Hospital Acquired Conditions

Hospital-Acquired Condition Reduction Program

What is the Hospital-Acquired Condition (HAC) Reduction Program?

The HAC Reduction Program is a Medicare value-based purchasing program that reduces payments to hospitals based on their performance on measures of hospital-acquired conditions (HACs). The HAC Reduction Program encourages hospitals to improve patients’ safety and implement best practices to reduce their rates of infections associated with health care.

Which hospitals does the HAC Reduction Program apply to?

As set forth under Section 1886(p) of the Social Security Act, the HAC Reduction Program applies to all subsection (d) hospitals (that is, general acute care hospitals).

Some hospitals and hospital units, such as the following, are exempt from the HAC Reduction Program:

  • Critical access hospitals
  • Rehabilitation hospitals and units
  • Long-term care hospitals
  • Psychiatric hospitals and units
  • Children’s hospitals
  • Prospective Payment System-exempt cancer hospitals
  • Veterans Affairs hospitals
  • Short-term acute care hospitals located in U.S. territories (Guam, Puerto Rico, the U.S. Virgin Islands, the Northern Mariana Islands, and American Samoa)
  • Religious nonmedical health care institutions
For a full description of subsection (d) hospitals, refer to the Social Security Act on the Social Security Administration’s website at

Maryland hospitals are exempt from payment reductions that come from the HAC Reduction Program. These hospitals have an agreement with the Centers for Medicare & Medicaid Services (CMS) and the state of Maryland.

What measures are included in the HAC Reduction Program?

The following measures are included in the HAC Reduction Program, grouped here by category:

Patient Safety and Adverse Events Composite (CMS PSI 90)

We calculate the CMS PSI 90 using Medicare Fee-for-service claims. The CMS PSI 90 measure includes:

  • PSI 03 — Pressure Ulcer Rate
  • PSI 06 — Iatrogenic Pneumothorax Rate
  • PSI 08 — In Hospital Fall with Hip Fracture Rate
  • PSI 09 — Postoperative Hemorrhage or Hematoma Rate
  • PSI 10 — Postoperative Acute Kidney Injury Requiring Dialysis Rate
  • PSI 11 — Postoperative Respiratory Failure Rate
  • PSI 12 — Perioperative Pulmonary Embolism or Deep Vein Thrombosis Rate
  • PSI 13 — Postoperative Sepsis Rate
  • PSI 14 — Postoperative Wound Dehiscence Rate
  • PSI 15 — Abdominopelvic Accidental Puncture/Laceration Rate

Centers for Disease Control and Prevention's National Healthcare Safety Network healthcare-associated infection (HAI) measures

We calculate the following HAI measures using data on infections taken from charts, reports, and other sources and reported to the National Healthcare Safety Network:

  • Central Line-Associated Bloodstream Infection (CLABSI)
  • Catheter-Associated Urinary Tract Infection (CAUTI)
  • Colon and Abdominal Hysterectomy Surgical Site Infection (SSI)
  • Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia
  • Clostridium difficile Infection (CDI)

How do payments change under the HAC Reduction Program?

We reduce the payments of subsection (d) hospitals with a Total HAC Score greater than the 75th percentile of all Total HAC Scores (that is, the worst-performing quartile) by 1 percent.

We first adjust payments for the Hospital Value-Based Purchasing Program, Hospital Readmissions Reduction Program, disproportionate share hospital payments, and indirect medical education payments based on the base-operating diagnosis-related group amount. Then, we apply the HAC Reduction Program payment reduction based on the overall Medicare payment amount.

For example, if a hospital is subject to a 2-percent payment reduction for both the Hospital Readmissions Reduction Program and Hospital Value-Based Purchasing Programs, does not have disproportionate share hospital adjustments, does not have indirect medical education adjustments, and is subject to the HAC Reduction Program payment adjustment, then the final Medicare payment for a discharge with a $10,000 base-operating diagnosis-related group payment would be as follows:

Base-operating diagnosis-related group amount: $10,000

Hospital Readmissions Reduction Program payment adjustment = $10,000 * -0.02 = -$200

Hospital Value-Based Purchasing Program payment adjustment = $10,000 * -0.02 = -$200

Disproportionate share hospital and indirect medical education payment adjustment = $0

Overall Medicare payment amount = $10,000 - $200 - $200 = $9,600

HAC Reduction Program payment adjustment = $9,600 * -0.01 = -$96 

Final Medicare payment = $9,600 - $96 = $9,504

More details on the Inpatient Prospective Payment System methodology are available in our Acute Payment System Fact Sheet.

When do we adjust payments under the HAC Reduction Program?

We adjust payments when we pay hospital claims. The payment reduction is for all Medicare fee-for-service discharges in the corresponding fiscal year. We let hospitals know whether their payment will be reduced in a HAC Reduction Program Hospital-Specific Report.

More information is available in the QualityNet HAC Reduction Program Scoring Methodology section.

What is the Scoring Calculations Review and Correction period for the HAC Reduction Program?

The FY 2014 Inpatient Prospective Payment System/Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) Final Rule requires CMS to give hospitals confidential Hospital-Specific Reports. We give hospitals 30 days to review their HAC Reduction Program data, submit questions about the calculation of their results, and request corrections before public reporting.

The Scoring Calculations Review and Corrections period let hospitals request corrections to the following:

  • CMS PSI 90 measure result
  • Measure score for each measure in the program
  • Total HAC Score
  • Payment reduction status

The Scoring Calculation Review and Corrections period does not let hospitals:

  • Submit more corrections to the underlying CMS PSI 90 claims data
  • Add new claims to the data extract we use to calculate the results
  • Correct reported number of healthcare–associated infections
  • Correct standardized infection ratios
  • Correct reported central-line days, urinary catheter days, surgical procedures performed, or patient days

How will I know if the HAC Reduction Program changes?

Changes to the program happen through rulemaking and are published every year after a public comment period. They’ll be proposed in the IPPS/LTCH PPS Proposed Rule and finalized in the IPPS/LTCH PPS Final Rule.

Where can I get more information about the HAC Reduction Program?

Learn more about the HAC Reduction Program.

Detailed program information can be found on the HAC Reduction Program pages of QualityNet.

Page Last Modified:
10/27/2023 07:07 AM