CMS: 769 hospitals will face payment cuts due to hospital-acquired conditions

Some critics say the program is 'arbitrary'

CMS named 769 hospitals that will face Medicare payment cuts in fiscal year (FY) 2017 under the Hospital-Acquired Condition Reduction Program (HACRP), which for the first time considered rates of infection from antibiotic-resistant bacteria in its calculations, Kaiser Health News reports.

Background on HACRP

HACRP evaluates hospitals based on their rates of several avoidable complications, such as bed sores, blood clots, central line infections, and falls. During the most recent evaluation period, CMS added two additional measures related to antibiotic-resistant bacteria:

  • Rates of infection from methicillin-resistant Staphylococcus aureus, or MRSA; and
  • Rates of infection from Clostridium difficile, or C. diff.

Under the program, which launched in October 2014, Medicare penalizes the 25 percent of hospitals that perform worst. During the ongoing payment period, which runs between October 2016 and September 2017, the lowest-performing hospitals will have their Medicare payments reduced by 1 percent. Certain hospitals, such as those that treat veterans, children's hospitals, and critical access hospitals, are exempt from the payment cuts, Kaiser Health News reports.

According to an analysis by Association of American Medical Colleges, HACRP will reduce Medicare payments by $430 million during the ongoing payment period—a reduction that is 18 percent larger than in the last fiscal year. The payment cuts will affect 769 hospitals, about 40 percent of which had avoided payment cuts in the first two years of the program, according to a Kaiser Health News analysis.

Background on the new infection metrics

CMS, CDC, and other organizations have identified the spread of antibiotic-resistant bacteria as a major public health threat. According to CDC, about two million people contract antibiotic-resistant infections each year, with about 250,000 of those cases occurring in hospitals. CDC estimates that antibiotic-resistant infections kill about 23,000 people annually.

Overuse of antibiotics accelerates spread of antibiotic-resistant bacteria because the pathogens can adapt to antibiotics over time, Kaiser Health News reports. And according to CDC, between 20 and 50 percent of antibiotics prescribed in hospitals are inappropriate or unnecessary.

Hospitals have been somewhat successful in fighting C. diff, MRSA, and other infections over the past several years, Kaiser Health News reports. According to CDC:

  •  MRSA infections declined by 13 percent between 2011 and 2014; and
  • C. diff infections declined by 8 percent between 2008 and 2014 (although CDC notes there was a "significant increase" in C. diff infections in 2014).


Some experts said that hospitals are not in full control over how many antibiotic-resistant infections occur in their facilities. For instance, Louise Dembry, a professor at the Yale School of Medicine and president of the Society for Healthcare Epidemiology of America, said, "The reality is we don't know how to prevent all these infections."

Moreover, some critics take issue with the way HACRP assesses penalties on hospitals. Because the program penalizes the 25 percent of hospitals that perform worst overall, in some cases a hospital is penalized even though it has reduced its rate of avoidable complications. Nancy Foster, vice president for quality and patient safety at the American Hospital Association, said, "The HAC penalty payment program is regarded as rather arbitrary, so other than people getting upset when they incur a penalty, it is not in and of itself changing behavior" (Rau [1], Kaiser Health News, 12/21; Rau [2], Kaiser Health News).

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