CMS regulations take on errors, self-referral, ASC procedures

October 1, 2007

Two important Medicare policy changes have been implemented by the federal government, tightening hospital payment rules to discourage preventable in-hospital errors, injuries, and infections and implementing the third phase of the Stark self-referral law.

Key Points

The action at the Centers for Medicare & Medicaid Services came in late August.

The hospital payment rule responds to a congressional directive included in the Deficit Reduction Act of 2005, and could be the subject of further discussions and congressional hearings.

Under the new rule, issued Aug. 1, Medicare will not pay hospitals for the costs of treating certain "conditions that could reasonably have been prevented," including pressure ulcers, injuries caused by falls, catheter-associated urinary tract infections, and vascular catheter-associated infections. Medicare also said it will not pay for the treatment of "serious preventable events," such as leaving an object in a patient during surgery and providing a patient with incompatible blood or blood products.

"If a patient goes into the hospital with pneumonia, we don't want them to leave with a broken arm," explained Herb B. Kuhn, CMS acting deputy administrator.

The provisions are contained in the fiscal year 2008 Inpatient Prospective Payment System Final Rule, "Improving the Quality of Hospital Care," which imposes requirements on hospitals for reporting quality data as part of the annual payment update program.

According to Bush administration estimates, the new policy will save Medicare $20 million annually. According to the Centers for Disease Control and Prevention, patients develop 1.7 million infections in hospitals that contribute to or cause the death of 99,000 people each year.

Hospitals or insurers will be required to bear the costs of any additional testing or lost reimbursement resulting from the rule, and hospitals are forbidden to pass on to the patient any charges associated with the hospital-acquired complication.

Self-referral phase III

Issued Aug. 27, the self-referral rules are the third phase of regulations prohibiting physicians from referring Medicare patients for certain items, services, and tests provided by businesses in which they or their immediate family members have a financial interest.

"These rules protect beneficiaries from receiving services they may not need and the Medicare program from paying potentially unnecessary costs," Kuhn said.

The new rules respond to public comments on the phase II interim final rule published March 26, 2004. They do not establish any new exceptions to the self-referral prohibition, but, rather, make "refinements" that could permit or, in some cases, require restructuring of existing arrangements, according to CMS.

The final regulation includes: