Press Releases


For Immediate Release: Monday, April 14, 2008
Contact: CMS Media Relations


The Centers for Medicare & Medicaid Services (CMS) today proposed additional steps to strengthen the tie between the quality of care provided to Medicare beneficiaries and payment for the services provided when they are in the hospital. 


CMS is proposing to expand the list of conditions which are reasonably preventable through proper care and for which Medicare will no longer pay at a higher rate if the patient acquires them during a hospital stay.  In addition, CMS is adding 43 new quality measures for which hospitals will have to report data in order to receive the full annual payment update for their services.


            “CMS is taking aggressive actions to ensure that beneficiaries get safe, high quality, and efficient care from their health care providers, and the actions we are announcing today build on our efforts,” said CMS Acting Administrator Kerry Weems.  “The status of the Medicare Hospital Insurance Trust Fund requires us to find the best solutions to ensure that Medicare stays strong while paying providers appropriately for the care they deliver.  The reforms we are proposing in this rule should lead to greater value for Medicare beneficiaries and the Medicare program.”


            The proposed regulation builds on efforts across Medicare to transform the program to a prudent purchaser of health care services, paying based on quality of care, not just quantity of services.  CMS is also making hospital quality and cost information available to help consumers make more informed choices.  On March 28, CMS posted updated pricing and quality information at, along with the results of surveys of patients about their experience with the care they received while in the hospital.

The proposed rule would apply to services provided to patients who are discharged from the hospital during fiscal year (FY) 2009, which begins on October 1, 2008. 


            Numerous studies have documented the detrimental effects on patients and their loved ones and the increased costs of health care services resulting from a preventable patient’s injury or condition acquired due to hospital errors.  These can include “Never Events,” those events that never should occur, like amputation of the wrong limb or transfusing patients with the wrong blood type.  CMS is working with the National Quality Forum (NQF), a national organization working to promote patient safety and improve hospital care, on ways to reduce or eliminate 28 Never Events identified by NQF. 


In its 1999 report, To Err is Human: Building a Safer Health System, the Institute of Medicine (IOM) concluded that medical errors, particularly hospital-acquired conditions (HACs), may be responsible for as many as 98,000 deaths annually, at costs of up to $29 billion.  In 2000, the Centers for Disease Control and Prevention (CDC), estimated that hospital-acquired infections added nearly $5 billion to hospital costs.  At the same time, a 2007 survey by the Leapfrog Group of more than 1,200 hospitals found that 87 percent did not follow recommendations to prevent many of the most common hospital-acquired conditions.


“When these conditions occur during a hospital stay, the patient and his or her family suffer needlessly.  To make matters worse, these conditions are likely to result in higher medical bills for the family to pay for additional services for physician care, prescription drugs, and other items and services that would not have been necessary if proper care had been provided,” said Weems.  “Medicare can and should take the lead in encouraging hospitals to improve the safety and quality of care and make better practices a routine part of the care they provide not just to people with Medicare, but to every patient they treat.”


The rules proposed by CMS expand two key initiatives that begin to link payments for health care services to quality of care – the Hospital-Acquired Conditions and the Hospital Quality Measure Reporting initiatives.  Under the HAC initiative, beginning October 1, 2008, 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 several conditions they didn’t have when they were first admitted to the hospital and that have been determined to be reasonably preventable by following generally accepted guidelines. 


            The HAC provisions in Medicare regulations required hospitals to begin reporting on their Medicare claims on October 1, 2007, whether certain specified diagnoses were present when the patient was admitted.  The first eight conditions, which were selected last year because they greatly complicate the treatment of the illness or injury that caused the hospitalization, resulting in higher payments to the hospital for the patient’s care by both Medicare and the patient, were:



  • Object inadvertently left in after surgery
  • Air embolism
  • Blood incompatibility
  • Catheter associated urinary tract infection
  • Pressure ulcer (decubitus ulcer)
  • Vascular catheter associated infection
  • Surgical site infection- Mediastinitis (infection in the chest) after coronary artery bypass graft surgery
  • Certain types of falls and trauma


CMS is proposing to expand the list of conditions that need to be reported if present when a patient is first admitted and is seeking public comment on whether they should be added to the list in the final rule to be announced later this year.  The list in the proposed rule includes:


  • Surgical site infections following certain elective procedures
  • Legionnaires’ disease (a type of pneumonia caused by a specific bacterium)
  • Extreme blood sugar derangement
  • Iatrogenic pneumothorax (collapse of the lung)
  • Delirium
  • Ventilator-associated pneumonia
  • Deep vein thrombosis/Pulmonary Embolism (formation/movement of a blood clot)
  • Staphylococcus aureus septicemia (bloodstream infection)
  • Clostridium difficile associated disease (a bacterium that causes severe diarrhea and more serious intestinal conditions such as colitis)


Beginning October 1, 2008, Medicare will no longer pay the hospital at a higher rate for the original eight conditions or any conditions added to the list in the final rule, if they were acquired during the hospital stay.


The second initiative CMS is proposing is the expansion of the hospital quality measure reporting program, which reduces the amount a hospital is paid if it does not participate in the voluntary reporting of standardized quality measures.  These are measures that are publicly reported on Hospital Compare.  Hospitals are currently required to report 30 quality measures on their claims for Medicare inpatient services to qualify for a full update to their FY 2009 payment rates.  CMS is proposing to add 43 quality measures to the list in order to get the full inflation update for FY 2010, bringing the total number of measures in FY 2009 to 73.  The proposed additions include the measures of the following types:




  • Surgical Care Improvement Project (SCIP) – 1 new measure
  • Hospital readmissions – 3
  • Nursing care – 4
  • Patient Safety Indicators developed by the Agency for Healthcare Research and Quality (AHRQ) – 5
  • Inpatient Quality Indicators developed by the AHRQ – 4
  • Venous thromboembolism measures (VTEs) ‑ 6
  • Stroke measures (STK) – 5
  • Cardiac surgery measures –15


In proposing to require hospitals to report on readmissions, CMS notes that almost 18 percent of Medicare patients are readmitted to the hospital within 30 days of discharge, potentially exposing the patients and their families to significant additional suffering.  Taken together with the patient satisfaction information recently reported on Hospital Compare web site that shows the effectiveness of nurse and physician communication with the patient, including discharge planning, the building blocks for monitoring and improving the entire episode of care will be available.  The impact on taxpayers is also significant.  According to the Medicare Payment Advisory Commission (MedPAC), readmissions cost the program $15 billion annually, with $12 billion of those costs potentially preventable. 


            The proposed rule would apply to more than 3,500 acute care hospitals paid under the Inpatient Prospective Payment System (IPPS).  The IPPS was intended to reward hospitals for being efficient by making a single payment to the hospital based on the average costs of treating a patient with a particular diagnosis, rather than paying for the actual costs of each case.  However, until recently, Medicare did not have the legal authority to use its payment system to encourage hospitals to improve the quality of care they furnish. 


The proposed rule also includes proposals to update Medicare payment rates and policies for inpatient hospitals for FY 2009. Overall, the proposed rule is estimated to increase Medicare payments to acute care hospitals by nearly $4.0 billion.


            Comments on the proposed rule will be accepted through June 13.  CMS will respond to comments in a final rule to be issued on or before August 1, 2008.


 For more information, please see the CMS Website at:






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