Most people associate the Patient Protection and Affordable Care Act (PPACA) signed by President Obama in March 2010, along with its companion legislation the Health and Education Reconciliation Act (the reconciliation amendments), a vehicle for providing many more Americans with access to affordable health care through better access to health insurance. And it certainly does address that issue. However, a lesser-known known effect of the law will be to tie payments into how the care is delivered and the effect it has on a patient's overall health.

PPACA has many provisions that will significantly affect Medicare reimbursement. Implementation of many of the changes will not take place until 2011 or later and some will be phased in over a multi-year schedule. However, some will be implemented right away.

An alert posted on Foley and Lardner, LLPs Website notes that, "the already complex Medicare payment policy will become much more complex under PPACA. The vast number of regulations and demonstration and pilot projects required by PPACA, as well as inevitable future statutory changes, will contribute to this increased complexity,"

Fixing the Bigger Problem
The Institute of Medicine estimated in 1999, that as many as 98,000 Americans die every year from medical errors, and the Centers for Disease Control and Prevention (CDC) has subsequently estimated that almost 100,000 Americans die each year from hospital-acquired infections alone.

The best solution, of course, is to avoid the complications from happening. Catherine Dimou, Chief Medical Officer of Rush Health--a network of providers whose members are Rush University Medical Center, Rush Oak Park Hospital, and approximately 750 physicians and 50 allied health providers who are on the medical staff of the Member hospitals notes:

"Hospital Acquired Conditions (HACs) can occur despite appropriate care. Healthcare providers must do their best to limit the number of HACs by making certain appropriate care pathways are in place to prevent these complications. These interventions can include: making sure urinary and intravenous catheters are used only when necessary and discontinued as soon as possible, implementing standard guidelines for preventing pressure ulcers and utilizing wound care nurses to document and care for ulcers that do occur, and developing standard protocols to prevent ventilator acquired pneumonia and falls, and track compliance with these interventions."

PPACA, which refers to medical harm in several different ways-hospital-acquired conditions, medical errors- and, health care-associated infections, uses a carrot-and-stick effect to significantly strengthen the link between payments to providers and the quality of the services they deliver and patient outcomes. In some cases, incentive payments will be made to those providers that demonstrate that quality care results in better patient care. In other cases, payments will be reduced when outcomes are affected negatively by the care delivered. Many provisions begin by rewarding providers in the initial years of implementation and then move to penalizing for noncompliance.

Dimou points out that, "A key consideration in monitoring HACs is making sure they are documented when patients are admitted. Rush University Medical Center (RUMC) has a single point person who gathers data on HACs. By having one person coordinate data and provide guidance to clinical units, RUMC has seen an improvement in HAC documentation, and a reduction in injuries due to falls."

For a number of years now, acute care hospitals have been required to submit quarterly data on 43 quality measures that affect patient care. Prior to the enactment of PPACA, hospitals were penalized for failing to report the information by payment reductions to the annual Medicare Basket index payment update. However, with implementation of the law, Medicare will require more than simple reporting. It will actively tie the amount of the Medicare payment to each hospital's performance on a set of quality standards.

Payment Adjustments for HACs and HAIs

One area of focus in the law is in dealing with conditions acquired during hospital stays and infections that are associated with the delivery of health care services.

Patients who acquire conditions, particularly infections, during a hospital stay, often have to stay in the hospital longer than would otherwise be the case, or have to be readmitted. In order to provide an incentive for hospitals to reduce HACs and readmissions, PPACA requires that the Secretary of Health and Human Services identify hospitals that are in the top quartile of all hospitals for certain, high-cost and common HACs relative to the national average. Beginning on October 1, 2014, those hospitals will be subject to reductions in Medicare payment for inpatient services. The information regarding the HACs of each hospital was to be posted for the public on the Hospital Compare Web site.

Raj Behal, MD, MPH, Associate Chief Medical Officer & Senior Patient Safety Officer at Rush University Medical Center in Chicago, describes a strategy Rush uses to reduce the likelihood that a Medicare Payment request the hospital submits will be reduced or denied because of an HAI that is deemed to have occurred during a hospital stay:

"We review all cases that are potentially hospital acquired conditions to ensure that the event actually occurred and that it was not present at admission. We have a checklist in our electronic medical record to document conditions present on admission. The key strategy, however, is to continually improve systems and processes to lessen the risk of harm to patients."

He offers a suggestion a hospital can employ to minimize the likelihood that an HAI or other HAC conditions will occur during a hospital stay.

"One approach is to use HAC rates at the hospital to identify the most common and/or most serious conditions, and then develop condition-specific improvement plans. Although education of staff in ways of prevention is important, it is much more effective to either remove hazards or reduce patient exposure to hazards that can lead to harm. Examples include removing central lines when no longer needed (or not inserting unless absolutely necessary), and avoiding sedating medications among patients at risk for falls."

PPACA provides that beginning on October 1, 2012, hospitals that have a high rate of potentially preventable Medicare readmissions will be subject to Medicare Payment reductions. The first three conditions targeted under the provision will be heart attacks, heart failures, and pneumonia. The hospitals readmission rate for these conditions will be compared to its expected readmission and the hospital will be subject to a reduction for "excess readmissions."

Provisions in PPACA will become effective over the next five or so years. In the meantime, there are several years of cost reports that will continue to be settled under existing laws.

What Conditions are Under Scrutiny
Although HAIs potentially represent the condition with the most far-reaching implications, they are by no means the only problem.
Section 5001(c) of Deficit Reduction Act of 2005 requires the Secretary to identify conditions that are: (a) high cost or high volume or both, (b) result in the assignment of a case to a DRG that has a higher payment when present as a secondary diagnosis, and (c) could reasonably have been prevented through the application of evidence based guidelines.

On July 31, 2008, in the Inpatient Prospective Payment System (IPPS) Fiscal Year (FY) 2009 Final Rule, CMS included 10 categories of conditions that were selected for the HAC payment provision.

The 10 categories of HACs include:

  1. Foreign Object Retained After Surgery
  2. Air Embolism
  3. Blood Incompatibility
  4. Stage III and IV Pressure Ulcers
  5. Falls and Trauma 
    1. Fractures
    2. Dislocations
    3. Intracranial Injuries
    4. Crushing Injuries
    5. Burns
    6. Electric Shock
  6. Manifestations of Poor Glycemic Control
    1. Diabetic Ketoacidosis
    2. Nonketotic Hyperosmolar Coma
    3. Hypoglycemic Coma
    4. Secondary Diabetes with Ketoacidosis
    5. Secondary Diabetes with Hyperosmolarity
  7. Catheter-Associated Urinary Tract Infection (UTI)
  8. Vascular Catheter-Associated Infection
  9. Surgical Site Infection Following:
    1. Coronary Artery Bypass Graft (CABG) - Mediastinitis
    2. Bariatric Surgery
      1. Laparoscopic Gastric Bypass
      2. Gastroenterostomy
      3. Laparoscopic Gastric Restrictive Surgery
    3. Orthopedic Procedures
      1. Spine
      2. Neck
      3. Shoulder
      4. Elbow
  10. Deep Vein Thrombosis (DVT)/Pulmonary Embolism (PE)
    1. Total Knee Replacement
    2. Hip Replacement

Payment implications began October 1, 2008, for these 10 categories of HACs.

Patti Eddy B.S., M.A., Director of Finance for Advocate Christ Medical Center in Chicago, says Christ combats Medicare payment denials for HAC's with quality teams in place working on reducing their occurrence. If we do receive a denial from Medicare the medical record will be reviewed to determine the accuracy of the denial. If we disagree with the denial it will be appealed."

What's Next?

Foley and Lardner note that, "there will be much need and many opportunities for hospitals to plan in advance for Medicare reimbursement policies and potential appeals." They recommend a number of areas on which hospitals should focus their advance planning, including quality issues, such as reporting quality data, quality measures' effect on Medicare payments, and availability of quality data to the public through the Hospital Compare Web site."


Affected Hospitals

The Present on Admission (POA) Indicator requirement and Hospital-Acquired Conditions (HAC) payment provision only apply to Inpatient Prospective Payment Systems (IPPS) Hospitals.

At this time, the following hospitals are EXEMPT from the POA Indicator and HAC:

  1. Critical Access Hospitals (CAHs)
  2. Long-term Care Hospitals (LTCHs)
  3. Maryland Waiver Hospitals
  4. Cancer Hospitals
  5. Children's Inpatient Facilities
  6. Rural Health Clinics
  7. Federally Qualified Health Centers
  8. Religious Non-Medical Health Care Institutions
  9. Inpatient Psychiatric Hospitals
  10. Inpatient Rehabilitation Facilities
  11. Veterans Administration/Depart of Defense Hospitals



Publication Date: Thursday, July 29, 2010