HAC Medicare Reduction Penalty Update

Loran Cook, Product Evangelist and Quality Assurance
HAC Medicare Reduction Penalty Update
Scoring data from CMS’ most recent reimbursement adjustment program have been released. Under the Affordable Care Act, the worst-performing quartile of participating hospitals are subject to a 1% reduction of their Medicare Inpatient Prospective Payment System claims made during Fiscal Year 2015. When Billian ran a preliminary analysis in ...

Scoring data from CMS’ most recent reimbursement adjustment program have been released. Under the Affordable Care Act, the worst-performing quartile of participating hospitals are subject to a 1% reduction of their Medicare Inpatient Prospective Payment System claims made during Fiscal Year 2015. When Billian ran a preliminary analysis in September of 2014 to study the potential effect of this program, only 1,834 participating hospitals had quality data reported. CMS published HAC scores for 3,284 hospitals in December 2014, with the (not so obvious) application of a penalty to any hospital with a total HAC score of seven or higher. (Scoring methodology is discussed in greater detail in a previous article.)

A few interesting observations now that the first round of scoring is public:

Specific indication of which facilities are to be penalized is not documented in the dataset, merely scores for each domain and a total HAC score. Maryland hospitals are included, although they received a waiver for FY 2015 penalties. It took no shortage of man/will-power to clearly decipher to which hospitals the penalty would be applied. Ultimately the disclaimer was buried in a QNet FAQ indicating that the penalty would apply to hospitals with a total HAC score of seven or higher. (Don’t bother searching the text; it’s buried in a graphic on page 15. Open, public-facing data is only as great as the documentation that goes with it, a frustration recently addressed here.)

The Medicare reimbursement for each claim will be adjusted by programs in ranking order, so that the amount reduced by 1% for the HAC Reduction program has already been affected (if necessary) by the Readmissions Reduction and Hospital Value Based Purchasing programs, ranging from a 4.5% reduction to a 1.5% increase in reimbursement. (Inpatient Quality Reporting adjustments are calculated separately in FY 2015 due to 99% participation in the quality reporting program.)

The total HAC score was calculated by scoring two separate domains. Waivers were granted for one of the two domains for hospitals who did not have an intensive care unit. Their ranking was then based on the ranking score of the first domain only. This exception worked to the favor of 445 hospitals missing Domain 2 scores, but scoring high enough on Domain 1 to miss the penalty, while 217 hospital missing Domain 2 did receive the penalty due to low Domain 1 scores.

One striking illustration early on in the program is how fast a hospital can find itself in or out of the worst performing quartile. Using the same scoring methodology in September, we applied the previous reporting period’s quality scores to 1,834 hospitals with available data, weighted and ranked them, and identified the 459 worst performing facilities. Of those, only 75% (344) ended up being penalized using data from the following reporting period in a sample size that nearly doubled. Conversely, of the hospitals sampled, 174 indicated that they would not be penalized in the previous study, but by virtue of a larger sample size or poorer performance on the relevant metrics, ended up being penalized.

This illustrates that measure scores can easily change from one period to the next. It will be interesting to see, over time, how well the risk adjustment holds and what kind of variance we see in which hospitals are penalized as measures are expanded in 2016 to include Surgical Site Infections (during colon or abdominal hysterectomy surgeries) and again in 2017 to include C.diff and MRSA infections.

Ultimately, 861 hospitals were assessed the 1% HAC Reduction Penalty for FY 2015. We have created a custom report to help customers identify those hospitals impacted by HAC Reduction Penalties in the Billian's HealthDATA Portal dataset. Clients can contact Loran Cook (@loranstefani) to learn more.

Does not include 19 facilities that Billian categorizes as non-hospitals. but CMS includes in Long-Term Care Hospital groupings (ex: bariatric surgery clinics, birthing centers, etc.).

Source: www.billianshealthdata.com