Medicare Payment and Reimbursement

Two Signs of Healthcare’s Improvement as the ACA Nears Its Denouement

January 23, 2017 3:46 pm

Lost amid all the post-election speculation about forthcoming health policy changes under the administration of President Donald Trump were positive developments regarding the incidence of hospital-acquired conditions (HACs) and hospital readmissions, which are measures that pertain to two long-term objectives of the Affordable Care Act (ACA): improved quality and lower cost.


On Dec. 12, 2016, the U.S. Department of Health and Human Services (HHS) released a report compiled by the Agency for Healthcare Research and Quality, National Scorecard on Rates of Hospital-Acquired Conditions 2010 to 2015: Interim Data From National Efforts to Make Health Care Safer . The report concludes that, from 2011 through 2015, approximately 125,000 fewer patients died due to HACs than would have died under the 2010 rate of occurrence of these conditions, and more than $28 billion in healthcare costs were avoided. During the period, there was a 21 percent decline in the rate of HACs, including adverse drug events, catheter-associated urinary tract infections, central-line-associated bloodstream infections, pressure ulcers, surgical site infections, and others.

It should be noted that in 2015, the first year of the Hospital-Acquired Condition Reduction Program, which imposed a Medicare payment adjustment of 1 percent on hospitals that rank in the quartile of hospitals with the highest rate of HACs, there was an additional 4 percentage point reduction in the rate of HACs relative to the baseline year of 2010, after no improvement from 2013 to 2014.

In the HHS press release on the report, HHS Secretary Sylvia Mathews Burwell comments, “Today’s report shows us hundreds of thousands of Americans have been spared from deadly hospital-acquired conditions, resulting in thousands of lives saved and billions of dollars saved.”

Hospital Readmissions

In a recently issued national health expenditure fact sheet, the Centers for Medicare & Medicaid Services (CMS) reports that total U.S. healthcare spending rose by 5.8 percent in 2015, totaling $3.2 trillion, which is equal to 17.8 percent of gross domestic product and translates to almost $10,000 per person.

Although the hike in total healthcare spending in 2015 outpaced the prior year’s 5.3 percent spending growth, Medicare spending was a bright spot, increasing by 4.5 percent in 2015, down slightly from 4.8 percent growth in 2014. In particular, Medicare hospital spending growth was well controlled, up only 1.7 percent for the year, as a result of decreases in disproportionate-share hospital payments and a continued decline in utilization in part due to reductions in hospital readmissions from 2011 to 2015. Hospital readmission rates dropped by an average of 8 percent nationally from 2010 to 2015. The number of avoidable 30-day readmissions of Medicare patients dropped in 49 states and the District of Columbia, according to CMS. In 43 states, the readmission rates fell by more than 5 percent, and in 11 states, by more than 10 percent. Correspondingly, the ACA’s Hospital Readmissions Reduction Program (HRRP) became effective in October 2012, and its financial impact and number of applicable conditions have both increased in recent years.

Pursuit of Value-Based Care

As some congressional Republicans continue to push for a complete repeal of the ACA, including value-based care delivery reforms such as the payment adjustment for HACs and the HRRP, former White House official Ezekiel Emanuel cautions: “In the long term, the only way we get the rate of [healthcare cost] increase down is by experimenting with alternative payment models. We need to push harder and harder.”

Ken Perez is vice president of healthcare policy, Omnicell, Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter.


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