HAC costs: measuring the impact

How much do hospital-acquired conditions (HACs) cost the industry? How much will CMS save with its no-pay policy for HACs?

A recent study from the Agency for Healthcare Research and Quality estimates that preventable medical errors that occur during or after surgery cost employers and health plans $1.5 billion annually. Of course, this figure takes into account many more conditions or "mistakes" than CMS' 11 no-pay conditions.

From another perspective, CMS reported in its final rule for FY2009 that it expects to save $20 million annually with its no-pay policy. Although CMS is pursuing its no-pay initiative to improve care quality, one health care publication editor feels that CMS’ modest savings is hardly worth the effort. FierceHealthcare editor Anne Zieger in an editorial stated:

When you consider that Medicare's annual expenses are expected to be in the range of $450 billion this year, we're talking about savings of roughly one twenty-two thousandth. The agency could easily spend more than that every year just figuring out which hospitals are the wrong-doers.

After all, monitoring compliance with new rules is expensive. At minimum CMS will have to beef up its IT infrastructure, as no amount of employees could accurately analyze that many claims on their own. And then there are human time and effort in interpreting the results, appeals, dealing with lawsuits from hospitals who feel they've been treated unfairly, employee training costs and so on. We're not talking chump change here.