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Delivery System Innovation

Applied research and implementation science agenda to spread evidence-based practices and test new models of care delivery and payment.

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Analyzing Medicare’s Payment Policy for Hospital-Acquired Conditions and its Impact on Safety Net Hospitals

The purpose of this study is to examine the impact of Medicare's new payment policy for hospital-acquired conditions (HAC). As of October 1, 2008, CMS no longer pays for eleven conditions (e.g., blood incompatibility, object left in surgery, air embolism) if they were acquired during the hospitalization. Hospitals are paid as though the HAC had not occurred; hence, hospitals absorb the cost of treating the condition. With the exception of demonstration projects, this policy represents the first Centers for Medicare and Medicaid Services (CMS) value based purchasing (VBP) strategy that ties reimbursement to hospital performance. CMS is considering expanding the list of HAC conditions under the policy in the future, but to date, there has been no assessment of the impact of the current policy.

Understanding the potential impact of VBP on safety net hospitals is important because of the key role that they play in providing care to vulnerable populations. VBP efforts could potentially lead to quality improvement efforts at safety net hospitals; however, they could also bring financial harm to safety net hospitals, which could result in more limited access for those seeking care. Obtaining early information on hospitals' response to VBP initiatives is particularly important as these initiatives continue to expand in both the public and private sectors.

With support from The Commonwealth Fund, researchers at the Health Research & Educational Trust (HRET) will conduct telephone interviews with representatives from 90 hospitals to examine the effect of the policy. Research questions include:

  1. What has been the initial impact of the HAC payment policy? Has the policy impacted safety net and non-safety net hospitals differently?
  2. How are hospitals responding to the policy? Are safety net hospitals responding differently than non-safety net hospitals? Do safety net providers face unique challenges that impact their response to the policy?

Results will provide early information to policy makers as they consider expansions to the number of HACs included in the policy. The study team will undertake a broad dissemination effort to communicate project findings to policy makers, hospital administrators, and health service researchers. The project team will summarize findings in an issue brief, which will be shared with study respondents.

For more information,  please email (312) 422-3000.

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