By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    benefits of using protein powder to build muscles
    Protein Powder for Muscle Mass: Everything You Need to Know
    December 12, 2021
    changes brought on by blockchain in healthcare
    Technology In The Healthcare Industry
    March 28, 2022
    What Does Core Body Temperature Say About Health?
    August 17, 2022
    Latest News
    5 Steps to a Promising Career as a Healthcare Administrator
    August 3, 2025
    Why Custom Telemedicine Apps Outperform Off‑the‑Shelf Solutions
    July 20, 2025
    How Probate Planning Shapes the Future of Your Estate and Family Care
    July 17, 2025
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    Obesity Explained
    December 2, 2011
    Why Pilot Programs are a Waste of Time and Money
    August 26, 2017
    Does Disclosure Work?
    January 4, 2012
    Latest News
    How IT and Marketing Teams Can Collaborate to Protect Patient Trust
    July 17, 2025
    How Health Choices and Legal Actions Intersect After an Injury
    July 17, 2025
    How communities and healthcare providers can address slip and fall injuries with legal awareness
    July 17, 2025
    Let Your Lawyer Handle the Work Before You Pay Medical Costs
    July 6, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: The Penalty Box: CMS’s 3 Ways to Ding Hospitals
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > The Penalty Box: CMS’s 3 Ways to Ding Hospitals
BusinessHealth ReformHospital AdministrationPolicy & Law

The Penalty Box: CMS’s 3 Ways to Ding Hospitals

Linda Ringquist
Linda Ringquist
Share
7 Min Read
The Penalty Box for hospitals
SHARE

The Penalty Box for hospitalsSummary: Are you one of many hospitals being dinged with CMS penalties? Are you ready to be dinged for Hospital Acquired Conditions, in addition to readmissions and value-based purchasing? How can a hospital remain profitable?

Contents
Hat Trick | Hospital-Acquired Condition (HAC) Reduction Program | Penalty BoxMajor Penalty | Hospital Readmission Reduction Program | Penalty BoxPower Play |Value-Based Purchasing Program (VBP) | Penalty Box

The Penalty Box for hospitalsSummary: Are you one of many hospitals being dinged with CMS penalties? Are you ready to be dinged for Hospital Acquired Conditions, in addition to readmissions and value-based purchasing? How can a hospital remain profitable?

In terms of hockey, the penalty box is where players are sent when they have committed an act which is against the regulations of the game. The player is forced to sit in the penalty box for a period of time, causing the team to play with less players, until the penalty time has lapsed. For CMS, the penalty box currently consists of:

  • Hospital Readmission Reduction Program
  • Value-Based Purchasing (VBP)
  • Hospital Acquired Condition (HAC) Reduction Program

Hat Trick | Hospital-Acquired Condition (HAC) Reduction Program | Penalty Box

In hockey, when a team member scores 3 or more goals, it is called a Hat Trick. For CMS, their Hat Trick is the creation of the HAC program, the third major penalty program to be created.

More Read

Tools Help Foster Communication Between Patients and Clinicians
Dissatisfaction with Billing Companies Starts with Lack of Clarity of What is Expected
Innovation: Aligning Physicians and Hospitals to Create Sustainable Health Care Delivery
Humor Matters in Healthcare
Never Run Out of Patients: How SEO Fuels Consistent Growth for Medical Practices

Beginning in 2015, there will be an additional way for CMS to reduce Medicare payments to hospitals – assessing hospitals who rank in the lowest-performing quartile for HACs. An HAC is, as the full name implies, a condition which is acquired while a patient is in the hospital. The propensity for a patient to be admitted for one condition and acquire a completely different condition while receiving care is growing. How is patient safety maintained?

cms and hospitalsThe penalty for the initial year is set as a 1% reduction in Medicare reimbursement. The scoring is based upon a domain system consisting of:

Domain 1 – 35% weight – includes the Agency for Health Care Research and Quality (AHRQ) composite PSI#90 which includes:

o   Pressure ulcer rate

o   Latrogenic pneumothorax rate

o   Central venous catheter-related blood stream infection rate

o   Postoperative hip fracture rate

o   Postoperative pulmonary embolism

o   Postoperative sepsis rate

o   Wound dehiscence rate

o   Accidental puncture and laceration rate

  • Domain 2 – 65% weight – includes healthcare associated infection measures developed by the CDC

o   Central Line-Associated Blood Stream Infection

o   Catheter- Associated Urinary Tract Infection

  • Risk factors such as the patient’s age, gender, and comorbidities will be considered in the calculation of the measure rates

As a hospital, can you afford to give up 1% of your Medicare reimbursement?

Major Penalty | Hospital Readmission Reduction Program | Penalty Box

In hockey, a major penalty is a deliberate intent to injure and may include such things as: slashing, spearing, high-sticking, elbowing, butt-ending, and cross-checking. For CMS, their major penalty program is the Readmission Reduction Program, carrying a maximum penalty of up to 3% of Medicare reimbursement.

readmission penalties2The Hospital Readmission Reduction Program began in 2012, with the first penalties being assessed in 2013. The initial penalties were set to be up to 1% of Medicare reimbursement with an increase to 2% in 2014 and an initial cap set at 3% beginning in 2015. The program is designed to reduce readmission rates for “avoidable” readmissions tied to 3 very specific conditions:

  • Heart attack
  • Heart failure
  • Pneumonia

Hold on to your hats. CMS is proposing 2 additional conditions for 2015:

  • Hip/knee arthroplasty
  • Chronic obstructive pulmonary disease (COPD)

2015 could bring pretty hefty penalties with the combination of both additional conditions and additional penalties percentages.

As a hospital, can you afford to give up 3% of your Medicare reimbursement?

Power Play |Value-Based Purchasing Program (VBP) | Penalty Box

In hockey, a power play is when an opponent has an advantage in terms of the number of players as a result of the other team having players in the penalty box. The team with players in the penalty box in this situation is called short-handed. For CMS, the power play goes to the hospitals that are complying with the VBP program, while those who do not comply are short-handed.

The VBP program is designed to provide better clinical outcomes and improve inpatient stays. It is designed to:

  • Reduce the occurrence of adverse events
  • Provide evidence-based care standards and protocols
  • Re-design processes to improve patient experiences

According to QualityNet, “Hospital Value-Based Purchasing (HVBP) will be funded through a reduction from participating hospitals’ Diagnosis-Related Group (DRG) payments for the applicable fiscal year. The money that is withheld will be redistributed to hospitals based on their Total Performance Scores (TPS), as required by statute, and the actual amount earned by hospitals will depend on the actual range and distribution of all eligible/participating hospitals’ TPSs. A hospital may earn back a value-based incentive payment percentage that is less than, equal to, or more than the applicable reduction for that program year.”

penalty for readmissions

If you are a hospital, you are facing these as well as many other financial obstacles. It makes it difficult for a hospital or healthcare system to stay afloat. As a hospital, if you are dinged under each of these programs, you could be assessed penalties of up to 6% of your Medicare reimbursement. Those are pretty stiff penalties. What are you doing to make sure you are not dinged?

BHM is a healthcare management consulting firm whose specialty is optimizing profitability while improving care in a variety of health care settings. BHM has worked both nationally and internationally with managed care organizations, providers, hospitals, and insurers. In addition to this BHM offers a wide breadth of services including healthcare transformation assistance, strategic planning and organizational analysis, accreditation consulting, healthcare financial analysis, physician advisor/peer review, and organizational development.

TAGGED:hospital readmissions
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

technology in medical research
The Tools Helping Medical Researchers See the Full Picture
News Technology
August 3, 2025
5 Steps to a Promising Career as a Healthcare Administrator
5 Steps to a Promising Career as a Healthcare Administrator
Health
July 31, 2025
holistic dental
Holistic Dentist Services Are Natural and Safe
Dental health Specialties
July 28, 2025
botox certification
Help Improve People’s Skin Health Via Botox Certification
Skin Specialties
July 22, 2025

You Might also Like

Image
BusinessWellness

RAND Corporation (Briefly) Publishes Sobering Report On Workplace Wellness Programs

June 9, 2013
Image
BusinessTechnology

Medtech Financings for August 2011 Pass $300 Million

August 25, 2011
Health careHealth ReformHome Health

Pros And Cons Of Supplements In Your Daily Diet

July 24, 2019
Personalized Care
HealthPolicy & Law

Bridging the Gap: The Role of Personalized Care in Improving Patient Outcomes

December 16, 2024
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?