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March 4, 2019

The record 800 hospitals facing HAC penalties in 2019

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    CMS recently announced that 800 hospitals will face Medicare payment cuts in fiscal year (FY) 2019 under Medicare's Hospital-Acquired Condition (HAC) Reduction Program—the highest number since the program was established five years ago, Kaiser Health News reports.

    Background on the HAC program

    The HAC program, which launched in October 2014, evaluates hospitals based on their rates of several avoidable complications, including bed sores, blood clots, central line infections, falls, and infection from methicillin-resistant Staphylococcus aureus (MRSA) or Clostridium difficile (C. diff).

    Every year, the facilities in the worst-performing 25% are penalized by losing 1% of their Medicare payments. So far, the program has penalized 1,756 hospitals since it was established in 2014, and 110 of those hospitals have been penalized all five years, according to a KHN analysis. Congress exempts the over 1,000 critical access hospitals, as well as Maryland hospitals, and certain specialized hospitals (children's, psychiatric, and veterans) from the penalties, according to KHN.

    The hospital industry has argued that the HAC methodology uses an arbitrary cutoff. The American Hospital Association published an analysis last year that only 41% of the 768 hospitals penalized in 2017 had HAC rates significantly higher than the hospitals which were not penalized. The industry has also argued the methodology punishes hospitals that thoroughly test for infections and other patient safety hazards as they may uncover more problems and appear statistically worse than others with lower testing standards.  

    Details on this year's penalties

    This year, 800 hospitals will have their Medicare payment rates reduced for having high infection rates and other patient complications. These penalties, along with Medicare's other pay-for-performance programs (the Hospital Readmissions Reduction and Value-Based Purchasing programs), place a total of up to 6% of Medicare's inpatient payment at risk. According to KHN, the penalties will be applied as hospitals submit Medicare claims for reimbursement. As such, the exact dollar amount of the penalties will not be known until FY2019 concludes in September (Rau, Kaiser Health News, 3/1).

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