CMS Issues Final Rule on Medicaid Payment Adjustments for Provider-Preventable Conditions

On June 1, 2011 the Centers for Medicare and Medicaid Services (CMS) issued a final rule prohibiting Medicaid payments to providers for conditions that are reasonably preventable. These provider-preventable conditions (PPCs) are based on the Medicare nonpayment policy for preventable conditions and include two distinct categories of conditions:

1. Health care acquired-conditions (HCACs) apply to all inpatient hospital settings and include the full list of Medicare’s hospital acquired conditions (HACs)
    
2. Other provider-preventable conditions (OPPCs) apply broadly to inpatient and outpatient settings and include, at a minimum, three Medicare National Coverage Determinations: surgery on the wrong patient, wrong surgery on a patient, and wrong site surgery.

Although Medicare requirements are the minimum under the rule, states are permitted and encouraged to identify additional OPPCs, which may be approved by CMS.

The final rule mandates that Medicaid State Plans require providers to identify and report PPCs that are associated with claims for Medicaid payment or with courses of treatment furnished to Medicaid patients for which Medicaid payment would otherwise be available.

The rule implements provisions of the health care reform legislation, which require the Secretary of Health and Human Services to identify current state practices that prohibit payments for HCACs and incorporate appropriate practices into the Medicaid regulations. The final rule outlines this research, noting that 21 states currently have nonpayment policies for HCACs that use Medicare’s HACs, and at least half of these states exceeded Medicare’s HAC requirements. CMS analyzed the variation between the states and concluded that the use of evidence-based measures and the push for quality are appropriate as a foundation for the regulation, leaving room for state flexibility to design individual HCAC policies.

The final rule is effective July 1, 2011, but CMS intends to delay enforcement of the rule until July 1, 2012. In order to comply with the regulations, states must update Medicaid State Plans and amend any managed care contracts no later than July 1, 2012.

The press release is available via the CMS website.