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%.
Avoidable Conditions
To target the new HAC penalty, CMS is using a composite of 10 avoidable types of harm the agency believes occur all too frequently during beneficiaries' acute care. That composite score will determine which of the 3,388 hospitals affected by the rule deserve a cut in pay, along with the public attention and embarrassment that comes with it.
The avoidable conditions CMS seeks to reduce include pressure ulcers, hip fractures after surgery, blood clots, lung injuries incurred during treatment, central line bloodstream infections, post-operative sepsis, and accidental punctures and lacerations.
Hospitals have known about this penalty since early 2010, and they've been trying like crazy to get their error rates under control. The first two-year performance period ended at the end of last year, and hospitals presumably will privately review their scores before they are publicly released later this summer, and we find out which hospitals scored the worst.
That's why it wasn't surprising when Wednesday, the Department of Health and Human Services released a report amid much fanfare saying that thanks to the effort of hospitals across the country in the last several years, the number of HACs has fallen.
The report says the incidence of a select group of hospital-acquired conditions per 1,000 patient discharges in 2010 was 145. By 2012, it was down to 132, a drop of 9%.
HHS seized an opportunity to translate this to actual humans, saying some 560,000 patients, the number who endured a hospital-acquired condition in 2010, didn't suffer one in 2012. What's more, these efforts saved lives; an estimated 15,000 people who would have died from these errors or lapses in care in 2012 got out of their hospitals alive.
Unpopular
The HAC penalty isn't popular among some hospital officials, however.
Alven Weil, spokesman for the group purchasing and quality improvement collaborative Premier, Inc. which represents some 2,600 hospitals and health systems, says the HAC penalty is in effect a triple jeopardy, "penalizing hospitals three times" for the same types of harm.
Premier, he said in an e-mail, is "disappointed that CMS continues to include central line-associated bloodstream infections, catheter-associated urinary tract infections and the Agency for Healthcare Research and Quality patient safety indicators in both the Value-Based Purchasing and the Hospital-Acquired Condition (HAC) reduction programs."
Weil adds that "Since the HAC Reduction Program is required by law, CMS should include the safety measures there, and remove them from the Value-Based Purchasing program to minimize overlap."
The HAC penalty also punishes hospitals for many of the same types of harm as the 2008 Hospital-Acquired Condition payment provision. That's the provision under the Deficit Reduction Act of 2005 that empowers CMS to stop paying for extra care that resulted from 10 types of harm, now increased to 11, such as pressure ulcers, falls and trauma, poor glycemic control or urinary tract infections.
Back then, these adverse incidents were called "never events," and the thought was that hospitals would rush to avoid them to escape incurring extra costs for delayed stays and additional surgeries, especially if it meant fewer patients spending time in expensive intensive care units.
Small Dollars
As it's worked out, however, the 2008 HAC payment provision has not hurt hospitals financially. In fact, CMS has avoided paying hospitals for extra care from these adverse events a total of only about $25 million a year since the rule took effect.
And according to the latest proposed rule, CMS says that it anticipates saving only between $28 million and $38 million a year from FY 2015 through FY 2019. That's really just pennies.
CMS will have to wield a bigger hammer for hospitals to take HAC prevention seriously. The new HAC penalty of 1% is that bigger hammer.
The overlaps of most concern are the penalties for central line bloodstream infections and catheter associated urinary tract infections. They are embedded in the value-based purchasing program, which results in up to a 2% cut in hospital payment, the HAC program, and the 2008 HAC payment provision, and they are often the most troublesome to prevent.
Top officials for CMS and the Centers for Disease Control and Prevention have acknowledged in numerous recent conversations with me that they're aware of the triple jeopardy of penalties for hospital-acquired conditions.
But they say they don't think it's unfair. It's right to double and triple up on these penalties to make a point. Hospital systems and their leaders will respond by putting people in charge, with authority to make cultural and procedural changes to reduce harm.
Hospitals can reduce these incidents. This week's HHS report shows they can. But they also can do a lot more, which I believe we'll see when the actual scores come out in August.