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UPDATE: CMS releases final rule on Medicaid HCACs

HCPRO Website, June 2, 2011

By Andrea Kraynak, CPC

Provider-preventable conditions (PPC), including health care-acquired conditions (HCAC), are now subject to payment adjustments under the Medicaid program, according to the final rule released by CMS June 1.

The rule, “Medicaid Program; Payment Adjustment for Provider-Preventable Conditions Including Health Care-Acquired Conditions,” implements provisions in the Patient Protection and Affordable Care Act requiring HHS to prohibit federal payment to states for specified HCACs, as well as additional conditions determined on a state-by-state basis.

“We found that 29 states do not have existing HCAC-related nonpayment policies,” according to the final rule. “Most of the 21 states that currently have HCAC-related nonpayment policies identify at least Medicare’s HACs [hospital-acquired conditions] for nonpayment in hospitals.

"However, it is important to note that at least half of the existing policies we reviewed exceeded Medicare’s current HAC requirements and policies, either in the conditions identified, the systems used to indicate the conditions, or the settings to which the nonpayment policies applied.”

CMS introduces the term PPCs in the rule, which consists of two categories: HCACs and other provider preventable conditions (OPPC). OPPCs would be those additional conditions identified and approved by states that are not found on the list of HCACs, which are included on pages 20 and 21 of the final rule. This also allows states to expand beyond the inpatient hospital setting HCACs.

“We believe, and confirmed through public comment, that incorporating Medicare’s HACs in Medicaid’s policy is inherently complex because of population differences across programs,” according to the rule. “We fully understand that the HACs developed for Medicare’s population will not directly apply to various subsets of Medicaid’s population. While we have established Medicare as a baseline, we understand that states will, through their payment policies, appropriately address these differences.”

As with the Medicare HAC program, there will be no payment reductions for those conditions that existed prior to treatment by the provider, according to the rule.

In addition, payment reductions are limited to only those PPCs that would otherwise result in a payment increase and those that the state can “reasonably isolate for nonpayment the portion of the payment directly related to treatment for the PPC.”

In the rule, CMS notes that while the point of the Medicaid PPC payment adjustments is to improve quality of care, it does expect to realize cost savings on a state and federal level.

The federal government expects to save approximately $4–5 million annually between 2012–2015, with states experiencing an additional savings of $3–4 million each fiscal year, leading to a total savings of $35 million through 2015.

“These steps will encourage health professionals and hospitals to reduce preventable infections, and eliminate serious medical errors. As we reduce the frequency of these conditions, we will improve care for patients and bring down costs at the same time,” CMS Administrator Donald M. Berwick, MD, said in a June 1 press release.

Due to the fact that the majority of hospitals already have programs in place to reduce the occurrence of Medicare HACs, CMS does not believe the cost of implementing a similar program for Medicaid HCACs will be significant.

The effective date of the rule is July 1, 2011; however, CMS is delaying compliance action until July 1, 2012.

Editor’s note: Access the display copy of the final rule here. The proposed rule was published in the Federal Register February 17.

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