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Financial Incentives for Preventing HAIs Don't Add Up to Much

 |  By cclark@healthleadersmedia.com  
   September 05, 2013

A major teaching hospital's move to provide a financial rationale for preventing healthcare-acquired infections points to the dearth of meaningful incentives for hospitals to work harder toward the goal of improved patient safety.

The idea that hospital leaders would require financial justification before beefing up their efforts to prevent healthcare-associated infections (HAIs) would seem like a brazen insult. Surely concern for patient safety would be motivation enough.

But that was indeed the rationale behind a project launched by Eyal Zimlichman, MD and David Bates, MD, and others with the Center for Patient Safety Research and Practice at Boston's Brigham & Women's Hospital about three years ago.

"A member of our executive committee is Charles Denham," the well known healthcare and technology solutions expert whose patient safety CV seems to go on for days, Zimlichman explains. "Denham was discussing the idea that we needed to start putting some numbers out there, cost estimates, so that providers, specifically hospitals, would understand there's a need from a financial point of view to try to reduce HAIs."

That they thought it essential to provide hospitals with an ROI rationale to prevent HAIs points to the dearth of other meaningful incentives for hospitals to take HAI prevention seriously.

Indeed, the opposite is true, as explained in a May report by Johns Hopkins infection expert Peter Pronovost, MD. The study found that hospitals make exorbitant profits from infections, especially when health plans rather than the government are paying the bill, and there is little financial incentive to work harder to prevent them.

The result was a paper published Monday in JAMA Internal Medicinein which the cost of five types of hospital infections tallied up to a scary $9.8 billion a year. A third of that figure is attributed to surgical site infections alone.

The actual total cost is much greater, because the project only counted infections in hospitals paid under Medicare's inpatient prospective payment system (IPPS). Researchers excluded pediatric acute care and many other settings.

Absent this HAI cost awakening, federal rules now include four penalties or disincentives for higher HAI rates, but they are so meaningless in terms of their dollar amounts, that I'm calling them Chump Change, Mickey Mouse, Chicken Feed, and Peanuts.

1. Chump Change
Under the Deficit Reduction Act of 2005, Medicare is prohibited from reimbursing hospitals additional costs to deal with extra care required for a patient who develops any of 10 hospital-acquired conditions, three of which are infections not present on admission. These are:

  • Catheter associated urinary tract infections
  • Vascular-associated infections and
  • Surgical site infections following coronary artery bypass graft, orthopedic, bariatric, and cardiac implantable electronic device procedures.

But because hospitals are allowed to upwardly adjust the billing code for patients who are seriously ill, the dollars lost are ridiculously small.

According to page 2144 of the 2014 final IPPS rule issued Aug. 19, the Centers for Medicare & Medicaid Services estimates the total federal savings from the DRA program are as follows:

FY 2014 — $26 million
FY 2015 — $28 million
FY 2016 — $30 million
FY 2017 — $33 million
FY 2018 — $36 million

These amounts are represent total avoided payments for all 10 hospital acquired conditions, including air embolism, blood incompatibility, pressure ulcers, falls and trauma, manifestations of poor glycemic control, and deep vein thrombosis and pulmonary embolism following total hip or knee replacement surgeries.

Avoided spending for three types of infections could be a mere $9 million to $11 million, amounts that dissipate when they are spread out among a subset of 3,500 hospitals.

2. Mickey Mouse
Though Medicare no longer pays for additional care required because of a hospital-acquired condition, there was no such requirement under Medicaid, which is funded by a roughly 50/50 combination of state and federal funds, and states generally set their own coverage rules. Only half of the states in 2011 had a no HAC payment rule, and those that did widely varied.

That changed as of July 6, 2011, when CMS announced that, under authority of the ACA section 2702, all states had to adopt similar HAC no-payment policies. Federal payments would not go to any state for any amounts expended for providing medical assistance for a healthcare-acquired condition.

But here again, the amount is miniscule. CMS estimated savings for all five years, across all providers, from 2011, 2012, 2013, 2014 and 2015, is a whopping $20 million for the federal share and $15 million for the state share.

Also, hospitals are required to self-report to state Medicaid agencies any incident involving a qualifying HAC.

3. Chicken Feed
Under the Patient Protection and Affordable Care Act starting on Oct. 1, 2014, or FY 2015, Medicare will financially punish hospitals with higher rates of central line-associated bloodstream infections [PDF], or CLABSI, as part of the value-based purchasing incentive program.

All eligible hospitals are required to relinquish into a pool an amount that is bound to be somewhat higher than $1.1 billion, the amount of the pool for FY 2014.

This money will be redistributed to hospitals based on their performance in three basic areas. Patient experience counts 30%, process of care measures count 40%, and five outcome measures, which include three measures of 30-day mortality, a composite safety score, and rates of CLABSI, count 30% with each of the five equally weighted at 6%

The precise algorithm is too complicated for this column, but the amount at risk for just those hospitals with high CLABSI rates is probably a mere $60 million, and higher performance in other parts of the VBP equation may mute that impact to any one hospital.

4. Peanuts
Under the Affordable Care Act, effective with patient discharges beginning Oct. 1, 2014, the Hospital-Acquired Condition penalty kicks in. Any hospital whose rates of hospital-acquired conditions are among the highest 25% will see its Medicare DRG rate, which for most hospitals amounts to roughly half their total revenue, cut by 1%.

The algorithm is divided into two domains, the first of which has eight measures, two of which deal with hospital-acquired infections—postoperative sepsis and central venous catheter-related bloodstream infections. Domain one counts 35%.

Domain two is a combination of a hospital's CLABSI and catheter-associated urinary tract infection rates or CAUTIs. Domain 2 counts 65%.

Now we could be talking real money. A hospital with higher rates of sepsis, central venous catheter, CLABSI and CAUTI infections could heavily influence whether it suffers a 1% DRG pay cut in FY 2015.

But to many hospitals leaders I've talked with recently, this may seem too away to take seriously in 2013.

For Zimlichman and his research colleagues, hospitals "must try to get accustomed with the entire emerging array of payment reforms," which he said will make major changes on how hospitals calculate their financial losses and gains.

"As we slowly phase out of fee for service payment approach, we're going to see hospitals investing much more in efforts to battle complications. There's no doubt about that."

The idea is that when payers, including private insurers and the government, start demanding that the costs of managing and fixing avoidable healthcare errors be shifted from payers to providers through bundled payments and accountable care organization contracts, hospitals will start seeing these costs on their balance sheets. And the awakening then will be rude indeed.

The Brigham & Women's study was an effort to brace hospital leaders against the shock they'll get when payment reforms are much more robust than they are today. Existing HAC penalties in current federal rules, I'm afraid to say, don't amount to much more than a hill of beans.

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