New Medicare Hospital Reimbursement Rule Should Lead To Better Care, Reduce Costs, Editorial States

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Public Health
Article Date: 23 Aug 2007 - 7:00 PDT

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A new rule under which Medicare no longer will reimburse hospitals for the treatment of certain preventable conditions "won't save much money at first" and "will impose additional testing and documentation burdens on many hospitals," but the regulation "should promote better care" and "could yield greater savings" in the future, a New York Times editorial states (New York Times, 8/21).

Under the rule, which will become final this week, Medicare no longer will pay hospitals for the treatment of certain "conditions that could reasonably have been prevented," and the facilities "cannot bill the beneficiary for any charges associated with the hospital-acquired complication." The rule, proposed by CMS in April and mandated by a 2005 law, will take effect in October 2008 (Kaiser Daily Health Policy Report, 8/20).

The "perversity of a payment system that actually rewards incompetence rather than penalizing it seems self-evident," the editorial states, adding, "So Medicare is clearly wise to start changing the incentives." The Times recommends that CMS in the future "consider reforms in physician payments as well" so that doctors who commit errors do not receive extra payments for additional procedures. Hospitals have raised concerns that they will "have to absorb the costs of additional tests when a patient arrives to establish whether an infection is already present" and that some of the conditions on the list of those for which Medicare no longer will reimburse them for treatment are not preventable in all cases, the editorial states.

However, according to the Times, the "extra tests and documentation should help improve patient care," and the conditions "were chosen with the help of experts in the belief that they could reasonably be prevented by following evidence-based guidelines." CMS officials "will need to monitor the situation closely and be prepared to make adjustments if hospitals are unduly burdened," but "they are clearly on the right track in seeking to prevent errors that harm patients and drive up the cost of health care," the editorial concludes (New York Times, 8/21).

"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.