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HAC Reduction Program: How To Protect Your Medicare Dollars

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This year, approximately one out of every seven hospitals in the nation will face penalties under the Hospital-Acquired Condition (HAC) Reduction Program, CMS’s latest quality-improvement program. Based on measures of adverse events occurring during hospital stays, those hospitals with the highest HAC rates will see their total Medicare payments reduced by 1% for all discharges occurring from October 2014 through September 2015. Penalties for fiscal 2015 will total an estimated $373 million.

Being docked 1% through the HAC Reduction Program may not seem like a big deal. But when you combine the potential penalties of CMS’s various quality-improvement programs, the dollars add up fast. Because most hospitals today run on such small margins, they rely heavily on Medicare dollars to stay afloat. Any reduction in Medicare reimbursements can throw a facility into dire financial straights and competitive disadvantage.

The rate of penalty will not change in the coming years, but Medicare will add more HACs to its analysis. Conditions currently designated under the program include infections from catheters, blood clots, bedsores, pressure ulcers, pulmonary embolisms and other avoidable complications. Starting this fall, Medicare will add rates of surgical site infections to its analysis, and in October 2016 it will add incident rates of two bacteria resistant to antibiotic treatments: C. Diff and MRSA.

Penalties for fiscal 2015 will total an estimated $373 million.

To avoid Medicare penalties, hospitals must proactively measure, analyze and optimize their care processes and performance outcomes. Making systematic improvements takes high-level strategic planning. It requires not only the right technical resources, but also the right human resources, capable of driving improvements based on expert analysis and targeted quality interventions.

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