Hospital Acquired Condition Reduction Program Proposal for Fiscal Year 2015

on Wednesday, 03 July 2013. All News Items | Quality | Coding

Did you know that there are three programs mandated by the Affordable Care Act (ACA) that have the potential to put up to 6% of your hospitals Medicare payments at risk by the year 2017? Last October 1st two of the three programs went from a mandate to a reality and are the Value Based Purchasing (VBP) Program and Readmission Reduction Program. The last program to be implemented is the Hospital Acquired Condition (HAC) Reduction Program that is set to begin October 1, 2014.   The table below shows the progression of potential payment reductions by Fiscal Year (FY) for these programs:


Affordable Care Act (ACA) Mandated Hospital Programs

Fiscal Year

VBP Program Potential Reduction in Payment by Fiscal Year

Readmission Reduction Program Potential Reduction in Payment by Fiscal Year

Hospital Acquired Infection Program Potential Reduction in Payment by Fiscal Year

Overall, Potential Payment Reduction Risk by Fiscal Year



























For the rest of this article I want to turn your attention to the HAC Reduction Program Proposal in the FY 2014 Inpatient Prospective Payment System (IPPS) proposed rule. But first, you should understand just what a HAC is.


HAC Background:


HACs are conditions that occur while a patient is receiving treatment for another condition in an acute care health setting. In a HAC Fact Sheet CMS has indicated that HACs are conditions that are:


  1. High cost or high volume or both,
  2. Result in the assignment of a case to an MS-DRG with a higher relative weight and payment when present as a secondary diagnosis, and
  3. Could reasonably have been prevented through the application of evidenced-based guidelines.


Simply put, HACs are high cost and/or high volume conditions that have been designated as a complication (MCC or CC) for coding purposes, have evidence-based guidelines to prevent the condition and if it was the only secondary diagnosis driving the MS-DRG assignment to a higher paying MS-DRG would be discounted and the hospital would receive payment as if the HAC never occurred.


Quality and Financial Impact of HACs to the Health Care System:


CMS has indicated that “our goal for the HAC Reduction Program is to heighten the awareness of HACs and reduce the number of incidences that occur through implementing the adjustments required by section 1886(p) of the Act. Following are a few facts provided in the Proposed Rule regarding the impact that HACs have on the patient as well as the financial burden to the health care system:


  • In 2009 the Centers for Disease Control (CDC) estimated that preventable Hospital Acquired Infections (HAIs) added almost $6 billion to U.S. health care costs annually.


  • HACs especially due to medical errors are a leading cause of mortality in the United States with deaths from HAIs alone being twice as high as deaths from HIV/AIDs and breast cancer combined.


  • Following evidenced based guidelines can prevent many HACs. Surveys reveal that 87% of hospitals don’t follow such guidelines.


HAC Reduction Program Details:

CMS has proposed scoring hospitals on their rates in two Domains to assign a Total HAC Score. The hospitals in the top quartile (25th percent) would then receive a 1% reduction in payment for all Medicare discharges.

For Domain 1 they are proposing two alternatives both of which are Agency for Healthcare Research and Quality (AHRQ) Patient Safety Indicators (PSI). Domain 2 would remain the same under either Domain 1 and would include Center for Disease Control and Prevention (CDC) Hospital Acquired Infection (HAI) measures. The following table details the measures being proposed:

Proposed Measures and Domains for FY 2015

Domain 1: AHRQ PSIs

Domain 2: CDC HAI Measures

Proposed Approach

Alternative Approach

PSI-3: Pressure Ulcer Rate

PSI-90 which includes:

Central Line-associated Blood Stream Infection (CLABSI) (FY 2015 onward)

PSI-5: Foreign Object left in body

* PSI-3: Pressure Ulcer Rate

Catheter-associated Urinary Tract Infection (CAUTI) (FY 2015 onward)

PSI-6: Iatrogenic pneumothorax rate

*PSI-6: Iatrogenic pneumothorax rate

Surgical Site Infections (SSI):

PSI-10: Post-op physiologic & metabolic derangement rate

* PSI-7: Central venous catheter-related blood stream infections rate

* SSI Following Colon Surgery (FY 2016 onward)

PSI-12: Post-op PE/DVT rate

* PSI-8: Post-op hip fracture rate

* SSI Following Abdominal Hysterectomy (FY 2016 onward)

PSI-15: Accidental puncture & laceration rate


Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia (FY 2017 onward)


PSI-12: Post-op PE/DVT rate

Clostridium difficile (FY 2017 onward)

PSI-13: Post-op sepsis rate


PSI-14: Wound dehiscence rate

PSI-15: Accidental puncture & laceration rate


Regardless of which Domain 1 CMS ultimately goes with, this program again makes it apparent that CMS is quickly moving away from simply paying for volume of care to payment for the quality of care provided to the Medicare Beneficiary population. Additional details about the HAC Reduction Program can be found in the Proposed Rule pages 27622 through 27636.

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc. Beth has over twenty-two years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth monitors, interprets and communicates current and upcoming Case Management / Clinical Documentation issues as they relate to specific entities concerning Medicare. You may contact Beth at  This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.



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