Impact of Medicare Pay-for-Performance Program for Surgical Procedures on Cost and Outcomes

In 2008, the Centers for Medicare & Medicaid Services (CMS) implemented the Hospital-Acquired Conditions Present on Admission (HAC-POA) program. The goal of this program was to reduce the frequency of high-cost complications among Medicare beneficiaries. The mandatory program
penalized hospitals as it would no longer reimburse them for treating of preventable complications that developed during a patient’s hospitalization. While the HAC-POA program targeted 14 conditions, a paper by Kim et al. (2021) focused on estimating the impact of HAC-POA on conditions related to surgery. These included: foreign objects retained after surgery, surgical site infection (SSI) following coronary artery bypass graft, cardiac implantable electronic device, bariatric surgery, certain orthopedic procedures, and deep vein thrombosis (DVT) or pulmonary embolism following certain orthopedic procedures.

To estimate the impact of HAC-POA, Kim et al. (2021) use 2004-2017 data from the Healthcare Cost and Utilization Project (HCUP). They examine surgical complications, length of stay, in-hospital mortality and hospital costs as the outcomes of interest. As HAC-POA was a mandatory program, one cannot propensity score match comparable hospitals. Instead, the authors use a propensity-score matched difference-in-difference approach compare procedures covered by HAC-POA (before and after it was implemented) compared to the before and after for those procedures that were included in HAC-POA The sample was limited to hospitals who performed both types of procedures.

Based on this approach, the authors found that:

…HAC-POA program was associated with a significant reduction in SSI incidences of 0.3 percentage points (95% CI, −0.5 to −0.1 percentage points; P = .02). The HAC-POA program was also associated with a significant reduction in LOS of 0.5 days (95% CI, −0.6 to −0.4 days; P < .001) and hospital costs (−8.1%; 95% CI, −10.2% to −6.1%; P < .001). The HAC-POA program was, however, not associated with a reduction in DVT incidence (0.02 percentage points, 95% CI, −0.1 to 0.2; P = .80) and mortality (0.05 percentage points; 95% CI, −0.04 to 0.2; P = .30).

While the authors did find an impact of HAC-POA, the magnitude of the effect was small. Also, the author’s approach may be problematic if hospitals shifted resources away from non-HAC-POA conditions and towards HAC-POA conditions; thus it could be the case that there was no aggregate change in quality of care although outcomes may have improved for HAC-POA conditions. Also, the authors found that there was a significant lag in the improvements in HAC-POA outcomes. For instance, “…the incidence of SSI did not significantly decrease until 2014—5 years after program implementation.” In short, a lot of questions remain to be answered, but this study is an interesting first step to estimating the impact of this long-standing CMS pay-for-performance initiative.

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