Prepare now for new Medicare ruling: No more payment for preventable errors

Will change result in better quality or punitive culture?

If a surgeon left an instrument inside you during an operation, would you expect the hospital to be paid for this procedure? Almost any patient would say no. Now the Centers for Medicare & Medicaid Services (CMS) has announced it will stop paying the costs of eight conditions resulting from preventable mistakes: objects left in a patient during surgery, blood incompatibility, air embolism, falls, mediastinitis (an infection after heart surgery), urinary tract infections from using catheters, pressure ulcers, and vascular infections from using catheters.

"This particular issue has been under discussion for quite some time," says Patti Muller-Smith, RN, EdD, CPHQ, a Shawnee, OK-based consultant who works with hospitals on performance improvement and regulatory compliance.

"Some individuals seem to approach the quality-of-care issue as a necessary but expensive cost to the health care facility," says Muller-Smith. "Now it will become a major contributor to a healthy bottom line, and will be brought to the forefront at all levels within hospitals."

Impact on quality

Many in the quality field argue that it took too long for this change to occur. "My first reaction is: Why did it take significant loss of life and well-being to bring this critical issue to the forefront? And why did it take a government organization to put 'teeth' into this?" says Pamela Rowse, RN, clinical nurse manager at Kindred Hospital in Las Vegas and former quality management coordinator at St. Rose Dominican Hospitals in Henderson, NV.

The Medicare rule will be a powerful catalyst for change in the quality field, predicts Rowse. "I see it as a monumental turning point in our profession," she says. "When you tie a dollar figure to the decision to do it right or you don't get paid for the care you do provide, I think we will see a significant change in the reduction of iatrogenic injuries and deaths."

Quality professionals "absolutely can use this to our advantage," says Rowse. "This will provide hospitals the opportunity to invest time and money into prevention, rather than intervention," she predicts.

However, other quality professionals worry that the ruling will put a strain on already limited resources. Tom Knoebber, director of performance improvement for Asheville, NC-based Mission Hospitals, says he "sees potential issues down the road" as hospitals try to prioritize the many initiatives coming from CMS with proper documentation upon admission, Hospital Quality Alliance data elements, and other requirements.

Some predict the ruling will actually have a negative impact on quality. "Nonpayment is an easy but illogical solution to a complex problem," says Claire Davis, vice president of quality at Norwalk (CT) Hospital. "Those of us who have studied and operationalized the science of health care quality know that quantifiable improvements in process and outcome do not result from elimination of funding or cost reductions. The ruling assumes that the threat of nonpayment will force doctors and nurses to give better care. That is simply ridiculous."

Three of the conditions included in the ruling are identified as "never events" by the National Quality Forum. These are always the result of error and are "absolutely avoidable," says Davis, and hospitals should not be reimbursed for these. However, the other five conditions fall under a different category, she says.

"Falls, pressure ulcers, and various types of infection are not necessarily the result of poor care. They, in fact, do occur at times, even when all reasonable efforts have been made to prevent them," says Davis. Because of this, the ruling is a setback to progress already made in improving safety cultures and reporting of errors and near misses, and cause organizations to revert back to a punitive culture, Davis says.

"The rule will create massive administrative costs, and force hospitals to direct resources from other quality initiatives that actually do improve care," she continues. "Also, hospitals will be spending much time, energy, and money in proving that preexisting conditions existed prior to admission or transfer. Handoffs and interagency relationships may be negatively impacted by defensive posturing."

More power for QPs?

Internal strategies will be needed to prevent these eight conditions from occurring while the patient is hospitalized, and failures will need to be carefully analyzed to develop improvement strategies, says Deborah K. Hale, CCS, president of Shawnee, OK-based Administrative Consultant Service LLC, a consulting firm specializing in improving clinical and financial outcomes in health care. "In my opinion, the role of the quality professional will certainly be enhanced."

There is no question that preventable injuries cost CMS a significant amount of money each year, due to extended length of stay and increased cost. However, though it will sometimes be clear the injury was preventable, in other cases it will be difficult to determine if the hospital is at fault, notes Muller-Smith.

"If anything, the ruling will put the quality professional in a position of being very important to the overall bottom line for a hospital," she says.

Patient falls probably will be be the most difficult of the eight conditions to prevent, predicts Muller-Smith. Hospitals may identify patients at risk for falls and take the appropriate precautions, but disoriented patients may not follow instructions, she says.

"Short of having a health care provider in each patient's room on a consistent basis, there are times when even though all reasonable actions have been taken, the patient may still fall," Muller-Smith says.

To prepare, quality professionals "must immediately gear up and push the education process" at medical staff meetings, governing board meetings, and midlevel and upper management meetings, urges Rowse.

"Tight collaboration with the health information management department is essential," says Rowse. "The nursing division must also be included in the education process, as their documentation and practice is important."

All members of the medical staff must be fully educated on the new CMS mandate and its impact on the care and reimbursement of their patients, says Rowse. She recommends sending individual mailings to physicians with a required signed letter stating that they received the information, posting an announcement in all areas where physicians dictate, and providing education for emergency department physicians about the necessary documentation triggers.

"It will require a full commitment and buy-in by the chief medical officers and/or chiefs of staff to ensure that change occurs," says Rowse. "Involvement by the quality arm of the governing board of the hospital will further ensure that there are resources to assist in this project."

'Present on admission'

As of Oct. 1, 2007, coders must determine whether each of the diagnoses reported were present on admission. Your biggest challenge will be complete and accurate physician documentation, coupled with ICD-9-CM coding accuracy, says Hale.

Conditions identified as present on admission will be reported as a "Y," conditions not present on admission will be reported as an "N," and clinical undetermined conditions will be reported with a "W." As of Oct. 1, 2008, the MS-DRG payment will be reduced for any of the eight conditions developed during the hospital stay.

Urinary tract infections, pressure ulcers, and other hospital-acquired infections should be preventable with good patient care, says Muller-Smith. "If these issues are identified as present on admission, which requires good documentation during the admission assessment, the hospital will not be penalized."

However, some of the conditions might be overlooked as "present on admission," such as a decubitus ulcer. Hospital coders must use the physician's documentation to determine whether a condition was present on admission, says Hale. "For the most part, hospitals do a good job of wound care, but physicians often omit documentation of the presence of a decubitus ulcer or early skin breakdown at the time of admission, but they do order wound care."

In this case, the lack of physician documentation would result in the coder reporting the condition as not present on admission, or returning the record to the physician for additional documentation prior to billing, she explains. "This would slow down the billing process, not to mention the aggravation to physicians," says Hale.

A quality professional or clinical staff person will need to perform pre-billing review to assist the coder in determining whether certain conditions were present on admission or developed during the course of the hospital stay so the hospital's reporting will be accurate, says Hale.

In addition to the pre-billing review, when any one of the eight conditions are going to be reported as not present on admission, concurrent review by clinical documentation specialists can be helpful in obtaining additional documentation to support the circumstance of the admission and whether these conditions were, in fact, present on admission, says Hale.

If your hospital is already doing concurrent documentation to achieve accurate DRG reimbursement and compliance with core measures, adding review for these eight conditions will be "relatively easy to accomplish," says Hale.

"Coder productivity will be reduced if time is taken to thoroughly review records and make good decisions about present on admission," she adds.

To ensure accurate reporting of present on admission, a thorough assessment using a standardized form would be ideal, but multiple patient entry points and variable staff are challenges, says Knoebber.

"We are currently working with our health information management department and nursing staff to develop a standardized assessment form for centralized evaluation and documentation," reports Knoebber.

Each of the present on admission elements are evaluated and any staff member is able to document if prior evidence is found, says Knoebber. "At this point, we are moving toward more concurrent coding," he says. "It does take more time as coders try to educate physicians and staff regarding quality documentation and terminology."

Adding additional case managers with specific education on mandates could be effective, says Rowse. "Armed with screening checklists for reviewing all admissions, they could identify gaps in documentation that would require an addendum to the physician's documentation," she says.

Tougher than it sounds

Denying reimbursement for hospital-incurred complications "sounds much easier to implement than it is," says Patrice Spath, RHIT, a health care quality specialist with Forest Grove, OR-based Brown-Spath & Associates. "It's a big issue that seems simple on the surface, but actually has lots of twists and turns that don't appear to be well addressed right now by Medicare."

At first glance, it may seem easy to identify a retained surgical instrument as not being present on admission, but Spath gives the following example: A patient has surgery at hospital X, then nine months later has surgery at hospital Y to remove the retained surgical instrument. The retained instrument in this example is "present on admission" for hospital Y.

"So does hospital Y get paid for the surgery to remove the retained instrument, or does hospital X pay the bill at hospital Y?" asks Spath. "And, just as important, is all of this tied to the surgeon's payment? And the surgeon that left the instrument in the patient on the first admission — will they get paid for doing the second surgery?"

Or if another surgeon removes the instrument at hospital Y, there is the question of whether that second surgeon gets paid by Medicare for removing the instrument. "Without tying the nonpayment to the physician side of reimbursement, it may be somewhat challenging to get physicians to adopt prevention strategies — especially for conditions such as urinary tract infections and pressure ulcers," says Spath.

It is not easy to determine if such conditions are present on admission, says Spath. "For example, should every Medicare patient have a urinalysis on admission to see if they have a urinary tract infection, or be carefully examined for skin breakdowns by the physician and/or nursing staff?" she asks. "All this will take more resources."

It also could be difficult to collect data on the incidence of hospital-acquired urinary tract infections or pressure ulcers when people aren't currently doing thorough admission evaluations to see if the conditions are present on admission, says Spath.

In addition, many infection control departments don't routinely gather data on the incidence of all urinary tract infections, notes Spath. "Just gathering data to evaluate the hospital's payment denial exposure will be challenging."

While most hospitals already are collecting data on these preventable conditions, there is a long way to go for obtaining buy-in from everyone, says Kathleen Catalano, RN, JD, director of health care transformation for Plano, TX-based Perot Systems.

"On top of that, once the data are collected, is there any evidence that action was indeed taken to remedy the condition? Therein will be the real issue," she says.

Catalano recommends answering these questions:

  • Are you collecting data on these preventable conditions?
  • If you are collecting data, what are you doing with them?
  • Where are the data reported?
  • Have data then been reviewed?
  • Depending on the condition, has a failure mode and effects analysis been performed to learn the best way to prevent similar occurrences in the future?

"This move on the part of CMS should send a message to providers that they are serious about preventing these conditions," says Catalano. "Hopefully, it will get the ball rolling."

[For more information, contact: Kathleen Catalano, RN, JD, Perot Systems, Healthcare Transformation, 2300 W. Plano Parkway, Plano, TX 75075. Phone: (214) 709-7940. E-mail:
Claire Davis, Vice President, Quality, Norwalk Hospital, 34 Maple Street, Norwalk, CT 06856. Phone: (203) 852-2212. Fax: (203) 852-3436.
Knoebber, Director, Performance Improvement, Mission Hospitals, 509 Biltmore Avenue, Asheville, NC 28801. Phone: (828) 213-9194. E-mail:
Deborah K. Hale, CCS, President, Administrative Consultant Service LLC, 678 Kickapoo Spur, P.O. Box 3368, Shawnee, OK 74802. Phone: (405) 878-0118. E-mail: Web:
Pamela Rowse, RN, BS, Clinical Nurse Manager, Kindred Hospital, 2250 East Flamingo Road, Las Vegas, NV 89119. Phone: (702) 784-4300. Fax: (702) 784-4331. E-mail:
Patti Muller-Smith, RN, EdD, CPHQ, Administrative Consulting Services, Box 3368, Shawnee, OK 74802. Phone: (405) 878-0118. E-mail:
Patrice L. Spath, BA, RHIT, Health Care Quality Specialist, Brown-Spath & Associates, P.O. Box 721, Forest Grove, OR 97116. Phone: (503) 357-9185. E-mail: Web:]