Preliminary Medicaid Penalties Hit Nonprofit Teaching Hospitals Hardest

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June 23, 2014; Kaiser Health News

The hospitals with the highest rate of patient infections and injuries occurring in the facility will have their Medicaid payment rates docked starting in October. A full quarter of the nation’s hospitals will lose one percent of every Medicare payment for a year starting in October.

In April, a preliminary list named 761 facilities, and although these may well change before final determinations are made, it appears that the penalties will hit some types of hospitals harder than others, with the most marked category being teaching hospitals, most of which are nonprofits. Of this field, a full 54 percent were marked for preliminary penalties,

The Hospital-Acquired Condition (HAC) Reduction Program was created by the 2010 health law, and is one of three pay-for-performance measures under the new health care law. Penalties against hospitals will also be levied based on high readmission rates and two dozen quality measures. These latter two were implemented first and are both in their second year.

In the chart below, you will note that nonprofits are more likely to have fines levied against them than for-profits, a statistic that surprised us until we looked at the data on the teaching hospitals. (Public hospitals are in the worst shape, however.) Large hospitals and hospitals serving a largely low-income population are also more likely to be penalized than their counterparts. 




—Ruth McCambridge