Professional Role · Topic 14 of 21

Hospital-Acquired Conditions & Value-Based Care

Professional role · value-based care

Hospital-Acquired Conditions & Value-Based Care

Medicare pays less for preventable harm: the worst quartile on hospital-acquired conditions loses 1%, excess 30-day readmissions cost up to 3%, and never events are never billed.

Key numbers

Worst HAC quartile loses 1% of Medicareworst 25% → −1%

Excess 30-day readmissions cost up to 3%penalty cap 3%

Never events: 29 NQF serious reportable events29 events · 7 categories

Value-based purchasing withholds 2%2% withhold

01 · The ruleWorst HAC quartile loses 1% of Medicare

CMS HAC Reduction Program: hospitals whose Total HAC Score falls in the worst-performing quartile (above the 75th percentile) lose 1% of Medicare fee-for-service payments for the year.

02 · The ruleExcess 30-day readmissions cost up to 3%

The Hospital Readmissions Reduction Program cuts payment, up to 3%, for excess 30-day unplanned readmissions after AMI, heart failure, pneumonia, COPD, CABG and elective total hip or knee arthroplasty.

03 · What it isNever events: 29 NQF serious reportable events

Never events (NQF serious reportable events) are 29 unambiguous, serious, usually preventable events in 7 categories — e.g., wrong-site surgery, retained foreign object, stage 3, 4 or unstageable pressure injury acquired after admission.

The rules

Know these

No extra pay for hospital-acquired conditions must knowUnder the Deficit Reduction Act (since October 2008), Medicare pays no extra for selected hospital-acquired conditions not present on admission — the stay is paid as if that secondary diagnosis were absent.

HAC score: PSI 90 plus five HAIsThe Total HAC Score averages six measures equally: the CMS PSI 90 patient-safety composite plus five NHSN infections — CLABSI, CAUTI, colon and hysterectomy SSI, MRSA bacteremia and C. difficile infection.

Know the CMS present-on-admission HAC listCMS HACs include retained foreign object, air embolism, blood incompatibility, stage III–IV pressure ulcers, falls and trauma, poor glycemic control, CAUTI, vascular catheter infection, certain SSIs, DVT/PE after hip or knee replacement and iatrogenic pneumothorax from venous catheterization.

No Medicare payment for wrong-site surgerySince 2009 Medicare pays nothing for any costs of wrong-site, wrong-patient or wrong-procedure surgery, and many states and private insurers have adopted similar nonpayment policies.

Value-based purchasing withholds 2%Hospital Value-Based Purchasing withholds 2% of Medicare payments and pays it back by performance on mortality and complications, infections, safety, patient experience and efficiency — scored on the better of achievement or improvement.

Core measures are publicly reportedCore quality measures reported through the CMS Hospital Inpatient Quality Reporting program are published on Care Compare; hospitals that fail to report lose part of their annual Medicare payment update.

SEP-1: all-or-none sepsis bundleSEP-1 (all-or-none core measure): lactate, blood cultures, then broad-spectrum antibiotics within 3 hours; 30 mL/kg crystalloid within 3 hours for hypotension or lactate ≥ 4; repeat lactate within 6 hours if > 2.

Management

Orders

Document pressure injuries and infections on admissionHospitals report present-on-admission status for every diagnosis, so document pressure injuries, infections and other conditions found at admission in the admission history and physical.

CLABSI bundle: sterile insertion, daily line reviewPrevent CLABSI with an insertion bundle — hand hygiene, maximal sterile barriers, chlorhexidine-alcohol skin prep, ultrasound guidance and a checklist — then review line necessity daily and remove unneeded lines.

CAUTI: avoid catheters, remove them earlyThe best CAUTI prevention is avoiding indwelling urinary catheters and removing them as soon as possible; prefer intermittent catheterization, keep a closed drainage system and do not give routine prophylactic antibiotics.

VAP prevention: less sedation, daily SBT, HOB 30–45°Prevent VAP by avoiding intubation when noninvasive support is safe, minimizing sedation with daily awakening, a ventilator liberation protocol, early mobility and head-of-bed elevation 30–45°.

HAC Reduction or Readmissions Reduction?

Commonly confused

Measures	CMS PSI 90 plus 5 HAIs: CLABSI, CAUTI, SSI, MRSA bacteremia, C. difficile
Who is penalized	Worst-performing quartile of hospitals
Penalty	1% of Medicare payments
Comparison group	All subsection (d) hospitals

More detail

Reference

Show 5 reference facts

Since FY 2019 the Readmissions Reduction Program compares each hospital with peers that treat a similar share of patients dually eligible for Medicare and Medicaid (21st Century Cures Act).

The HAC Reduction Program (worst-quartile penalty) is separate from the Deficit Reduction Act present-on-admission provision (no extra DRG payment for a hospital-acquired condition).

The NQF never-event categories are surgical or invasive procedure, product or device, patient protection, care management, environmental, radiologic and potential criminal events.

Care-management never events include death or serious injury from a medication error, unsafe blood product administration, a fall in a care setting, and failure to follow up or communicate test results.

SEP-1 rests on low-quality evidence: hospital compliance runs about 50%, and the largest observational studies found no significant survival benefit from completing the bundle.

Pearl

Document what the patient brought in, prevent what they could leave with — present-on-admission conditions are not the hospital's harm.

Sources · CMS — Hospital-Acquired Condition Reduction Program (HACRP) · CMS — Hospital Readmissions Reduction Program (HRRP) · CMS — Hospital-Acquired Conditions (Present on Admission Indicator), Deficit Reduction Act 2005 §5001(c) · CMS — Hospital Value-Based Purchasing Program · AHRQ PSNet Primer — Never Events (NQF serious reportable events) · CMS — Hospital Inpatient Quality Reporting (IQR) Program · Buetti N et al. Strategies to prevent central line-associated bloodstream infections in acute-care hospitals: 2022 Update (SHEA/IDSA/APIC Compendium). Infect Control Hosp Epidemiol 2022;43:553–569 · Merck Manual Professional — Catheter-Associated Urinary Tract Infections (Mar 2026) · Klompas M et al. Strategies to prevent VAP, VAE and non-ventilator HAP in acute-care hospitals: 2022 Update (SHEA/IDSA/APIC). Infect Control Hosp Epidemiol 2022;43:687–713 · Wang J, Strich JR, Applefeld WN, et al. Driving blind: instituting SEP-1 without high quality outcomes data. J Thorac Dis 2020;12(Suppl 1):S22–S36 · ACEP E-QUAL — CMS SEP-1 data submission guide (bundle elements, septic shock lactate ≥ 4 mmol/L, vasopressors within 6 h) · Medisolv — SEP-1 added to the Hospital VBP Program safety domain in FY 2026 (FY 2024 IPPS final rule) · Starter sheet built from the verified AGACNP fact map (facts reviewed 2026-10-15).