Pharmacy OneSource Blog

758 Hospitals Penalized for Hospital-Acquired Conditions Performance

In October 2014, the Centers for Medicare & Medicaid Services (CMS) began to reduce Medicare payments for hospitals that rank in the worst performing quartile with respect to hospital-acquired conditions (HACs).1 For the FY 2016 HAC Reduction Program, the worst performing quartile (HAC score greater than 6.7500) is identified by calculating a Total HAC score based on the hospital’s performance on 4 quality measures:

  1. Agency for Healthcare Research Quality (AHRQ) Patient Safety Indicator (PSI) 90 Composite, including pressure ulcers and sepsis.
  2. Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) Central-line Associated Bloodstream Infection (CLABSI)
  3. Catheter Associated Urinary Tract Infection (CAUTI), and
  4. Surgical Site Infection (SSI) (colon and hysterectomy) measures.

More than half of the hospitals penalized in 2016 were also penalized in 2015 for having low performance on the measures used to calculate the prevention of patient harm as reported by Modern Healthcare.In the CMS report, 758 hospitals Medicare payments will be reduced by 1% for being in the bottom quartile of the Affordable Care Act (ACA) program. About half of the hospitals improved enough that they were not in the bottom quartile.  Of note, the law requires that one-quarter of hospitals be penalized each year.

The federal fiscal year starts October 1, which is when the pay cuts took effect. As a result, Medicare expects to reduce hospital spending by $364,000,000.

Interestingly enough, what is the flip side of this? Dr. Rajaram, et al,4 found that among hospitals participating in the HAC Reduction Program, hospitals that were penalized more frequently had:

  • more quality accreditations
  • offered advanced services
  • were major teaching institutions, and
  • better performance on other process and outcome measures

According to Dr. Conway, Deputy and Chief Medical Officer at CMS, CMS continues to examine data adjustment for ways to improve. In the meantime, hospitals and infection preventionists must do their best by making patient safety a priority. Do you think the CMS rating system could be better? Do you think it’s fair? What about the teaching, tertiary care hospitals that care for more complex patients or safety net hospitals – should they be ‘graded’ differently?




  1. Hospital-Acquired Condition Reduction Program. Hospital Compare. Accessed March 22, 2016:

  2. Evans M. Half of hospitals penalized for hospital-acquired conditions are repeat offenders. Modern Healthcare; Dec 10, 2015. Accessed March 22, 2016:

  3. Rajaram R, Chung JW, Kinnier CV, et al. Hospital Characteristics Associated With Penalties in the Centers for Medicare & Medicaid Services Hospital-Acquired Condition Reduction Program. JAMA. 2015;314(4):375-383. Accessed March 22, 2016:

How to Build a High-Performing Infection Prevention and Control Program. Download eBook now.

Learn More About Our Products & Solutions