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AdvaMed has announced support of certain changes in the Centers for Medicare and Medicaid Services' (CMS) final CY 2009 In-Patient Rule, addressing charge compression and hospital-acquired events.

Ann-Marie Lynch, executive vice president for payment and health care delivery policy at the Advanced Medical Technology Association, issued the following statement: "AdvaMed is pleased that CMS has addressed the problem of charge compression for advanced medical devices by committing to make the necessary changes to Medicare's hospital cost reports. We look forward to working with CMS and hospitals to ensure successful implementation."

Charge compression is a practice relating to hospital markup practices. Lower cost supplies, including medical devices, are generally marked-up more than more expensive items. CMS bases payment calculations on cost reports from hospitals. The products had been grouped together in calculating the total payment for a procedure. Due to the method of calculation, the cost of expensive products with the low markups tended to be underestimated.

CMS is continuing a three-year reform of the Inpatient Prospective Payment System (IPPS), which in part is to address the inequities in charge compression. The reforms include changing one component of its payment rate from hospital charges to costs. The changes do not produce any budget savings but will more accurately reflect the costs of treating Medicare beneficiaries and reduce incentives to select some patients over others. In this final rule, CMS completes the transition so that its payment rates are 100 percent cost-based. In addition, CMS is making changes to hospital cost reports that will allow Medicare to distinguish between high and low cost supplies and devices and improve cost-based payments. This change is in response to industry concerns that the existing methodology for determining hospital cost-to-charge ratios does not take the low markups into account. In April, the CMS proposed to add a cost center to the cost report to allow costs and charges for inexpensive medical supplies to be reported separately from the costs and charges of more expensive devices. This revised cost reporting form would be available for use by hospitals during FY 2009 and would ultimately affect the relative weights under the IPPS and Outpatient Prospective Payment System (OPPS).

Ms. Lynch also commented on the CMS changes to the designation of hospital- acquired conditions. "AdvaMed had supported the inclusion of eight of the nine proposed new hospital-acquired conditions (HAC) to improve quality of care including glycemic control. We are pleased that in the final rule, CMS added four new HACs and look forward to working with the agency to continue to improve the quality of care for patients through innovation."

The rule implements a provision of the Deficit Reduction Act of 2005 (DRA) that begins a practice of preventing hospitals from receiving a higher Medicare payment for the additional costs of treating patients who acquire certain conditions during a hospital stay. Several state health care programs already have such a policy. The DRA requires hospitals to begin reporting secondary diagnoses that are present on the admission of patients, beginning with discharges on or after October 1, 2007. Beginning in FY 2009, cases with these conditions would not be paid at a higher rate unless the conditions were present on admission. The rule identifies eight conditions, including three serious preventable events (sometimes called "never events") that meet the statutory criteria. CMS will work to add an additional 3 conditions to the list next year. [DOTmed has previously reported on this issue: DM 6650, DM 6652, and DM 5990]

The conditions include: Foreign object inadvertently left in patients after surgery; Air embolism; Transfusion with the wrong type of blood; Severe pressure ulcers; Fracture; Joint dislocation; Head injury; Crushing injury; Burn; Electric shock; Catheter-associated urinary tract infection; Vascular catheter-associated infection; Manifestations of poor control of blood sugar levels; Surgical site infection following coronary artery bypass graft; Surgical site infection following certain orthopedic procedures; Surgical site infection following bariatric surgery for obesity; Deep vein thrombosis (a blood clot in a major vein) and pulmonary embolism (blockage in the lungs) following certain orthopedic procedures.

If at discharge, the condition was either not identified by the hospital as present on admission, or could not be identified based on data and clinical judgment at admission, it is considered hospital-acquired. Also, Medicare will no longer pay hospitals at a higher rate for the increased costs of care that result when a patient is harmed by one of the listed hospital-acquired conditions. Medicare prohibits the hospital from billing the beneficiary for the difference between the lower and higher payment rates. The AMA has stated that it is disappointed in the CMS decision, and the changes will put patients at risk.

The three Medicare National Coverage Determinations (NCD) proceedings for "never events" categories of "wrong surgery," included in the National Quality Forum's list of Serious Reportable Adverse Events, are Surgery on wrong body part; Surgery on wrong patient; and Wrong surgery on a patient.

More information about Advamed may be found at:
http://advamed.org/memberportal/about/newsroom/

More information from the CMS: http://www.cms.hhs.gov/apps/media/fact_sheets.asp