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Medicare Reimbursement and Hospital-Acquired Infections: The Costly Connection

Though COVID-19 is taking probably the most consideration, Medicare continues to penalize hospitals with the best affected person security incidents. In at present’s put up we discover the entire challenge of Medicare reimbursements, penalties, and security packages.

First, let’s take a look at how Medicare and hospitals work together. Medicare is a government-subsidized medical insurance program. Medicare covers people over the age of 65 (54 million individuals in 2020), people with disabilities, and/or these with sure well being situations (8 million individuals in 2020). By numerous personal insurance coverage firms, the federal authorities pays hospitals for about half of the healthcare prices of enrolled Medicare recipients, the rest being paid for by the sufferers themselves. Previous to 1982, Medicare would reimburse hospitals on a per-case foundation. With sharp will increase in the price of medical care, Medicare adopted the “Inpatient Potential Cost System,” a program that set allowable charges (adjusted for market and geography) for each conceivable therapy, and reimbursing at these set charges. This helped managed prices whereas additionally slowing the fast enhance in medical prices.

Now let’s take a look at the penalties. The Affected person Safety and Reasonably priced Care Act (ACA), recognized colloquially as “Obamacare,” introduced in new measures to manage prices and enhance affected person outcomes. There are two packages that intersect with affected person security:

The Hospital Readmissions Discount Program: Hospitals are penalized for sufferers who should be readmitted inside 30 days of receiving therapy for sure situations. This program hopes to make sure that sufferers obtain the right care and training earlier than discharge. The penalty is as much as 3% of whole reimbursement. 

The Hospital-Acquired Situation (HAC) Discount Program: Knowledge on hospital-acquired situations is collected by Medicare and every hospital receives a rating primarily based on their efficiency. These measures embody preventable situations which are associated solely to being in a hospital, not the underlying situation. This contains mattress sores, medical errors, and an infection. Hospitals within the lowest quartile (lowest 25%) will obtain 1% much less of their Medicare reimbursement. 

Exempt from each these packages are youngsters’s hospitals, veteran’s hospitals, and “essential entry” hospitals (hospitals that are the only medical suppliers in a single geographic space).

How are these packages working? The most recent report from the Company for Healthcare Analysis and High quality (AHRQ) signifies preliminary reductions in infections and enhancements in affected person security. The report estimates that primarily based on the 2014 charges, these coverage interventions adverted 20,500 HAC-related inpatient deaths from 2015 -2017 or $7.7 billion in prices. 

Why are these penalties essential? The thought behind these penalties is as follows: First, to carry hospitals accountable for affected person security and high quality service. A lot of preventable affected person hurt may very well be eradicated with improved human processes, together with clear protocols, coaching, monitoring, and communication. Second, the very actual monetary burden of preventable affected person hurt impacts not solely the affected person’s backside line, but additionally Medicare’s. In 2018, backed medical insurance for 60 million individuals accounted for 15% of the total federal finances, or $731 Billion. It is sensible for Medicare to attempt to decrease prices by ensuring hospitals are doing their utmost to stop pointless (and sometimes expensive) therapies for situations they themselves trigger (mattress sores, infections from catheters, and so on.). And bear in mind, people on Medicare are paying for half their medical payments, so eliminating expensive issues advantages them financially as nicely.


There’s actually controversy associated to the Medicare reimbursement penalties. Whereas the scores hospitals obtain are adjusted to degree the taking part in subject – known as risk-adjustment – some imagine the scores don’t precisely signify a hospital’s efficiency or enchancment. The general Medicare reimbursement mannequin, some consultants say, even encourages hospitals to emphasise quantity and complexity of procedures with a view to garner larger reimbursements.  As well as, others add, treatment errors are usually not tracked on this program and but they’re the main explanation for preventable affected person damage. One other article suggests a pair enhancements to the present program and cites findings from a research representing 93% of penalized hospitals in 2015. 

Whatever the controversy, the Medicare reimbursement penalties are one thing hospitals should take care of as they measure their very own efficiency and design methods for enchancment. In a future put up, we’ll discover the sorts of methods hospitals are utilizing to keep away from these penalties.

Hospital Score Data Sources

Editor’s Word: This put up was initially revealed in December 2015 and has been up to date for freshness, accuracy and comprehensiveness. 

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