Medicaid to reduce hospital pay for preventable conditions

Federal health officials expect only limited savings in part because a third of states already limit Medicaid fees for medically acquired conditions.

By Doug Trapp — Posted June 13, 2011

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The Centers for Medicare & Medicaid Services is extending Medicare's no-pay policy for avoidable health conditions to the Medicaid program, prompting physician and hospital organizations to voice concerns that the policy could include unintended consequences.

On June 1, CMS issued a final rule implementing a Medicaid no-pay policy for 10 types of hospital-acquired conditions and other injuries and illnesses deemed preventable. The final list is very similar to the hospital-acquired conditions for which Medicare ended pay in October 2008. The rule allows states to add additional conditions and injuries to their lists and to expand the penalties beyond hospitals, but they require CMS approval to do so.

In following the Medicare model, the policy only prevents hospitals from being paid at a higher rate for treating certain complications or injuries that can occur during a hospital stay. It does not affect payment to treat the primary diagnosis or other complications not on the list, and it does not alter payment for the physicians providing that care. Federal officials still expect the new policy to act as an incentive.

"These steps will encourage health professionals and hospitals to reduce preventable infections and eliminate serious medical errors," said CMS Administrator Donald M. Berwick, MD. "As we reduce the frequency of these conditions, we will improve care for patients and bring down costs at the same time."

The national health system reform law requires the Health and Human Services secretary to implement a Medicaid policy limiting pay for preventable health conditions by July 1, 2011. However, CMS delayed the rule's effective date until July 1, 2012, to allow states time to comply. States face a Sept. 30, 2011, deadline to submit plans to implement the rule.

The American Medical Association wants CMS to adjust payment based on compliance with evidence-based care guidelines instead of adopting a policy to block pay for medically acquired conditions, according to comments the AMA submitted in response to the proposed rule, released on Feb. 17.

AMA President Cecil B. Wilson, MD, said the Association is pleased CMS is delaying implementation of the final rule by one year, but he said more evidence is needed showing that the Medicare hospital-acquired conditions program is effective before CMS expands it to Medicaid.

"We recommend CMS conduct an analysis of the current inpatient [hospital-acquired conditions] policy -- in consultation with experts, physician organizations, hospitals and other providers," Dr. Wilson said.

The American Academy of Pediatrics is concerned that the Medicaid preventable conditions rule could encourage hospitals to divert complicated patients to charity institutions, according to AAP comments on the proposed rule. Also, many hospitals and other facilities care for out-of-state children with special health care needs, and obtaining payment for these services already is considered difficult.

"Adding one more burden to receiving that payment could negatively impact access for the most vulnerable children," the AAP wrote.

CMS noted in the final rule that the health system reform law requires the Medicaid no-pay rule not to "result in a loss of access to care or services for Medicaid beneficiaries."

CMS also indicated in the final rule that the agency will examine carefully state additions to the Medicaid preventable condition list. "We do not believe that beneficiaries would be best served by this policy if the focus was shifted from quality to system cost containment."

Another issue that could confound hospital implementation of the rule is the burden of documenting a patient's conditions at the time of admission. Staff and resources will be needed to establish a record of these conditions, some of which are not always identifiable when the patient arrives, according to Xiaoyi Huang, assistant vice president for policy for the National Assn. of Public Hospitals and Health Systems.

Improving Medicare and Medicaid quality in a coordinated fashion is important, said Matt Salo, executive director of the National Assn. of Medicaid Directors. But the rule could require more reporting and systems changes by physicians and hospitals, depending on implementation details. "It could be trivial, or it could get mission creep and become quite problematic."

CMS expects the rule to produce only limited savings, with states spending $3 million less and the federal government $4 million less in fiscal year 2012, which begins on Oct. 1. The rule would reduce federal and state Medicaid spending by a combined $35 million by 2015.

Seventeen states already limit Medicaid pay for avoidable medical conditions or injuries: Colorado, Connecticut, Florida, Idaho, Indiana, Kansas, Kentucky, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon, Utah, Washington, Wisconsin and Wyoming. About half of these states' lists of conditions differs from the Medicare hospital-acquired conditions exclusion list, according to CMS.

The final Medicaid rule is available online.

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Medicaid's no-pay events

A final CMS rule issued June 1 reduces Medicaid payment for treating 10 categories of preventable medically acquired conditions and injuries. A similar Medicare policy went into effect in October 2008. The Medicaid conditions are:

  • Foreign object retained after surgery
  • Air embolisms
  • Blood incompatibility
  • Stage III and IV pressure ulcers
  • Falls and traumas that produce fractures, dislocations, crushing and other injuries
  • Catheter-associated urinary tract infections
  • Vascular catheter-associated infection
  • Manifestations of poor glycemic control
  • Surgical site infections following coronary artery bypass grafts, bariatric surgeries and orthopedic procedures
  • Deep vein thrombosis or pulmonary embolism after total knee or hip replacement (with pediatric and obstetric exemptions)

Source: Centers for Medicare & Medicaid Services

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External links

Final rule on payment adjustment for provider-preventable conditions including health care-acquired conditions for Medicaid, Centers for Medicare & Medicaid Services (link)

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