Hey!  That’s my bottom line you’re talkin’ about.  Now you’ve got my attention.  The government has always played a role in healthcare, but now they’ve tossed another wrench into every hospital’s operating gears.  Report to us on your healthcare associated infections (HAIs), and we will penalize you for poor performance they say.  Those penalties are not black marks in some regulator’s little book.  They are reductions in payments.  Reductions in your bottom line!

Since the government will be reporting on your success, or lack thereof in preventing HAIs, your reputation may be negatively impacted.  And, you will have to put more effort into reporting your results.  Money you might otherwise use to actually improve those results through providing better healthcare.  With this triple threat, and the reality of many hospitals operating on a thin line of positive revenue, it becomes kinda obvious that this needs to have your attention.

In 2008 Medicare quit paying for the added costs of treating catheter related urinary tract infections and central line related bloodstream infections.  Not long afterward they also stopped payments for infections at surgical sites related to coronary artery bypass grafts, bariatric surgeries and orthopedic procedures.  Any HAI can extend a patient stay in the hospital.  In 2009 for instance, there was a 40 billion dollar tab for excess costs nationwide.  With the government refusing to pay this tab, it’s up to individual hospitals to eat their portion of this bill.  Ouch!

Previously the government concentrated its reporting requirements on a limited number of HAIs.  The new payment penalties are forcing hospitals to broaden their focus to include more and more types of infection to continue receiving their full reimbursements from Medicare.

The Patient Protection Affordable Care Act brought forth a readmissions reduction effort known as Hospital Inpatient Value-Based Purchasing that is a new withholding program for adverse events. The law also increased the amount of data required to be reported through the National Healthcare Safety Network.

This program calls for a 1 percent withhold of baseline DRG payments.  To get their money back, whether all or just some, the hospitals have to score well on a checklist of clinical quality indicators and patient satisfaction measures.  This includes several points related to infections.  In all, for fiscal year 2013 Medicare is rewarding 1,557 hospitals with more money and reducing payments to 1,427 others.

This value based purchasing will become even more dramatic beginning in October of 2014 when so called “double jeopardy” will come on line.  In this new phase, the program will hit hospitals performing in the bottom 25 percentile with an additional one percent withholding. And that could be a difficult hole to climb out of. 

Another red flag to those doling out the money will be a hospitals readmission rates.  Under a policy that began to take effect on Oct. 1, 2012, hospitals with high rates of 30-day readmissions are now slapped with a payment penalty, with those in the worst quartile losing 1 percent of baseline MS-DRG payment. That maximum penalty will rise over two years to 3 percent. All of these one and two and three percents really begin to add up don’t they?

And that’s just a portion of it.  There are other rules and regulations, all wrapped around performance, which are and will in the future impact your hospital’s bottom line.  The new bottom line?  Provide the best possible care and reduce healthcare acquired infections!

Information for this blog was derived from an article appearing in Becker’s Hospital Review entitled A Revenue Leak Soon Turns to Flood: How Payment Penalties for High Infection Rates Could Drain Hospital Finances

Written by Adam A. Boris, CEO, ICNet Systems | March 15, 2013