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February 3, 2020

The 786 hospitals facing HAC penalties in 2020

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    CMS recently announced that 786 hospitals will face Medicare payment cuts in fiscal year (FY) 2020 under Medicare's Hospital-Acquired Condition (HAC) Reduction Program.

    Get 1-page cheat sheets on how hospital quality ratings programs work

    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 1,865 hospitals at least once since it was established in 2014, according to a Kaiser Health News 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.

    Details on this year's penalties

    This year, 786 hospitals will have their Medicare payment rates reduced for having high infection rates and other patient complications. According to KHN, 145 hospitals will be receiving penalties for the first time.

    Certain hospitals were more likely than others to incur penalties. For instance, the Association of American Medical Colleges, which represents teaching hospitals, said 45% of its members were penalized this year. That's almost twice the rate of other hospitals, according to KHN.

    Atul Grover, AAMC's EVP, said teaching hospitals are more likely to face penalties because of the relatively poor health of their patient population. He explained that CMS doesn't account for the patients' health status and susceptibility to infections. 

    The program has faced opposition from the hospital industry overall, which has argued that the HAC methodology uses an arbitrary cutoff. In 2018, the American Hospital Association published an analysis showing that only 41% of the 768 hospitals penalized in 2017 had HAC rates significantly higher than the hospitals that were not penalized. The industry has also argued that 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.  

    Another criticism of hospital ratings overall is the discrepancy among them. In the past, hospital ratings have faced criticism for their different findings about hospital quality. KHN in its analysis found that seven of the penalized hospitals this year are on U.S. News and World Report's Best Hospitals Honor Roll (Rau, Kaiser Health News, 1/31; Ellison, Becker's Hospital CFO Report, 1/31).

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