If Hospital Infections and Injuries Rise, Medicare Reimbursement Rates Fall

Hospitals with high rates of infections and patient injuries face decreased rates of reimbursement from Medicare under the Hospital-Acquired Condition Reduction Program, now in its sixth year.

Published Feb. 5, 2020

Hundreds of hospitals across the U.S. may see a decrease in their Medicare reimbursement rates due to high rates of infections and patient injuries. 

A total of 786 hospitals were identified by the Centers for Medicare & Medicaid Services (CMS) as having rates of infections and injuries that were higher than other facilities. These offending hospitals will receive a lower rate of reimbursement for one year as part of the Hospital-Acquired Condition Reduction Program.

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The penalty is designed to keep the hospitals in the Medicare program while still encouraging better quality care.

What is the Hospital-Acquired Condition Reduction Program?

The Hospital-Acquired Condition Reduction Program is a product of the Affordable Care Act (ACA, also called Obamacare) and is now in its sixth year of operation.

Under the law, Medicare is required to punish the 25 percent of general care hospitals with the highest rates of patient safety issues. These issues include infections, blood clots, sepsis, bedsores, hip fractures and other complications that occurred in a hospital and may have been prevented. 

Reimbursement rates for the offending parties are reduced by one percent of the Medicare-approved amount (the amount Medicare would typically pay for covered services). This penalty rate lasts for the entire fiscal year, which begins in October and runs through September. 

Since the program launched, 1,865 of the country’s 5,276 eligible hospitals have been penalized. Some hospitals are exempt from the penalties because they solely treat children, veterans or psychiatric patients, or because they have status as a “critical access hospital” due to the lack of other nearby options for people needing inpatient care.

All hospitals in the state of Maryland are also excluded from the program, because Medicare reimburses Maryland hospitals differently than hospitals in other states.  

Of the 786 hospitals being penalized during the 2020 fiscal year, just 145 are being punished for the first time. Conversely, there were 16 hospitals that had been penalized during each year of the program but finally escaped punishment for the first time this year. 

Criticism of Medicare payment reductions

Critics of the program point to the relatively small penalty as being not significant enough to make a difference.

Other criticisms include:

  • Certain hospitals take on the sickest individuals, thereby increasing their chances of infections and injuries.

  • Some hospitals may be punished simply for doing an efficient job at reporting their infections and injuries, while others may get away with under-reporting such incidents.  

Seven of the 21 hospitals featured on the U.S. News Best Hospitals Honor Roll are facing punishment this year. The Honor Roll is an annual ranking used to identify the best facilities. 

There were around 2.5 million hospital-acquired conditions reported in 2017, according to the Agency for Healthcare Research and Quality.

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About the author

Christian Worstell is a licensed insurance agent and a Senior Staff Writer for He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.

His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.

Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.

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