Financial Incentives to Promote Health Care Quality: The Hospital Acquired Conditions Nonpayment Policy

Kevin T. Kavanagh

Over a decade ago it was estimated that in the United States 98,000 patients die each year from hospital acquired conditions (HAC). Recently it has been reported that this many patients now die annually from hospital acquired infections (HAI) alone. Currently, HAI affects 1.7 million U.S. citizens each year. Although these conditions are often called "preventable errors," some are associated with particular hospital and physician cultures, and many of these conditions, such as pressure ulcer formation and infections, may be a sign of low facility staffing levels. Protocols have been developed that have been shown to lower the incidence of many HAC, but these have been slow to be adopted. Voluntary reporting mechanisms to ensure health care quality are reported as having reduced effectiveness by the Joint Commission and U.S. Department of Health and Human Services, Office of Inspector General reports. Transparency and public education have also met with resistance, but in the case of infections now have the support of major national medical organizations. As a further initiative to promote quality, financial incentives have been implemented by the Centers for Medicare and Medicaid Services. Surgeons have lived under stringent financial incentives since the mid-1980s when they were placed under global surgical fees. Medicare currently must make expenditure reductions because it is at risk of becoming insolvent within the decade. Implementation of financial incentives should depend upon a balance between the nonpayment of providers for nonpreventable HAC verses the promotion of health care quality and patient safety, the reduction in patient morbidity and mortality, the spurring of mechanisms to further reduce HAC, and the recouping of taxpayer dollars for HAC that could have been prevented.