Medicare Rules Linking Payments to Quality

March 18, 2007

CMS proposed rules on April 14 which expand on its FY ’07 initiatives to link Medicare payments to quality of care. Beginning October 1, 2008, Medicare will no longer pay 3,500 acute care hospitals under its inpatient prospective payment system for additional care that results from any of 17 preventable conditions that a patient didn’t have upon an initial admission. The Medicare Payment Advisory Commission estimates that potentially preventable readmissions within 30 days of discharge cost Medicare $12 billion annually. The Institute of Medicine estimates that up to 98,000 persons die annually as a result of infections, medication errors, and other preventable conditions acquired in hospitals. CMS also will require that hospitals report data on 72 quality of care measures in FY ’09 in order to receive their full Medicare payment updates in FY ’10.  

PCG will encourage its Medicaid clients to review the Medicare rules carefully and possibly emulate those rules for Medicaid payment purposes. MMIS systems changes may be necessary to identify such claims. Aetna, Cigna, and Wellpoint have already said that they will follow Medicare’s lead. Comments on the proposed rules will be due on June 13. The final rules will be published in August.

Tom Entrikin

Tom Entrikin is a PCG manager and former Medicaid policy specialist with the U.S. Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS).