$364M projected savings for 2016 under HAC Reduction Program

Of the 3,308 hospitals subject to the Hospital-Acquired Condition (HAC) Reduction Program for fiscal year (FY) 2016, 758 are in the worst performing quartile and will have a 1 percent payment reduction applied to all Medicare discharges occurring between October 1, 2015, and September 30, 2016. In FY 2015, 724 hospitals were subject to a payment reduction. CMS estimated that the reductions will result in a total savings in FY 2016 of $364 million.

CMS attributed the rise in hospitals partly due to a new 75 percentile of Total HAC Score cutoff as compared to FY 2015. Out of the 758 hospitals in the worst performing quartile in FY 2016, approximately 53.7 percent were also in the worst performing quartile in FY 2015.

CMS made the following HAC Reduction Program information publicly available for each hospital: (1) PSI 90 Composite measure score; (2) CLABSI, CAUTI, and SSI measure scores; (3) Domain 1 and Domain 2 scores; and (4) total HAC score. The FY 2016 HAC Reduction Program scores for hospitals can be found on the Hospital Compare Website.

HAC score methodology

CMS determines whether a hospital should be subject to a payment reduction based on the hospital’s measure results and scoring. In order to determine a hospital’s total HAC score, a number of factors are considered. Hospitals are first classified based on their measure results; specifically, each hospital is assigned a measure score between 1 and 10 for each measure, which reflects the hospital’s relative rank in 10 groups for that measure. Measure scores are then used to determine the two domain scores, one comprised of the PSI 90 Composite Index Value and the other from three different measures. A hospital’s total HAC score is determined by the sum of the weighted domain scores. The first domain score is weighted at 25 percent and the second domain score is weighted at 75 percent of the total HAC score for hospitals that received calculated domain scores.


Section 3008 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established the HAC Reduction Program to provide an incentive for applicable hospitals reimbursed by Medicare to reduce HACs. Effective beginning FY 2015 (discharges beginning on October 1, 2014), HHS was required to adjust payments to applicable hospitals that rank in the worst-performing quartile of all subsection (d) non-Maryland hospitals with respect to risk-adjusted HAC quality measures. Hospitals will have their payments reduced to 99 percent of what would otherwise have been paid for such discharges.