Is Your Hospital Being Penalized by Medicare?

Two programs may trigger a reduction in Medicare payments to a hospital-based on performance goals. The Hospital-Acquired Condition (HAC) Reduction Program rates performance in five monitored hospital-acquired conditions. The Hospital Readmission Reduction Program (HRRP) rates performance in six monitored 30-day readmission rates.

Key takeaways:

The HAC and HRRP programs are required by law in section 1886 of the Social Security Act. These programs are intended to increase patient safety by incentivizing hospitals to reduce hospital-acquired infections and readmissions.

What does Medicare monitor and why?

Medicare is required by the Social Security Act of 1935 to incentivize hospitals to improve healthcare quality in the inpatient hospital setting. To fulfill this requirement, Medicare monitors five healthcare-acquired conditions (HACs) and six 30-day hospital readmission rates (HRRPs).

The monitored HACs are:

  • Central line-associated bloodstream infection (CLABSI).
  • Catheter-associated urinary tract infection (CAUTI).
  • Surgical-site infection (SSI) for abdominal hysterectomy and colon procedures.
  • Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia.
  • Clostridium difficile Infection (CDI).

The monitored HRRPs are:

  • Acute myocardial infarction (AMI).
  • Chronic obstructive pulmonary disease (COPD).
  • Heart failure (HF).
  • Pneumonia.
  • Coronary artery bypass graft (CABG) surgery.
  • Elective primary total hip arthroplasty and total knee arthroplasty (THA/TKA).

Based on a hospital’s performance in these areas, the Social Security Act requires that the lowest 25% be penalized by reducing payments from Medicare. The penalties are designed to incentivize hospitals to focus on reducing hospital infections and readmissions. If your hospital has been penalized, it will be on a public list.

What does it mean if my hospital is on the list?

If your hospital is on the list of hospitals being penalized by Medicare, it means they are in the bottom 25% for the HAC and HRRP conditions monitored. Even if every hospital improves, by law, Medicare must report the bottom 25% and assess a penalty of up to 3% of their Medicare payments over 12 months.

Medicare relies on hospitals to report the required performance data, and the Medicare penalties are based on the specific conditions for HAC and HRRP.

The HAC and HRRP lists do not necessarily provide a complete view of a hospital’s overall quality performance.

Some hospitals are exempt from HAC and HRRP

There are about 2,000 hospitals that are exempted from the Medicare evaluation and are not penalized. Among the exempt hospitals are critical access (the only hospital in a region — usually a rural area), rehabilitation, long-term care, psychiatric, Veteran’s Affairs, and children’s hospitals. These hospitals will not be on the list of penalized facilities.

Are there other hospital quality lists?

Other reliable sites provide quality ratings for hospitals that are user-friendly and provide a more comprehensive look at hospital performance. These sites use data from dozens of components in several categories to provide an overall quality score for each facility.

Consider searching for your hospital’s rating on’s Care-Compare site which allows side-by-side comparisons based on dozens of quality data points from five measure groups: mortality, safety, readmission, patient experience, and timely & effective care. This site uses a star rating system, with five stars being the highest rating.

Another trustworthy hospital quality site is hospital safety grades provided by the LeapFrog Group, a non-profit organization that promotes “safety, quality and affordability of U.S. health care by using transparency to support informed health care decisions and promote high-value care” so consumers can access the right information to choose the best care. The Leapfrog Group collects data on the safety, quality, and efficiency standards for hospitals and ambulatory surgical centers. This site uses a grading system of A, B, C, D, or F, with “A” being the highest grade.

The health of you and your loved ones is significant, so consider these trusted resources when choosing a hospital or other healthcare facility.

Medicare is required by law to incentivize hospitals to improve healthcare quality in the inpatient hospital setting based on the criteria in the HAC and HRRP reduction programs.

While the HAC and HRRP lists provide accurate information about hospitals, Medicare Care-Compare and Leapfrog Group hospital safety grade use more comprehensive data to provide their ratings to hospitals and other facilities.

When choosing a hospital, use more than one of the available hospital quality lists to get information to help you make your decision.

Finding the best healthcare is essential, and you want to consider your decision with as much information as possible from trustworthy sources.

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