Under New Policy, Medicare Will No Longer Pay The Extra Cost Of Treating Certain Medical Conditions That Occur While A Patient Is In The Hospital

The Centers for Medicare & Medicaid Services (CMS) has issued a new State Medicaid Directors Letter concerning “hospital acquired conditions.” The gist of the letter is that as of October 1, 2008 Medicare will stop reimbursing hospitals for the extra cost of treating certain conditions that, evidence shows, should not occur if treatment in the hospital is proper. State Medicaid agencies are encouraged in the letter to adopt policies that are consistent with Medicare so that no federal money goes to pay for the extra cost of treatment required by a hospital acquired condition. The list of hospital acquired conditions for which Medicare will stop paying the extra cost associated with treatment include stage 3 and state 4 bed sores as well as falls and the resulting patient trauma.

For those Medicare recipients who are also eligible for Medicaid, the hospital could attempt to bill Medicaid as a secondary payer after being denied payment for the extra treatment costs of hospital acquired conditions. However, the State Medicaid Directors Letter warns that payment would probably be denied under the Medicaid program, too. The Letter states: “States are encouraged to implement Medicaid payment policies to coordinate their payment policies with the existing Medicare … payment policy [for hospital acquired conditions in order to avoid] state fiscal consequences from the provider’s improper patient care.”

The risk of this new policy to elderly and disabled Medicare and Medicaid recipients is obvious. Under the new policy, hospitals are placed under significant financial pressure to discharge patients who might not be ready for discharge in order to avoid providing unreimburseable care for hospital acquired conditions.

The new State Medicaid Directors Letter can be read at the following link: http://www.cms.hhs.gov/SMDL/downloads/SMD073108.pdf