HAC reduction program is broken and unfairly penalizes hospitals, study says

Medicare’s controversial program to reduce hospital-acquired conditions (HACs) unfairly penalizes organizations, according to new research.

Medicare’s controversial program to reduce hospital-acquired conditions (HACs) unfairly penalizes organizations, according to new research.

The formula used to calculate fines for hospitals and health systems has inherent bias, said a new article published in American Journal of Medical Quality.

Last year, nearly 800 hospitals received penalties for poor HAC scores and stood to lose about $364 million in reimbursements. The Centers for Medicare & Medicaid Services indicated (PDF) that in 2017, 769 ranked hospitals will receive penalties for poor performance in the reduction of HACs, such as central line-associated blood stream infections, surgical site infections, Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia and Clostridium difficile (C.diff) infection.  

But the penalties disproportionately impact the nation’s teaching and large urban hospitals, the study noted. The program uses a broadly determined threshold to identify poor-performing hospitals, all of which receive a 1% penalty.

The problem with using that threshold is that the difference in performance of hospitals just above and below the penalty threshold may not be statistically different. Furthermore, hospitals can improve performance but still remain in the bottom quartile if other hospitals also improve, according to the study, which was conducted by the American Hospital Association (AHA), KNG Health Consulting, Network for Excellence in Health Innovation and the Association of American Medical Colleges.

But another issue arises when the number of eligible cases that vary significantly across hospitals and complications are rare. “In such circumstances, hospitals of different sizes may be unequally likely to experience an extreme complication rate resulting in penalties, even if they have similar quality (i.e., perform the same on average),” the study said.

The results suggested that when the government gauges hospital quality using measurements of infrequent events and performance thresholds, variations across hospitals in numbers of cases can bias the results.

“Large hospitals are more likely to be identified as poor performers for measures with very low probabilities of complication. The reverse holds for measures with higher probabilities of complication,” the study noted.

In order to reduce the bias, study authors recommended that CMS could include certain hospital characteristics, such as size, in the risk-adjustment models; and evaluate hospital performance using a broader “all-harm” measure. Researchers also said Congress may need to provide CMS with flexibility in how it can assess which hospitals to penalize in the program.

In a blog post for the American Hospital Association, Nancy Foster, vice president of quality and patient safety policy, wrote that the organization supports programs that effectively promote patient safety improvements, but the “HAC program misses the mark” and “is broken.”

She called for a reform to the current law to more effectively promote improvement and better measures that accurately reflect performance.