Hospital-Associated Condition Penalties: What They Really Mean


Are the threats of CMS financial penalties creating tunnel vision for certain hospital-associated conditions?

Has your hospital received a financial penalty for health care-associated conditions (HACs)? The truth is that there are probably a lot of hospitals in your area that had poor HAC ratings.

The story of HACs actually goes back to 2008 when the Centers for Medicaid and Medicare Services (CMS) began tying hospital quality metrics to Medicare reimbursements. Simply put, CMS was done paying full price for substandard care. Under the previous rules, hospitals would receive full Medicare reimbursement even if a patient ended up getting an infection or pressure ulcer as a result of care.

In 2014, CMS established another rule tying health care quality of care and reimbursement—the HAC Reduction Program. Although this started with reporting of certain conditions, such as central-line associated bloodstream infections, these pay-for-performance programs were expanded over time. The program links hospital performance in certain categories with reimbursement. That’s right, if a hospital performs poorly, they can be hit where it hurts—the bank.

Scores are determined by a hospital’s performance in 2 domains—1 includes indicators like pressure ulcers and in-hospital falls with injury, while the second domain focuses on health care-associated infections that include central-line associated bloodstream infections, catheter-associated urinary tract infections, certain surgical-site infections, methicillin-resistant Staphylococcus aureus bacteremia, and Clostridium difficile (C diff)

infections. Considering there are 500,000 cases and 15,000 deaths a year related to C diff in the United States, it’s not surprising that CMS would want to crack down on those cases associated with hospitalization.

Hospitals that rank in the lowest quartile (ie, the bottom 25%) are penalized financially through 1% of their Medicare reimbursement. In the most recent case, for fiscal year 2019, CMS generated financial penalties based on health systems’ performance between October 1, 2015, through June 30, 2017. CMS has posted the scores and which hospitals are receiving a penalty through the Hospital Compare site.

Realistically, what does this all mean? Sure, there will always be some hospitals that land in the low-performing quartile; that’s just a fact of how the strategy is designed. On the other hand, the HAC program does not account for those hospitals that are teaching facilities and have higher acuity patients, which means they’re at an increased risk for HACs. In the end though, this newly reported data from Hospital Compare allows us to see which hospitals performed poorly enough to receive a financial penalty.

Roughly 800 hospitals in the US were hit with financial penalties as a result of poor HAC scores. In Arizona, 15 hospitals were penalized as a result of their scores.

From the infection prevention perspective, these pay-for-performance programs are definitely a move in the right direction. More attention to health care-associated infections and other HACs are important since these are critical problems that need to be addressed.

However, the HAC program only impacts those reimbursements from Medicare, meaning that there are no penalties from private insurance. Furthermore, the conditions addressed by the HAC program are limited and don’t encompass all the potential HACs that can occur. This short list can easily create tunnel vision for hospitals seeking to avoid penalties in that they only focus on the conditions that might result in costly fines.

There are just over 5000 US community hospitals that will likely receive CMS reimbursement in FY2019, and 800 (16%) of these institutions experienced financial penalties related to poor performance. That’s a pretty substantial amount, but the painful truth is that this number is likely higher considering there have been concerns for hospitals failing to report HACs and a general lack of CMS data validation.

It’s important to read these reports and see how hospitals in your area might be performing but, ultimately, we need to remember that there’s so much more that goes into quality of care and the HAC program is just 1 strategy for addressing substandard patient care.

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