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Medicare Payment Regs Include Focus on Medical Errors

By John Reichard, CQ HealthBeat

July 31, 2008 -- The Centers for Medicare and Medicaid Services (CMS) announced the release of four payment regulations Thursday, choosing to emphasize provisions to reduce medical errors in a telephone press briefing on the regulations.

But skilled nursing facilities had their attention focused elsewhere, heaping praise on the Bush administration for holding back on provisions they said would reduce their payments over $5 billion over five years. Hospice programs, however, weren't celebrating.

The regulations cover inpatient hospital care and inpatient rehabilitation facilities in addition to hospice programs and skilled nursing facilities.

Acting CMS Administrator Kerry Weems noted a report released this week by the Agency for Healthcare Research and Quality (AHRQ) in explaining Medicare's growing pressure on hospitals to avoid preventable medical mistakes.

The study found that one of every ten patients who died within 90 days of surgery in 2001 and 2002 did so because of a preventable medical error. Published in the journal Health Services Research, the study also found that preventable medical errors that occur during and after surgery may cost employers $1.5 billion a year.

The AHRQ study looked at surgeries involving patients enrolled in employer health plans, but Weems made it clear that he thinks the problem of preventable medical errors takes a big toll on Medicare enrollees as well.

Weems said that as of Oct. 1, Medicare will not pay for care for certain conditions that were not present on admission to the hospital, but that were acquired during the stay because of sloppy care. CMS announced eight of those conditions last year, and is adding three more through this year's final rule governing hospital inpatient payments. The payment cutoff for both the conditions announced last year and those just announced takes effect this October.

The three additional conditions include: surgical site infections following certain elective procedures such as orthopedic surgeries and weight reduction surgery; certain manifestations of poor control of blood sugar levels; and deep vein thrombosis or pulmonary embolism following total knee replacement and hip replacement surgeries.

The conditions are known as "never events" because they are errors that never should have occurred and can result in serious injury or death, the agency said. CMS also announced that it will undertake "national coverage determinations" on whether it will pay for surgery on the wrong body part, surgery on the wrong patient, and wrong surgery performed on a patient.

Weems said CMS also sent a letter to state Medicaid directors urging them to adopt the same non-payment policies for never events as were announced in the final inpatient payment rule. Nearly 20 states have or are considering non-payment in Medicaid for some never events, CMS said.

The American Medical Association (AMA) protested Thursday that CMS acted inappropriately on never events.

"The federal government's decision today to no longer pay hospitals for care provided for three additional medical conditions acquired in the hospital puts patient care at risk," said AMA President-elect J. James Rohack. "We are working hard to improve quality and efficiency, but simply not paying for complications or conditions that while regrettable—are not entirely preventable—is not the way to do it. It is unacceptable that this program is being expanded beyond the original eight conditions identified last year for non-payment when the first phase of the program has not even begun.

"HHS is confusing events that should never happen in a hospital, like wrong-site surgery, with often unavoidable conditions, like surgical site infections," Rohack added. "To be reasonably preventable, there should be solid evidence that by following guidelines, the occurrence of an event can be reduced to zero or near zero. This is not the case for many of the now-banned conditions."

Weems said that CMS also is adding to the number of quality performance measures on which hospitals must report data in fiscal 2009 in order to qualify for Medicare's full payment update in fiscal 2010. They now must report on 30 measures to get their full payment update in fiscal 2009; the final rule adds 13 more measures, a bit of a reprieve in that the agency had discussed adding 43 more measures to get the full 2010 update.

The final hospital inpatient payment rule will increase payments to hospitals in fiscal 2009 by $4.75 billion and provides a 3.1 percent increase in payment rates.

Skilled nursing facilities meanwhile got the welcome news that CMS delayed a recalibration of payment categories the agency planned to correct what it said was a previous payment error. Weems said "we will continue to evaluate the underlying data carefully."

The decision averted $770 million in cuts in fiscal 2009 and more than $5 billion in cuts over five years, the American Health Care Association and the Alliance for Quality Nursing Home Care said in a joint news release.

CMS estimated that payments to skilled nursing facilities would rise $780 million overall, reflecting a 3.4 percent payment update.

Hospice programs meanwhile issued a statement Thursday calling on Congress to block what they said were cuts announced by CMS. The agency said hospices will see a 2.5 percent increase in their payments in 2009, 1.1 percent less than would have been the case had it decided not to phase out certain payments relating to switching to a new wage index about a decade ago. "Phasing out this special adjustment will save Medicare $2.18 billion over five years," CMS said.

But the National Hospice and Palliative Care Organization said the change is effectively a cut and will force many hospice providers to either cut back care to the terminally ill or "shut their doors altogether." J. Donald Schumacher, the organization's CEO, said "let's be clear, the Administration's cuts will seriously hurt the most vulnerable."

CMS also announced that a final payment rule governing services provided by inpatient rehabilitation facilities would mean total fiscal 2009 payments of $5.6 billion for the providers.

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