The ambitious plan to halt Medicaid payment for some avoidable medical complications could create inefficient incentives that penalize some providers and fail to advance patient safety, health system executives say.
Providers fear unfair penalties if Medicaid adopts Medicare no-pay rules
Medicaid, the safety net insurer that experienced significant growth during the economic downturn, will soon no longer pay hospitals and other providers to treat common and costly conditions that likely could have been prevented.
The policy shift—one effort by policymakers to more closely tie payment to quality performance under the Patient Protection and Affordable Care Act—expands the 2008 rules that prohibit Medicare from paying for avoidable illness to Medicaid, which is jointly financed by states and the federal government. It also extends the no-payment policy outside hospital walls to outpatient clinics, nursing homes and other ambulatory providers.
Under the proposed policy, states must adopt Medicare's existing no-pay list, which prohibits payment for treatment of preventable complications tied to hospital admission such as severe bed sores; surgical and certain other infections; and objects left behind during surgery. Medicare also won't pay when hospitals perform the wrong surgery or operate on the wrong body part or wrong patient.
Medicare has denied roughly $20 million in claims each year for medical care to treat avoidable complications or injuries for hospitalized elderly patients, the CMS said as it introduced its proposed plans for Medicaid.
Providers contend plans do not account for the high percentage of children covered by Medicaid, a demographic strikingly different than Medicare's elderly population. That oversight puts providers at greater risk for financial penalties and fails to effectively promote quality improvement for the nation's youngest patients, providers argue.
Medicare's no-pay list includes procedures rarely performed on children—such as knee and hip replacements—and the quick timetable under health reform to adopt new rules leaves no time to identify more appropriate measures that would better promote quality improvement in children's hospitals, says Ellen Schwalenstocker, acting vice president of quality advocacy and measurement for the National Association of Children's Hospitals and Related Institutions.
The Medicaid policy is scheduled to go into effect July 1.
Schwalenstocker says the trade group has proposed to the CMS an expert panel to draft quality measures for children's hospitals. Aimee Ossman, director for policy analysis and implementation for the association's public policy arm, the National Association of Children's Hospitals, notes the rules call for Medicaid to adopt any future additions to Medicare's no-pay list, which raises questions about how policymakers will address the issue.
Children's hospital executives argue in letters to the CMS that slower development of pediatric quality measures and treatment differences undermine the use of Medicare's no-pay list unless some modifications are made.
“The evidence base for pediatrics as well as the federal investment in sound quality metrics for children lags behind that for adults,” writes Patrick Magoon, president and CEO of Children's Memorial Hospital, Chicago. The chief patient safety and quality officer for Children's Hospital Boston, Dr. Kathy Jenkins, notes the lack of published measures to prevent rare occurrences of deep vein thrombosis among children or catheter-associated urinary tract infections.
Schwalenstocker also notes children's hospitals were exempt from 2007 billing changes under Medicare that identify conditions that patients acquire after entering the hospital. Under Medicare, hospitals began to modify bills one year before the CMS started to withhold pay. Children's hospitals would not be granted the same time to modify bills, and Medicaid does not process bills similar to Medicare, creating a further complication.
As introduced in February, the policy also allows states to build on Medicare's no-pay list. States may halt payment for medical care that clearly caused unintended injury or illness or an illness that was reasonably preventable (March 28, p. 8).
The proposal has drawn criticism from providers, who say multiple state lists would lead to confusion and wasted resources.
Linda Greene, director of infection prevention for Rochester (N.Y.) General Health System, calls the potential for inconsistent laws problematic for providers and confusing for patients. Greene, who stresses the patient-safety goal of quality improvement, argues that quality improvement can also deliver significant financial returns. Rochester General calculated the cost of certain preventable cardiac infections to be roughly $40,000 per patient.
The greater leeway to withhold Medicaid payment to providers also comes as states are struggling with budget distress, one major health system notes. Santiago Munoz, associate vice president for health sciences and services at the University of California, cautioned in a letter to federal officials that academic medical centers may be unfairly penalized because of the difficulty policymakers face trying to pinpoint how much to withhold for treatment of preventable conditions, “particularly for medically complex patients often cared for in an academic setting.”
“Conceivably, cash-strapped states may be inclined to look for savings in state Medicaid programs even where empirical evidence does not support the imposition of nonpayment or apply too aggressive of a reduction to an entire patient stay,” Munoz argues in a letter to the agency. Federal estimates do little to make clear how significantly the policy will reduce Medicaid spending.
The Congressional Budget Office projected no new savings (or costs) from the policy, which was one of seven included in a group of Medicaid quality-improvement provisions under the Affordable Care Act. Notably, the seven provisions were projected to increase spending by roughly $1.1 billion through 2019, the CBO said. But actuaries at the agency that oversees Medicare and Medicaid found the expanded no-pay policy would reduce the safety net insurer's spending, if just slightly.
Savings would grow gradually during the next five years to total roughly $35 million through 2015. States would spend about $15 million less, actuaries estimate, during the five-year period, with federal savings accounting for the rest.
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