00011_RT8By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

Medicare will be lowering its payments by one percent in 2016 to 758 hospitals nationwide with high rates of potentially avoidable patient safety incidents.  The penalties are based on an assessment of the frequency of several types of infections, sepsis, hip fractures and other complications.  It is estimated that such penalties will cost hospitals $364 million in the new federal fiscal year, which runs through September 2016.

Over half of the penalized hospitals are repeat offenders from last year.  Among those that will be penalized for the first year since the creation of the 2010 health law, are big names such as Stanford Health Care in Northern California and two satellite hospitals run by the Mayo Clinic Health System in Minnesota.  Florida Hospital in Orlando made the “naughty list” as well.

For a full list of the penalized hospitals, click here.

Incentive to Reduce Hospital-Acquired Conditions.

Section 3008 of the Patient Protection and Affordable Care Act (ACA) established the Hospital-Acquired Condition (HAC) Reduction Program.  In October 2014, the Department of Health and Human Services (HHS) began adjusting payments to hospitals ranking in the worst-performing quartile with respect to risk-adjusted HAC quality measures as an incentive for hospitals to reduce HACs.

The second round of the HAC Reduction Program was based on HHS’s assessment of the frequency of infections in patients with central lines inserted into veins, urinary catheters and incisions from colon surgeries and hysterectomies.  While such infections comprise 75 percent of Medicare’s evaluations, the remaining evaluations are based on other complications including surgical tears, collapsed lungs, broken hips and reopened wounds.  Most of these complications were included in last year’s assessment as well, excluding colon operations and hysterectomies which were just added this year.

Congress has exempted veterans’ hospitals, children’s hospitals and “critical access” hospitals from receiving penalties since they are normally considered the sole providers in each of their respective locations.

Medicare has released numbers that show overall hospital performance for two of the three measures evaluated has improved.

Health Care Incentives Misaligned: Is the HAC Reduction Program Counterproductive?

Much contention surrounds the program initiated by the 2010 health law which has implemented the toughest sanctions ever imposed by Medicare regarding hospital safety.  Some hospitals contend that the penalties are counterproductive and unfairly doled out on those attempting to make improvements.  It is argued that further penalizing such hospitals by stripping them of additional funding just makes it that much harder for the facilities to provide better quality care.

Furthermore, it is noted that the majority of Medicare pay-outs rely upon the frequency and complexity of services provided.  Variations in such factors are currently not considered in the government assessments.  Therefore, it is asserted that hospitals dealing with sicker patients who are more prone to infections may be singled out as sub par health care facilities and unjustly penalized for taking on more complicated (and accordingly more lucrative) patient cases.

According to Harvard researcher, Dr. Ashish Jha, the current evaluation measures miss the mark.  Dr. Jha stated, “Ultimately unless we get to clinically based, validated measures of patient safety, we’re not going to be able to move the needle.”


What are your thoughts on the HAC Reduction Program?  Do you believe it is effective or counterproductive in providing patients with better quality care?

Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues.

The attorneys of The Health Law Firm represent health care providers in Medicare audits, ZPIC audits and RAC audits throughout Florida and across the U.S. They also represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid Program.

For more information please visit our website at www.TheHealthLawFirm.com or call (407) 331-6620.


Rau, Jordan.  “Medicare Penalizes 758 Hospitals for Safety Incidents.”  Kaiser Health News.  Kaiser Family Foundation: 10 Dec. 2015.  Web.  18 Dec. 2015.

“Hospital-Acquired Condition (HAC) Reduction Program.”  CMS.gov.  Centers for Medicare and Medicaid: 10 Dec. 2015.  Web.  18 Dec. 2015.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

Keywords: Florida health attorney, patient safety, health law attorney, Florida health lawyer, The Health Law Firm, health professional attorney, Centers for Medicare and Medicaid Services (CMS), Patient Protection and Affordable Care Act (ACA), Hospital-Acquired Condition (HAC) Reduction Program, Medicare penalties, legal representation for hospitals, HAC quality measures, Medicare attorney, Medicare defense lawyer

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

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