CMS Future HAC Plans? HAI Cost Impact on Hospitals?

1. CMS Future HAC Plans? HAI Cost Impact on Hospitals? Rick Sites General Counsel & Senior Health Policy Director October 1, 2008

2. Section 1996(d)(4)(D) of the Deficit Reduction Act of 2005 • DRA required Medicare to identify HACs that are: • High cost, high volume or both • Assigned to a higher paying DRG when present as a secondary diagnosis • Could reasonably have been prevented through application of evidence based guidelines

3. Lower Reimbursement for IPPS Hospitals Only • Beginning October 1, 2008, Medicare will pay a case with an HAC as though the HAC did not occur (i.e., a lower DRG amount) • Critical access, long-term acute care, rehab, psychiatric, cancer, and children’s hospitals are exempt at this time

4. DRA Criteria for HACs • Medicare data must support the selected conditions are high cost and/or high volume • Selected conditions must have a diagnosis that identifies the condition and results in higher payment as a secondary diagnosis • Selected HACs must be reasonably preventable through application of evidence-based guidelines

5. Key HAC QuestionsCMS Must Answer • Is there high cost, high volume per HAC? • Does ICD-9 code clearly identify the HAC? • Are there evidence-based guidelines? • Is the HAC reasonably preventable?

6. 10 Selected HACs

7. 10 Selected HACs-Continued 73 FR 48434 at pp. 48473, 48490 *average from combining DRGs

8. Rejected HACs

9. CMS Estimated Medicare Savings From 10 HACs

10. Additional Potential Candidate HACs

11. What Does the Future Hold for More HACs? • There are 258 sets of DRGs with subgroups based on complication or comorbidity

12. What Does the Future Hold? • CMS’s reduced payment for HACs has just begun • Submit comments to www.regulations.gov • Medicaid and private insurers are or will follow the CMS lead • As to CMS and Medicaid, participating in the rulemaking process especially by submitting meaningful comments is critical