Effective October 1, 2008, Medicare will no longer reimburse hospitals for the treatment of conditions that could have "reasonably been prevented." In addition, hospitals cannot bill beneficiaries for any charges associated with the hospital-acquired conditions. Hospitals need to get ready to submit secondary diagnoses information that is present at admission when reporting payment information for discharges. CMS recommends submitting such "present on admission" or "POA" codes by October 1, 2007, but for those submitting via direct data entry, such codes are mandatory beginning January 1, 2008.

The "preventable" conditions include, thus far, the following: falls; mediastinitis, an infection that can develop after heart surgery; urinary tract infections resulting from improper use of catheters; pressure ulcers; vascular infections resulting from improper use of catheters; and the following three "never events": objects left in the body during surgery; air embolisms; and blood incompatibility. Next year CMS plans to add three additional conditions to this existing list of eight. These conditions may include those that were proposed for inclusion in this final rule; however, CMS determined further investigation and information was needed before including them in this new policy. Some possibilities include: deep vein thrombosis (DVT)/pulmonary embolism (PE), staph infections/sepsis, pneumonia related to the use of a ventilator, clostridium difficile-associated disease (CDAD), Methicillin-Resistant Staphylococcus Aureus (MRSA), and wrong surgeries.

CMS asserts that this new payment rule will help to make Medicare's payments to hospitals more accurate and better reflect the severity of the patient's condition. CMS believes it will force hospitals to pay more attention than they ever have before to the issue of preventable errors, injuries and other conditions. With respect to the selected conditions, CMS’s rationale is that it only selected "conditions where, if hospital personnel are engaging in good medical practice, the additional costs of the hospital-acquired condition, will, in most cases, be avoided.…"

The industry disagrees with CMS's conclusion that hospitals and physicians only "engage in good medical practice" when they are subject to financial risk. According to many in the industry, the designated conditions are not always preventable and, with or without the denial of payment, in many cases these conditions will continue to occur. Hospitals are also concerned with the foreseeable additional costs of diagnostic testing at the time of admission. In order to prove a patient did not acquire one of the designated conditions after admission, the hospital will be forced to administer numerous tests, the costs of which the hospital will have to absorb.

Ober|Kaler's Comment: One glimmer of hope is CMS's statement in the final rule, published on August 22, 2007, that it is researching whether to establish exceptions to the conditions for specific clinical circumstances where the condition may not be preventable. CMS will consider this issue, as well as the inclusion of other conditions to the existing list of eight, in the FY 2009 rule. If hospitals have suggestions on possible exceptions to the clinical conditions already subject to the rule, or on the inclusion of new clinical conditions, comments should submitted as soon as possible, so that they might be considered for the proposed FY 2009 rule.