Medicare Reimbursement: Fighting Hospital-Acquired Infections

Hospital-acquired infections (HAIs) are a significant concern for patients and healthcare providers, with the CDC estimating that one in 25 hospital patients suffer from an HAI. HAIs can lead to severe complications, including secondary infections, sepsis, and even death. As a result of the high costs associated with treating HAIs, Medicare has implemented reimbursement policies for hospitals to encourage the improvement of patient safety and the reduction of infection rates. The HAC Reduction Program is a Medicare value-based purchasing program that reduces payments to hospitals based on their performance in reducing HAIs. This program has led to the implementation of quality improvement initiatives by hospitals and has resulted in Medicare savings of $350 million annually. While the program has shown preliminary success in reducing infections and improving patient safety, there is controversy surrounding the accuracy of hospital performance scores and the impact of the program on financial incentives for hospitals to improve care.

The Hospital Readmissions Reduction Program

The HRRP has been controversial since its inception, particularly in the field of heart failure. Proponents argue that it has reduced national readmission rates by raising awareness and investment in mechanisms to better assist patients during discharge and transitions. On the other hand, critics argue that it unfairly penalizes hospitals for issues beyond their control and incentivizes readmission over survival. There are concerns that hospitals may be achieving reductions in readmissions by keeping returning patients in observation units rather than formally readmitting them.

The HRRP targets specific conditions that have been associated with higher readmission rates, such as acute myocardial infarction (AMI), heart failure (HF), and pneumonia (PN). In 2015, several target conditions were added, including chronic obstructive pulmonary disease (COPD), coronary artery bypass graft (CABG) surgery, and elective primary total hip or knee replacement. The program penalizes hospitals with higher-than-expected readmission rates by reducing Medicare payments. The financial penalties for hospitals with higher readmission rates can be substantial, and these penalties are adjusted for each hospital claim.

The impact of the HRRP on vulnerable populations has also been studied. Research suggests that the positive effects of the program are not evenly distributed across vulnerable populations, and there could be societal benefits if the policy is adjusted for the socioeconomic status of the patients and their neighborhoods. For example, relative to Medicare GI patients, the readmission rate reduction for Medicare AMI patients in low-income hospitals was larger than that of high-income hospitals. However, the readmission rate reductions for Medicare HF, PN, or All-Target patients relative to Medicare GI patients were larger for high-income hospitals than for low-income hospitals.

The Hospital-Acquired Condition (HAC) Reduction Program

The Centers for Medicare and Medicaid Services (CMS) evaluates hospitals annually by calculating Total HAC Scores, which are derived from various measures, including the CMS Patient Safety and Adverse Events Composite (CMS PSI 90) and healthcare-associated infection (HAI) rates. Hospitals with Total HAC Scores above the 75th percentile, or the worst-performing quartile, face a 1% reduction in their Medicare payments. This non-payment policy has resulted in significant savings for Medicare, approximately $350 million annually, by reducing reimbursements to underperforming hospitals.

The HAC Reduction Program has led to the implementation of quality improvement (QI) initiatives in hospitals, targeting the reduction of infection rates and the improvement of patient outcomes. Hospitals have allocated more resources toward preventing specific infections, such as MRSA and C. diff, which are of particular concern due to their antibiotic-resistant nature. However, the direct correlation between the program and infection rate reductions remains debated, and the impact on patient care and satisfaction is still being evaluated.

Hospitals subject to the HAC Reduction Program receive confidential Hospital-Specific Reports (HSRs) from CMS, which detail their performance data and calculations. Hospitals are given 30 days to review this information, ask questions, and request corrections before the data is publicly displayed on the Data.cms.gov website. This process ensures transparency and allows hospitals to address any discrepancies in their scoring.

While the HAC Reduction Program aims to enhance patient safety and reduce infections, it has faced some criticism. Concerns have been raised about the accuracy of certain quality measures and the failure to recognize patient safety improvements made by hospitals. Additionally, there is a perception that the program unfairly penalizes teaching hospitals, large hospitals, and small hospitals. As a result, calls for reform have emerged, advocating for a more effective program that promotes improvement and accurately reflects hospitals' efforts to enhance patient care.

Strategies for hospitals to avoid penalties

Since 2008, Medicare has stopped reimbursing hospitals for hospital-acquired infections. The aim is to incentivize hospitals to improve their standards of care and patient safety. However, evidence suggests that these penalties have had limited success, with hospitals finding ways to work around the system. As a result, hospitals have implemented quality improvement (QI) initiatives to reduce infection rates and improve patient outcomes.

• Accurate Reporting and Transparency: Hospitals should ensure accurate and transparent reporting of infection rates. Upcoding, or misclassifying infections, undermines the effectiveness of the penalty system and creates a false impression of improvement. Accurate reporting is essential for holding hospitals accountable and driving meaningful change.
• Infection Prevention and Control: Hospitals should invest in infection prevention and control measures. This includes implementing clear protocols, providing staff training, and adopting best practices to reduce the risk of infections associated with healthcare procedures, such as central line-associated bloodstream infections, catheter-associated urinary tract infections, and surgical site infections.
• Patient Education and Discharge Planning: By educating patients about infection prevention and providing them with the necessary tools and knowledge, hospitals can reduce the risk of readmissions due to hospital-acquired infections. Proper discharge planning ensures patients receive the care and education they need to recover at home, reducing the likelihood of readmission within 30 days, which is another factor considered in Medicare reimbursement penalties.
• Performance Measurement and Improvement: Hospitals should regularly measure their performance and identify areas for improvement. This includes tracking infection rates, patient satisfaction, and outcomes. By analyzing data and identifying trends, hospitals can develop targeted interventions to reduce infections and improve patient safety.
• Collaboration and Knowledge Sharing: Hospitals can benefit from collaborating with other healthcare facilities and sharing knowledge about successful infection control strategies. A coordinated approach, with transparent transmission levels and control expenditures, can help all hospitals improve their infection control practices and patient outcomes.
• Focus on Patient Safety: Ultimately, the goal is to protect patients from harm and provide safe, quality care. Hospitals should prioritize patient safety initiatives, such as clear communication protocols, medication management, and monitoring systems, to reduce preventable patient injuries and infections.

By implementing these strategies, hospitals can work towards avoiding Medicare reimbursement penalties and improving patient outcomes. It is important to remember that the success of these initiatives relies on accurate reporting, a culture of transparency, and a commitment to continuous improvement.

The financial implications for hospitals

The Centers for Medicare & Medicaid Services (CMS) implemented the Hospital-Acquired Condition (HAC) Reduction Program to curb infection rates and improve patient safety. This program reduces Medicare payments to hospitals based on their performance and infection rates, with the lowest-performing hospitals receiving a 1% reduction in reimbursement. The financial impact of this program is substantial, as it has saved Medicare almost $350 million annually. Hospitals with higher rates of hospital-acquired infections face increased costs associated with treating these infections, particularly for drug-resistant infections such as MRSA, which can cost up to $38,500 per patient.

In response to the HAC Reduction Program, hospitals have implemented quality improvement initiatives to reduce infection rates. This includes allocating more resources towards preventing infections and improving patient care. However, the program has also led to concerns about the accuracy of hospital performance measurements and the potential for gaming the system. Some hospitals may focus on increasing the number and complexity of procedures to achieve higher reimbursements, and medication errors, a leading cause of preventable patient injury, are not tracked in the program.

The financial incentives for hospitals to improve infection control practices are complex. While the HAC Reduction Program aims to hold hospitals accountable for patient safety, higher insurer payments for adverse conditions may offset a portion of hospital costs. Additionally, under certain payment systems, hospitals can classify patients with complications into higher reimbursement categories, and extremely costly cases may qualify for additional outlier payments. This reduces the incentive to avoid complications and may even lead to profits for hospitals in some cases, as evidenced by a case study on bloodstream infections.

Overall, the financial implications of Medicare reimbursement policies for hospital-acquired infections have led to a mixed impact. While there have been reductions in infection rates and improvements in patient safety, there are also concerns about the accuracy of performance measurements and the potential for unintended consequences, such as hospitals prioritizing financial gains over patient care.

Patient perceptions of care and HAC scores

The Centers for Medicare & Medicaid Services (CMS) has implemented the HAC Reduction Program to curb MRSA and C. diff infection rates. The program is a Medicare value-based purchasing program that reduces payments to hospitals based on their performance on measures of hospital-acquired conditions (HACs). The HAC Reduction Program encourages hospitals to improve patients' safety and implement best practices to reduce their rates of infections associated with healthcare.

The enactment of the Deficit Reduction Act of 2005 created an additional incentive for acute care hospitals to participate in the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) survey, which is the first national, standardized, publicly reported survey of patients' perceptions of hospital care. The HCAHPS survey asks discharged patients 29 questions about their recent hospital stay, including communication with nurses and doctors, the responsiveness of hospital staff, the cleanliness and quietness of the hospital environment, communication about medicines, discharge information, overall rating of the hospital, and whether they would recommend the hospital.

Public reporting of the survey results creates new incentives for hospitals to improve the quality of care and enhances accountability in healthcare by increasing transparency in the quality of hospital care provided in return for the public investment. Hospitals are incentivized to improve performance rather than receiving "payments for reporting". This performance measure utilizes HCAHPS data, along with other metrics.

A study by Hui-Chuan Chen, Tommy Cates, and Monty Taylor in 2023 sought to determine whether the VBP program reflects the quality of care and patient responsiveness via HCAHPS regarding the care that they received. The study hypothesized that a higher Hospital Acquired Condition (HAC) Patient Safety score is associated with lower HCAHPS and lower reimbursements. The study found that doctors who communicate well develop better relationships with their patients, and better relationships tend to improve patient ratings of the quality of service for the hospital.

Another study by Bates DW, Levine DM, Salmasian H, and others, published in N Engl J Med in 2023, explored the relationship between hospital patient safety culture and performance on measures of hospital-acquired conditions. The study used the 2018 and 2021 datasets from the Agency for Healthcare Research and Quality's Hospital Survey on Patient Safety Culture (HSOPS), the American Hospital Association's annual survey, and the Center for Medicare and Medicaid's Hospital Compare dataset. The results suggested that while patient safety culture may not be the only strategy necessary to improve HAC rates, it needs to be aligned with other efforts to improve quality and safety. This includes cultivating a culture of psychological safety that promotes open feedback and communication about errors.

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