Press Release

For Immediate Release Contact


Sue Ducat
Director of Communications
(301) 841-9962


Medicare's Hospital-Acquired Condition Reduction Program



A new policy brief from Health Affairs and the Robert Wood Johnson Foundation addresses Medicare's Hospital-Acquired Condition Reduction Program. When a patient goes to the hospital to receive care for one condition but then develops another, the second is considered a hospital-acquired condition (HAC). In 2010 there were some 4.8 million HACs among US adult patients out of 32.8 million discharges. Since HACs are preventable and can lead to higher spending on health care, Congress and the Centers for Medicare and Medicaid Services (CMS) have instituted several programs in the past two decades to lower the frequency of HACs. The most recent, which took effect on October 1, 2014, penalizes hospitals showing the highest frequency of HACs with a 1 percent reduction in their Medicare payments. 

Topics covered by this policy brief include:

  • What's the background and the law? The brief details how Medicare payment policies have evolved to reduce HACs. Historically, Medicare payments have been based on the services provided and the patient's primary diagnosis at the time of admission. However, as the brief explains, if a patient becomes more ill from conditions not present at that time, Medicare will not necessarily adjust those payments accordingly. This is known as the HAC present-on-admission payment provision. The brief also describes CMS's Inpatient Quality Reporting program; hospitals not regularly submitting data to this program run the risk of lowered Medicare payments.

  • What's the debate? The brief discusses some of the concerns raised by hospital associations about how Congress designed this program to reduce HACs. Some of the measures used in the HAC Reduction Program overlap with other quality programs, which can result in hospitals facing multiple penalties for the same incidence of below-par performance. However, as the brief points out, while CMS has acknowledged these concerns and made adjustments, CMS maintains that the measures are important for reducing HACs and providing a widely available data source.

  • What's next? Under the present law, up to 25 percent of hospitals will be subject to the HAC penalty. In the future, CMS will begin using more refined versions of the current National Healthcare Safety Network measures to expand the hospital units required to submit data. (Right now only intensive care units are covered.) As the brief also mentions, by FY 2017, CMS will allocate higher penalties for hospitals that fail to regularly report quality measures.