C-Suite Cheat Sheet: Hospital-Acquired Condition Reduction Program

Educational Briefing for Suppliers and Service Providers

Executive Summary

The Hospital-Acquired Condition (HAC) Reduction Program adjusts hospital inpatient Medicare payments based off performance on a set list of patient safety measures and hospital-associated infections. It is one of three mandatory pay-for-performance (P4P) programs that the Affordable Care Act introduced and is managed by the Center for Medicare and Medicaid Services (CMS). The program aims to improve patient safety and reduce common, but avoidable, conditions that patients can contract during hospital stays by measuring a hospital’s performance on seven metrics and adjusting payment based on the hospital’s scores compared to the national average. The quartile of hospitals with the worst performance receives a 1% penalty on their inpatient Medicare revenue. 

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