Medicolegal Issues

Medicare too Costly?


In April, the Centers for Medicare and Medicaid (CMS) published its proposed Inpatient Prospective Payment System (IPPS) rule for fiscal year 2009. The rule contains many important components, including additional categories of hospital-acquired conditions (HACs) that no longer will earn higher Medicare payment.

The good news is that under the proposed rule, Medicare payments to hospitals would increase by nearly $4 billion. However, the requirements to earn that are causing concern among some individuals and organizations, including SHM.

This year, CMS announced it would begin withholding additional payments for eight specific HACs, including some “never events”—a practice that won’t take effect until October (May 2008, p. 25). Now, the agency proposes to add nine more. Why double these restrictions so soon?

There are unintended consequences, like testing everyone who comes in the door for certain conditions, and even treating a condition that doesn’t need to be treated.

—Gregory Maynard, MD, MSc, division chief of hospital medicine, University of California, San Diego

“I think it’s a combination of things,” says Gregory Maynard, MD, MSc, division chief of hospital medicine at the University of California, San Diego Medical Center. “Medicare is trying hard to find things that will improve quality and reduce costs, and there are many ways you can do both.”

CMS will pay the lesser Medicare Severity DRG (MS-DRG) amount if the complication was acquired at the hospital and the patient has no other complications or comorbidities.

“It’s not that Medicare won’t pay for the hospital stay—they won’t pay for that condition as a co-morbidity,” explains Dr. Maynard.

  • The new HACs include:
  • Surgical site infections following certain elective surgeries;
  • Legionnaires’ disease;
  • Glycemic control for diabetes;
  • Iatrogenic pneumothorax;
  • Delirium;
  • Ventilator-associated pneumonia;
  • Deep-vein thrombosis/pulmonary embolism (DVT/PE);
  • Staphylococcus aureus septicemia; and
  • Clostridium difficile-associated disease.

Policy Points

CMS Revises PQRI Rules to Boost Participation

To make it easier for physicians to participate in the Physician Quality Reporting Initiative (PQRI), CMS has revised the program with alternative reporting periods and alternative criteria for satisfactorily reporting groups of measures.

For 2008, there are four measures groups: diabetes mellitus, end-stage renal disease, chronic kidney disease, and preventive care. Each of these contains at least four PQRI measures. Eligible physicians electing to report a group of measures must report all measures in the group that are applicable to the patient. The reporting period is from July 1 through Dec. 31. For a measure group, physicians can either report the measures for 15 consecutive patients or 80% of applicable cases. CMS has pointed out that it is not too late to start reporting; there are 60 patient-specific measures that need only be reported once per patient per reporting period.

For details on the latest changes to PQRI, visit

MedPAC Weighs in on Bundled Payments

The Medicare Payment Advisory Commission (MedPAC) has voted on three draft recommendations regarding bundled payments. One recommendation is that Congress require the Department of Health and Human Services (HHS) “to confidentially report readmission rates and resource use around hospitalization episodes for select conditions to hospitals and physicians. Beginning in the third year, providers’ relative resource use should be publicly disclosed.”

Commissioners also recommended providers be encouraged to collaborate and better coordinate care, by having HHS reduce payments to hospitals with relatively high admission rates for select conditions and also allow “shared accountability” (aka gainsharing) between physicians and hospitals.

Finally, the commission agreed to recommend that Congress should require the Department of Health and Human Services secretary to create a voluntary pilot program to test the feasibility of actual bundled payment across hospitalization episodes for select conditions.—JJ

Unlike the original eight HACs, these proposed conditions are raising questions.

“The first round of conditions, such as objects left in during surgery, those are obvious and people can buy into them,” Dr. Maynard says. Regarding the proposed additions, he says, “Some of these are just out there.”

He singled out a couple of the new HACs. “DVT is a pet of mine, because we’ve done a lot of work in that area,’’ he notes. “We have good information about what patients are on when they develop DVTs or PEs, and we know that very, very few patients who do were neglected.”

As for C diff.-associated disease, he points out: “C diff.-associated diarrhea—that’s tough to totally avoid. In spite of a perfect process, it will still happen.”

SHM sent a letter to CMS regarding specific concerns with three HACs, stating: “SHM supports the CMS initiative to improve the quality of care for hospitalized patients by preventing avoidable hospital-acquired conditions as proposed in the Final Rule for fiscal year 2008. We have concerns about the conditions selected for FY 2009 and the potential for creating unintended consequences through the inclusion of these conditions.”

Dr. Maynard and others fear the new HACs will lead to the addition of processes and other expenses. “I can’t speak totally for SHM,” he says. “I know they support transparency—but you have to think carefully about the process of transparency. There are unintended consequences, like testing everyone who comes in the door for certain conditions, and even treating a condition that doesn’t need to be treated.”

In an April 28 post on his blog “Wachter’s World” ( Robert Wachter, MD, professor and associate chairman of the Department of Medicine at the University of California, San Francisco, says: “This new list is a case of too far, too fast. … I can’t argue with the premise—many of the [adverse events] on this list are no doubt partly preventable with more religious implementation of certain safety practices (for example, for C diff., avoiding unnecessary antibiotics and adhering to strict infection control practices with suspected cases). But they are nowhere near ready for prime time. Adoption of this new list will lead to all kinds of gaming, [present on admission] shenanigans, wasted effort on preventive strategies with no supportive evidence, and nasty unintended consequences.”

Too Many Measures?

The proposed rule also will significantly increase quality data reporting requirements for hospitals. The rule adds 43 quality measures to the existing 30, so hospitals would need to report on 73 measures to qualify for a full update to their FY 2009 payment rates. The new measures include:

  • Surgical Care Improvement Project (one new measure);
  • Hospital readmissions (three new measures);
  • Nursing care (four new measures);
  • Patient safety indicators developed by the Agency for Healthcare Research and Quality (AHRQ) (five new measures);
  • Inpatient quality indicators by AHRQ (four new measures);
  • Venous thromboembolism (six new measures);
  • Stroke measures (five new measures); and
  • Cardiac surgery measures (15 new measures).

Critics of the rule believe reporting on 73 measures is unreasonable—and perhaps impossible for smaller hospitals. In a statement released by the American Hospital Association (AHA), Nancy Foster, the AHA’s vice president for quality and patient safety. says, “… we are dismayed that CMS has proposed to add a long and confusing list of measures to those on which hospitals must report to get their full update.” Foster recommends CMS only include measures endorsed by the National Quality Forum as appropriate national standards and adopted by the Hospital Quality Alliance as useful for public reporting on hospital quality of care.

In the Middle

As with previous CMS programs and rules, the increased reporting requirements will mean a continued role for hospitalists.

“This will put hospitalists in the middle even more than they are now,” predicts Dr. Maynard. “It could be good—increasing their role of communicating and training hospital staff and leading quality improvement initiatives—or it could come down to a blame game. Hospitalists are taking care of half the patients in the hospital these days, so if something goes wrong, it may be seen as their fault.”

Read more about the proposed rule online at CMS will respond to comments in a final rule to be issued by Aug 1. TH

Jane Jerrard is a medical writer based in Chicago.

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