Medicolegal Issues

Medicare, Money, More


The new payment system for hospitalized Medicare patients spells big changes for hospitals and hospitalists.

On Aug. 1, 2006, the Centers for Medicare and Medicaid (CMS) issued final regulations for Medicare payments to hospitals in 2008. This update to the hospital inpatient prospective payment system (IPPS) is designed to improve the accuracy of Medicare payments and includes a new reporting system with new incentives for participating hospitals, restructured inpatient diagnosis-related groups (DRGs), and the exclusion of some hospital-acquired conditions.

The IPPS contains a number of provisions that will affect hospital medicine, and the incentives paid will come from many hospitalist-treated patients. “Realistically, the majority of patients that hospitalists admit are Medicare patients,” says Eric Siegal, MD, regional medical director of Cogent Healthcare in Madison, Wis., and chair of SHM’s Public Policy Committee.

Policy Points

Protect Your Privacy with NPIs

If you’ve completed the application process for a National Provider Identifier (NPI) number, check your info. Because the information you supplied is public and accessible, any personal information you may have included (such as home address or mobile telephone number) can be found on the Internet.

If you have included information you don’t want accessed, here’s what you can do to change it. Submit changes online at or by downloading an NPI Application/Update Form (CMS-10114) from the CMS Web site at You can also call the NPI Enumerator (800) 465-3203) and request a form.

Hospital-Referring Physician Relationships Go Public

CMS plans to mandate that all Medicare-participating hospitals taking part in Medicare report details of their financial relationships with their referring physicians. A trial run of this disclosure began in September with a group of 500 hospitals. The purpose the Disclosure of Financial Relationships Report is to collect information that will be analyzed for investment interests or compensation arrangements between a hospital and its physicians. CMS will then scrutinize physician/hospital arrangements for compliance with the Stark law, a 1989 ruling that bars physician self-referral for Medicare and Medicaid patients.—JJ

27 Quality Measures

Under the IPPS, hospitals must now report on 27 quality measures to receive their full update. These include 30-day mortality measures for acute myocardial infarction and heart failure for Medicare patients, three measures related to surgical care, and the Hospital Consumer Assessment of Healthcare Providers and Systems patient satisfaction survey.

The set of measures will be expanded for 2009 to include a 30-day mortality measure for pneumonia and four additional measures related to surgical care, contingent on their endorsement by the National Quality Forum (NQF).

More Precise DRGs

The new IPPS uses restructured DRGs to better account for the severity of each patient’s condition. Now, 745 severity-adjusted DRGs have replaced the previous 538. This means hospitals that serve more severely ill patients will receive increased payments in an effort to prevent rewards for cherry-picking the healthiest patients.

“At least conceptually, this is a better way of doing things,” says Dr. Siegal. “Hospitals have been effectively penalized for taking care of really sick patients, because the DRGs weren’t really differentiating degrees of serious illness. Now that hospital comparison is becoming a big deal, people look at a statistic like mortality rates,” and the figures don’t specify which patients were mortally ill upon admission.

What’s Not Covered?

One interesting aspect to IPPS is that it specifies that Medicare will not cover additional costs of eight preventable, hospital-acquired conditions. These conditions include an object mistakenly left in a patient during surgery, air embolism, blood incompatibility, falls, mediastinitis, catheter-associated urinary tract infections (UTIs), pressure ulcers, and vascular catheter associated infections. For 2009, CMS will also propose excluding ventilator associated pneumonia, staphylococcus aureus septicemia, and deep-vein thrombosis/pulmonary embolism.

“Some of this stuff will be easy. Some cases, like ‘object left in patient during surgery’ are so obvious as to be laughable,” says Dr. Siegal. “Others are a tougher call, such as a catheter-associated UTI. These are not always as clear-cut as [CMS] says they will be. Philosophically, I think this is the right thing to do—it’s not right to pay a hospital for treating something they caused.”

Hospitalists and hospital staff are likely to see added paperwork as a result of this rule. “I can guarantee that there will be an added checklist for these conditions on admission,” says Dr. Siegal. “We’ll have to check for pressure ulcer, UTI, etc.—and that’s not necessarily a bad thing.”

Key Role for Hospitalists

When hospital payment based on reporting is involved, hospitalists are quickly drawn in. “This puts more money for hospitals at risk,” explains Dr. Siegal. “There’s a clear imperative to document better, and to identify who’s really sick. This will all land squarely on the shoulders of hospitalists—and, in fact, it already [has].”

On average, hospitals that comply with all provisions of the rule will earn an additional 3.5% in Medicare payments. This is really a result of the 3.3% market basket increase.

“The difference between doing this well and doing it poorly can add up to the margin for some hospitals,” stresses Dr. Siegal. “There’s absolutely no question that if I’m a hospital and I’m shelling out for a hospital medicine program, the single thing I want them to do and do well is report properly on these measures.”

Careful documentation includes the DRGs. Dr. Siegal points out that there’s a $4,000 swing between the DRG for low-acuity heart failure (a $3,900 payment) and high-acuity heart failure (a $7,900 payment). “Clearly, there will be a shift in reimbursement to those hospitals with sicker patients—or those that do a better job of documenting those patients,” he says. “You can bet that hospitals will make this a priority. They’re going to get much more finicky about how we document.”

Here’s an example: If presented with a patient with sepsis and a UTI, different physicians will have different diagnoses—or rather, use different terms, whether it’s sepsis, severe sepsis, urosepsis, SIRS, or something else. “Hospitals will try to force all physicians to get more crisp in their definitions,” says Dr. Siegal. “This could be good, because we’ll all be using the same language. But some aspects of this will just be a pain … like any other broadly applied rule. If you admit someone with chest pains, you will no longer be able to note ‘chest pains’; you’ll have to describe the pains.”

Starting now, the new IPPS will force hospitalists to perform more—and more careful—documentation for each patient. “It feels like one more hoop to jump through,” says Dr. Siegal. “But there should be no doubt that this is the future of healthcare, like it or not.” TH

Jane Jerrard has been writing for The Hospitalist since 2005.

Quality Measures IN IPPS Final Rule

Heart Attack (Acute MI)

  • Aspirin at arrival*;
  • Aspirin prescribed at discharge*;
  • ACE inhibitor (ACE-I) or Angiotensin Receptor Blocker (ARBs) for left ventricular systolic dysfunction*;
  • Beta-blocker at arrival*;
  • Beta-blocker prescribed at discharge*;
  • Thrombolytic agent received within 30 minutes of hospital arrival**;
  • Percutaneous coronary Intervention (PCI) received within 120 minutes of hospital arrival**; and
  • Adult smoking cessation advice/counseling.**

Heart Failure

  • Left ventricular function assessment*;
  • ACE inhibitor (ACE-I) or Angiotensin Receptor Blocker (ARBs) for left ventricular systolic dysfunction*;
  • Discharge instructions**; and
  • Adult smoking cessation advice/counseling.**


  • Initial antibiotic received within four hours of hospital arrival*;
  • Oxygenation assessment*;
  • Pneumococcal vaccination status*;
  • Blood culture performed before first antibiotic received in hospital**;
  • Adult smoking cessation advice/counseling**;
  • Appropriate initial antibiotic selection**; and
  • Influenza vaccination status.**

Surgical Care Improvement Project (SCIP)

  • Prophylactic antibiotic received within one hour prior to surgical incision**;
  • Prophylactic antibiotics discontinued within 24 hours after surgery end time**;
  • SCIP-VTE 1: Venous thromboembolism (VTE) prophylaxis ordered for surgery patient***;
  • SCIP-VTE 2: VTE prophylaxis within 24 hours pre/post surgery***;
  • SCIP Infection 2: Prophylactic antibiotic selection for surgical patients***;

Mortality Measures

  • Acute myocardial infarction 30-day mortality (Medicare patients)***; and
  • Heart failure 30-day mortality (Medicare patients).***

Patients’ Experience of Care

  • HCAHPS Patient Survey.***


* Measure included in 10-measure starter set.

** Measure included in 21-measure expanded set for fiscal year 2007.

*** Measure included in 27-measure expanded set for fiscal year 2008.

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