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CMS proposes Medicaid payment reductions for provider-preventable conditions

HCPRO Website, February 16, 2011

Provider-preventable conditions (PPC) would receive a payment reduction under Medicaid, similar to the treatment of hospital-acquired conditions (HAC) by the Medicare program, under a proposed rule posted by CMS February 16.

The proposal comes on the heels of increased attention to Medicaid as a result of the Patient Protection and Affordable Care Act; previous months have seen a proposed expansion of the recovery audit contractor program to Medicaid and an extension of the National Correct Coding Initiative edits to Medicaid claims. Although some states already have Medicaid provisions to reduce payment for conditions that match the Medicare HACs, the new rule would require such payment reductions nationwide. States will also have the flexibility to individually designate additional conditions that would result in reduced payment.

This flexibility may be a concern to Medicaid providers, says Debbie Mackaman RHIA, CHCO, regulatory specialist for HCPro, Inc., in Danvers, MA. “They’re giving Medicaid a long leash on this. This opens a huge window that allows them to create new restrictions on payments that are already minimal.” Importantly, CMS would allow states to expand beyond the inpatient setting, to include outpatient hospitals, nursing facilities, and ambulatory care settings.

PPCs would be divided into two types:

  • Healthcare-acquired conditions (HCAC), which would track the HACs identified for Medicare
  • Other provider-preventable conditions (OPPC), which states could specify as extensions of the payment reduction program

CMS explains that HCACs would set a floor on the payment reductions. States seeking to reduce payment by specifying diagnosis codes as OPPCs—above and beyond the HCAC category—would have to adhere to the following guidelines:

  • The codes must have a high cost or high volume, or both
  • The codes must result in the assignment of a case to a MS-DRG that has a higher payment when the code is present as a secondary diagnosis.
  • The codes must describe conditions that could reasonably have been prevented through the application of evidence-based guidelines

The proposed rule, if finalized, would have varying effects on Medicaid providers—already 21 states have programs in place to reduce Medicaid payment for specified conditions. So Medicaid providers in the remaining 29 states would face new payment reductions as a result of the rule. States that already have payment reduction programs in place vary considerably regarding their defined PPCs.

Mackaman encourages providers to read and comment on the proposed rule. She encourages Medicaid providers in states that already have payment reduction programs in place to examine the current programs and consider how their states might expand the reductions to other settings. Providers in states that currently lack such a program may want to examine nearby state programs, as well as how such measures will affect them.

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