on data gathered from July 2012 to June 2013. The final scores will include data through to the end of 2013. "It's not out of the realm of possibility that some HAC scores change due to the longer data collection period for the infection measures," The Advisory Board Company's Eric Fontana told KHN's Jordan Rau.

Who will be penalized?

Once all three penalty programs are in place, hospitals are at risk of losing up to 5.4% of their reimbursements, according to Rau.

As with the readmission and quality penalty programs, some types of hospitals are expected to be hit harder by the HAC penalties than others. According to Harvard's Ashish Jha, publicly owned facilities, safety-net hospitals, large hospitals, and facilities in the West and Northeast are the most likely to be penalized.

More than half of the nation's large teaching hospitals are on CMS's list of penalized facilities, but the reasons for their higher complication rates are under debate, Jha says. Although CMS accounts for hospital size, location, and medical school affiliations, the Association of American Medical Colleges questions whether the agency's calculations are sufficiently precise.

"Do we really believe that large academic medical centers are providing such drastically worse care, or is it that we just haven't gotten our metrics right? I suspect it's the latter," Jha told Rau (Rau [1], Kaiser Health News, 6/22; Rau [2], Kaiser Health News, 6/22).

How will your hospital fare?


See where your organization stands in the HAC program using our Hospital-Acquired Conditions Impact Assessment tool, which replicates CMS's scoring methodology and factors in the impact of new measures and modifications to scoring.

Then, check out our customized assessment portal to access all your organization-specific analyses in one location.


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