Hospitals Brace for Next HAC Penalty

Cheryl Clark, May 8, 2014

Hospitals have known since early 2010 about coming penalties for those with the highest rates of hospital-acquired conditions and they've been trying like crazy to get their error rates under control.

In less than five months, the last of the Patient Protection and Affordable Care Act's three cuts to hospital payments designed to incentivize improved safety and quality kicks in.

And according to the Centers for Medicare & Medicaid Services proposed rule for payments starting Oct. 1, this final program will cost an estimated 753 hospitals a total of some $330 million in Medicare cuts.

The bulk of it will come from the so-called HAC penalty which the healthcare reform law imposes on those hospitals with rates of hospital-acquired conditions that are in the highest 25%. By law, CMS will reduce payment to these hospitals by 1% between Oct. 1, 2014 and Sept. 30, 2015

The HAC penalty comes on top of a penalty of up to 3% for hospitals with the highest rates of 30-day readmissions, and up to 2% for hospitals that fail to provide certain types of value-based care, such as evidenced based measures during surgery, reduced 30-day mortality rates, and high patient experience scores.

Just think: the worst hospitals in the nation could see their total payments from Medicare drop by 6%, a deep hurt when one considers that in 2010, the overall Medicare margin for hospitals was a negative 4.5%.


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