CMS Reimbursement Changes Shine the Light on Patient Safety and Nursing Care

Texas Nursing Voice [Vol. 2, No. 4, p. 5], December 1, 2008

The hammer comes down this month. Beginning in October (the start of the federal 2009 fiscal year), Medicare will no longer reimburse hospitals at the higher rate for complications unless these conditions were present on admission. In addition, hospitals cannot bill Medicare for any wrong surgery (wrong patient, wrong site or wrong procedure.)

Why is Medicare so important? Because it is a major source (more than 40 percent) of hospital revenue; it’s the largest healthcare payer, covering 42 million seniors and disabled persons nationwide; and because private insurers/payers take Medicare’s lead.

Will hospital nurses influence their organization’s reimbursement? You bet we will! The clinical care we give on the frontlines will directly affect the financial stability of our hospitals. First, some background:

A Little History and Primer

1965:            To defuse physician and hospital opposition to the creation of Medicare in this year, the program’s congressional architects selected payment mechanisms designed to preserve the status quo.

1983:            The Health Care Financing Administration (predecessor to the Centers for Medicare and Medicaid Services) adopted the starting point for current Medicare payments for inpatient care based on diagnosis-related groups. The payment system is considered prospective in that the amount paid to a hospital for a patient is fixed in advance and depends only on the diagnoses and major procedures reported at discharge (which map to a specific DRG.)

In reality, payments have never been completely prospective, being influenced by what happens to an individual patient during a hospitalization. The system is called inpatient prospective payment system.

1999:            The Institute of Medicine published To Err is Human, revealing that as many as 98,000 people die in any given year from medical errors in hospitals. The landmark report broke the silence in the United States surrounding medical errors and their consequences and called into question the overall value of healthcare services, clearly demonstrating that the quality of care fell short of its potential. The jaw-dropping report launched a drive to create a culture of patient safety within the national healthcare community.

2001:            An IOM follow-up report, Crossing the Quality Chasm, called for restructuring the healthcare system, recommending aligning public and private payment methods to build incentives for quality enhancement.

2003:            With the passage of the Medicare Prescription Drug Act, Congress recognized that much of the increase in healthcare spending would shift from the private sector and Medicaid to Medicare, raising concerns about the value received for Medicare dollars. Policy-makers sought to reframe these expenses as public investments that should be designed to leverage higher levels of quality and performance. Congress thus asked the IOM to conduct a study to identify and prioritize options for aligning performance with payment in the Medicare program.

2005:            CMS announced the Reporting Hospital Quality Data for Annual Payment Update program, the first step toward “value-based purchasing” or “pay for performance.” Initially focused on 10 quality measures (now more than 30, plus patient satisfaction), hospitals submitting the required data would receive the full update to their Medicare DRG payments.

Nurses are familiar with many of these quality or “core” measures: acute myocardial infarction, congestive heart failure, the Surgical Care Improvement Project, etc.

2006:            The Deficit Reduction Act of 2005 was signed into law requiring CMS to choose hospital-acquired conditions proposed for reduced payment in FY 2009. Some of the conditions were selected from a list of “never events” or conditions that had been identified by the National Quality Forum, a nonprofit organization created to develop and implement a national strategy for healthcare quality measurement and reporting.

“Never events” are serious reportable events that should never have happened and could have been prevented.

Criteria for the selected hospital-acquired conditions were that they: a) be associated with a high cost of treatment or high occurrence rates within hospital settings, b) result in higher payment to the facility when submitted as a secondary diagnosis and c) can reasonably be prevented by adoption and implementation of evidence-based guidelines.

2008:            After consultation with the Centers for Disease Control and Prevention and the NQF, CMS finalized the first set of hospital-acquired conditions:

1)            object inadvertently left in after surgery;

2)            air embolism;

3)            blood incompatibility;

4)            *catheter-associated urinary tract infection;

5)            *pressure ulcer (decubitus ulcer);

6)            *vascular catheter-associated infection;

7)            *certain types of falls and traumas;

8)            mediastinitis (infection in the chest) after coronary artery bypass graft surgery;

9)            surgical site infections following certain elective procedures including certain orthopedic surgeries and bariatric surgery for obesity;

10)            *certain manifestations of poor control of blood sugar levels; and

11)            *deep vein thrombosis or pulmonary embolism following total knee replacement and hip replacement procedures.

The asterisks mark complications that are considered “nurse-sensitive.” They’re a majority, and it means they’re considered an indication of nursing performance.

Calling All Nurses!

All nurses can contribute. Probably the most obvious contribution will be initial physical assessments with accuracy of detail to the highest level of specificity to distinguish what is present on admission from co-morbidities or complications. Continuing documentation vigilance throughout the patient stay is paramount. Prevention of falls, bloodstream and urinary tract infections are all matters of importance. In a culture of safety, nurses feel comfortable guiding each other as well as other members of the healthcare team if unsafe practices are witnessed.

The electronic health record helps with documentation. Nurse case managers and clinical coordinators may need to work more closely with physicians to make sure correct and consistent diagnosis nomenclature is used (specifically in complication and co-morbidity lists) and that care provided is documented in physician progress notes and discharge diagnoses. All providers must distinguish between pre-existing conditions and complications regarding preventable, hospital-acquired conditions.

Hospitals without strong nursing leadership will be in a position to blame nurses for these hospital-acquired conditions that, beginning now, will potentially result in reduced reimbursement. These changes in reimbursement regulations require the focus of the entire healthcare team and thrust nursing into a strategically pivotal position.

Nurses who work for organizations with a history of valuing and committing to excellence in nursing practice are in good positions — for example, hospitals with the American Nurses Credentialing Center’s Magnet and Pathway to Excellence designations. Frontline nurses in those institutions use evidence-based, best practice.



As pay-for-performance standards have encompassed patient outcomes, nursing’s contribution is prominent. Nurses can play a huge role by ensuring that their patients:

•            are fully and properly assessed upon admission;

•            receive the clinically appropriate, high-quality nursing care for their condition to keep patients safe and to prevent unnecessary complications (core measures, falls prevention, urinary catheter use reduction, good central line maintenance, hand hygiene, isolation precautions, etc.); and

•            have a positive, healing experience.

Core measure and patient satisfaction data are publicly available on the federal Hospital Compare Web site at

Toni Inglis, MSN, RN CNS (retired), FAAN, a lifelong Austin resident, is a retired neonatal intensive care nurse and editor of NursingNews. She also wrote a monthly opinion column for the Austin American-Statesman editorial pages for 10 years.