Patient Care

Hospital-Acquired Conditions & The Hospitalist


Hospitalist Neal Axon, MD, first became aware of an important change in his hospital’s policies last year while attending to an elderly patient the morning after admission to the community hospital where he works part time.

“This new form appeared in the chart requesting a urinalysis for my patient, who’d had a Foley catheter placed,” says Dr. Axon, an assistant professor of medicine at the Medical University of South Carolina in Charleston. “I didn’t know why, so I asked. I was told that it was now necessary to document that there was no UTI present on admission.” He asked the charge nurse, “So what do I do now that the catheter has been in place for 12 hours and has colonization without a true infection?”

The next thing he heard: silence.

The new form Dr. Axon encountered was an outgrowth of the requirements of the Deficit Reduction Act (DRA) of 2005, which ordered Medicare to withhold additional hospital payments for hospital-acquired complications (HAC) developed during a hospital stay. One result of the new rule is that much of a hospital’s response to these initiatives has been placed in the hands of the hospitalist. From accurate documentation of complications already present on admission (POA), to confirming that guidelines for treatment are being followed, to taking the lead on review of staff practices and education, hospitalists are in a position to have a wide-ranging impact on patient care and the financial health of their institutions.

Table 1. Payment Examples click for large version

click for large version

Congress Pushes Reforms

In order for Medicare to not provide a reimbursement, an HAC has to be high-cost and/or high-volume, result in the assignment of the case to a higher payment when present as a secondary diagnosis, and “could reasonably be prevented through the application of evidence-based guidelines,” says Barry Straube, MD, chief medical officer and director of the Office of Clinical Standards and Quality at the Centers for Medicare and Medicaid Services (CMS). “CMS was to implement a process where we would not pay the hospitals additional money for these complications.”

The new rules mean Medicare pays hospitals on the basis of Medicare Severity Diagnostic-Related Groups (MS-DRG), which better reflect the complexity of a patient’s illness. The biggest change was a three-tiered payment schedule: a base level for the diagnosis, a second level adding money to reflect the presence of comorbidities and complications, and a third for major complications and comorbidities (see Table 1, p. 31).

“Instituting HACs means that hospitals would no longer receive the comorbidity and complication payments if the only reason a case qualified for higher payment was the HAC,” Dr. Straube explains. “We did carve out a POA exception for those conditions that were acquired outside of the hospital. HACs only impact additional payments; the hospitals are still paid for the diagnosis that resulted in the hospital admission.”

CMS also identifies three “never events” it won’t reimburse for (see “A Brief History of Never Events,” p. 35): performing the wrong procedure, performing a procedure on the wrong body part, and performing a procedure on the wrong patient. “Neither hospitals nor physicians that are involved in such egregious situations would be paid,” Dr. Straube says.

CMS’ List of Hospital-Acquired Conditions

  • Foreign object retained after surgery;
  • Air embolism;
  • Pressure ulcers;
  • Blood incompatibility;
  • Falls and trauma (fractures, dislocations, intracranial injury, crushing injury, burn, electric shock);
  • Catheter-associated UTI;
  • Vascular catheter-associated infection;
  • Manifestations of poor blood-sugar control;
  • Surgical-site infection following coronary artery bypass surgery;
  • Surgical-site infection following orthopedic procedures;
  • Surgical-site infection following bariatric surgery for obesity;
  • DVT and PE following orthopedic procedures; and
  • Ventilator-associated pneumonia.

Source: Centers for Medicare and Medicaid Services

Preventability: Subject of Controversy

Dr. Meddings

The big questions surrounding HACs: Could they reasonably be prevented through the application of evidence-based guidelines? How preventable are HACs? Who decides if a complication is preventable, and therefore payment for services is withheld?

They’re concerns that are widespread among physicians, hospital administrators, and regulators alike.

“The legislation required the conditions to be ‘reasonably preventable’ using established clinical guidelines,” Dr. Straube says. “We did not have to show 100% prevention. In an imperfect world, they might still take place occasionally, but with good medical care, almost all of these are preventable in this day and age.”

For CMS, the preventable conditions are an either/or situation: Either they existed prior to admission and are subject to payment, or they did not exist at admission and additional payment for the complication will not be made. “HACs do not currently consider a patient’s individual risk for complications,” says Jennifer Meddings, MD, MSc, clinical lecturer and health researcher in the Department of Internal Medicine at the University of Michigan Health System in Ann Arbor. “We know the best strategies to prevent complications in ideal patients, and these are reflected in the HACs. In real life, many of our patients just don’t fit into the guidelines for many reasons—and you have to individualize care.”

Dr. Meddings points to DVT as a prime example. For a certain number of inpatients, the guidelines can be followed to perfection. In other patients (e.g., those with kidney conditions), previous reactions to a medication or an individual’s predisposition to clotting might interfere with treatment. However, CMS doesn’t allow appeals of nonpayment decisions for HACs based on individual circumstances.

Some experts think the rigidness of the payment policy forces physicians to treat patients exactly to guidelines. Even then, payment could be declined if an HAC develops.

“One of the points of most discussion is how preventable some of these are, particularly when choosing those you are no longer going to pay for,” Dr. Meddings says. “Many of the complications currently under review have patients that are at higher risk than others. How much our prevention strategies can alleviate or reduce the risk varies widely among patients.”

A brief History of Never Events

Over the years, multiple lists of adverse medical events that are deemed preventable have been published. CMS released a group of hospital-acquired complications (HACs) that they will no longer pay for. The Joint Commission published its National Patient Safety Goals and implemented it as part of their accreditation process. The National Quality Foundation (NQF) has Serious Reportable Events. All of these have been thrown under the title of “never events,” to the confusion of many.

“In 2003, then-NQF chief executor officer Ken Kaiser coined the term ‘never events’ to describe things that should just never happen in healthcare,” says Peter Angood, MD, the foundation’s senior advisor for patient safety. “Although there is some overlap, each of these lists was developed by different entities for different reasons, using different criteria for inclusion. NQF now uses the term Serious Reportable Events and regularly updates its list to include the newest evidence.”

Efforts to harmonize the language and criteria across the various organizations have been made, and some believe a coordinated list will alleviate the confusion brought about by various lists. “While there have been many types of initiatives taken over the last decade or so, the fact remains that ongoing improvements are still required for patient safety in patient care, as well as the efficiency of that care,” Dr. Angood says. “Efforts around reportable events, no matter who they are reported to, are one component in spurring safer, higher-quality care.”—KU

Impact on HM Practice

Many of the preventable conditions outlined by CMS do not directly affect hospitalist payment. However, hospitalists often find themselves responsible for properly documenting admission and care.

“The rule changes regarding payment for HACs are only related to hospital payments, and to date, most physicians, including hospitalists, are not directly at financial risk,” says Heidi Wald, MD, MSPH, hospitalist and assistant professor of medicine in the divisions of Health Care Policy Research and General Internal Medicine at the University of Colorado Denver School of Medicine. “Although hospitalists have no financial skin in the game, there are plenty of reasons they would take an interest in addressing HACs in their hospital. In particular, they are often seen as the ‘go-to’ group for quality improvement in their hospitals.”

For example, some HM groups have been active in working with teams of physicians, nurses, and other healthcare providers to address local policies and procedures on prevention of catheter-associated urinary tract infections (UTIs) and DVT.

“This has certainly necessitated a team approach,” says Shaun Frost, MD, FHM, an SHM board member and regional medical director for Cogent Healthcare in St. Paul, Minn. “For many of the HACs that apply to our population of patients, the hospitalist alone cannot be expected to solely execute effective quality improvements. It takes a team effort in that regard, and one that includes many different disciplines.”

The Cogent-affiliated hospitalist group at Temple University Hospital in Philadelphia formed a task force to address issues with catheter-associated UTI. One initiative focused on educating all providers involved in the proper care of the catheters and similar interventions. A secondary focus of the project was an inventory of current practices and procedures.

“It was discovered that we did not have an automatic stop order for Foley catheters, so in some situations, they were likely being left in longer than needed while nursing [staff] tried to contact a physician,” Dr. Frost explains. “We created standardized order sets that include criteria for continuing the catheter. Once the criteria are no longer applicable, nursing will be able to discontinue it.”

Although CMS has only recently turned the spotlight on HACs and never events, hospitalists have been heavily involved in the patient-safety arena for years. “It is not a new phenomenon that hospitalists work for healthcare delivery and healthcare system improvement,” Dr. Meddings says.

Hospital administration at Temple University Hospital recognized the HM group’s quality-improvement (QI) work, and has “specifically charged us with spreading the work we have done in patient safety to the entire house,” Dr. Frost says. “That speaks to the administration’s opinion of the power of the HM program to assist with institution-wide QI initiatives.”

Documentation Is Key

Dr. Frost

Beyond applying proven methods to avoid HACs, hospitalists can make a difference through documentation. If the hospitalist notes all conditions when the patient first presents to the hospital, additional comorbidity and complication payments should be made.

“The part that probably has the greatest impact on the day-to-day practice of a hospitalist is the increased importance of documentation throughout the hospital episode,” Dr. Meddings says. “If complications are occurring and they are not present in the chart, the coders may not recognize that it has occurred and will not know to include it in the bill. This can have an adverse impact on the hospital and its finances.”

Documentation issues can impact hospital payment in several ways:

  • Hospitals might receive additional payment by default if certain HACs are described incorrectly or without sufficient detail (e.g., receiving overpayment because the physician did not indicate a UTI was in fact a catheter-associated UTI);
  • As more attention is invested in documenting all conditions POA, hospitals might be coding more comorbidities overall than previously, which also will generate additional payment for hospitals as any POA condition is eligible for increased payment; and
  • Hospitals might lose payment when admitting providers fail to adequately document the condition as POA (e.g., a pre-existing decubitus ulcer not detected until the second day of the hospital stay).

The descriptions to be used in coding are very detailed. UTIs, for example, have one code to document the POA assessment, another code to show that a UTI occurred, and a third code to indicate it was catheter-associated. Each code requires appropriate documentation in the chart (see Table 1, above).

The impact hospitalists have on care and payment is not the same across the HAC spectrum. For instance, documenting the presence of pressure ulcers might be easier than distinguishing colonization from infection in those admitted with in-dwelling urinary catheters. Others, such as DVT or vascular catheter-associated infections, are rarely POA unless they are part of the admitting diagnosis.

“This new focus on hospital-acquired conditions may work to the patient’s benefit,” Dr. Meddings says. “The inclusion of pressure ulcers has led to increased attention to skin exams on admission and preventive measures during hospitalizations. In the past, skin exams upon admission may have been given a lower priority, but that has changed.”

Dr. Meddings is concerned that the new rules could force the shifting of resources to areas where the hospital could lose money. If, when, and how many changes will actually take place is still up in the air. “Resource shifting is a concern whenever there is any sort of pay-for-performance attention directed toward one particular complication,” she says. “To balance this, many of the strategies hospitals used to prevent complications are not specific to just the diagnosis that is covered by the HAC.”

Dr. Meddings also hopes the new focus on preventable conditions will have a “halo effect” in the healthcare community. For instance, CMS mandating DVT prevention following orthopedic operations will, hopefully, result in a greater awareness of the problem in other susceptible patients.

POA Indicators

Dr. Wald
Table 2. POA Indicator Reporting Options Dr. Meddings

click for large version

Since hospitalists often perform the initial patient history, physical, and other admission work, they are in the best position to find and document POA indicators (see Table 2, p. below). Proper notes on such things as UTIs present and the state of skin integrity are an important part of making sure the hospital is paid correctly for the care it provides.

Education on the specific definition of each potential HAC is required to help physicians avoid overtreatment of certain conditions, especially UTIs. For example, the Centers for Disease Control and Prevention (CDC) defines all UTIs as symptomatic. Therefore, the screening of all admitted patients, regardless of symptoms, is wasteful and unlikely to help the hospital’s bottom line.

“If you start screening everyone that comes through the door so you don’t miss any pre-existing UTIs, you are going to find a lot of asymptomatic colonization,” Dr. Wald says. “You are also going to spend a lot of money and time on studies and possibly treatments that may not yield many true infections. It is important that physicians know the definition of these HACs to help avoid needless interventions.”

Minimal Loss

Dr. Berenson

Many hospital administrators and physicians were worried when the HAC program was first announced. Much of the stress and concern, however, seems to have dissipated. CMS estimated the HAC program would save Medicare $21 million in fiscal year 2009. Others, such as Peter McNair and colleagues writing in Health Affairs, suggest the actual impact is closer to $1.1 million.1 The CMS-projected impact of the HAC provision in fiscal-year 2009 was $21 million, out of more than $100 billion in payments.

“I think the HACs will not have a major impact because of the way payments are made,” says internist Robert Berenson, MD, a fellow at the Urban Institute in Washington, D.C., who has studied Medicare policy issues extensively, and for two years was in charge of Medicare payment policies at the Health Care Finance Administration, the precursor to CMS. “Patients who have HACs often have another comorbidity that would kick them into a higher payment category regardless of the presence of a hospital-acquired complication. In the end, it is probably more symbolic and unlikely to make a major dent in hospital income—at least at this point.”

Another limitation to CMS nonpayment for HACs is the issue of deciding which conditions are truly preventable. Dr. Berenson questions the ability of the current system to identify many additional complications for which this approach will be feasible.

“CMS has laid out its strategy, suggesting that we should be able to continue increasing the number of conditions for which providers would be paid differently based on quality,” he says. “Many observers question whether there will ever be measurement tools that are robust enough, and there will be a wide agreement on the preventability of enough conditions that this initiative will go very far.”

Although hospitalists might not face a direct financial risk, they still have their hospitals’ best interest—and their reputations—on the line. “Hospitalists care about preventing complications,” Dr. Wald says. “We are very engaged in working with our hospitals to improve care, maximize quality, and minimize cost.” TH

Kurt Ullman is a freelance medical writer based in Indiana.


  1. McNair PD, Luft HS, Bindman AB. Medicare’s policy not to pay for treating hospital-acquired conditions: the impact. Health Aff (Millwood). 2009;28(5):1485-1493.


IS HAC PROGRAM First Round of Payment Changes?

Hospital-acquired conditions (HACs) most likely are just the first round of carrots and sticks to be introduced into the U.S. healthcare payment system. It has long been a desire of Congress to have Medicare become a value-based purchaser in all realms of medical services.

“One of the biggest criticisms over the last few years of Medicare’s payment system is that we pay for quantity but not quality,” Dr. Straube says. “Historically, anything that happened, good or bad, we paid for. Now we are saying ‘the times, they are changing,’ and we are, too, by paying more for higher-quality and less for lower-quality care.”

Although HAC is the main component of the early iterations of CMS’ value-based purchasing, few expect it will remain the only component. Right now, CMS is withholding HAC payment from hospitals. The next logical step will be to include physicians and other providers in the mix.

“The Senate Finance Committee wants to extend value purchasing to all providers,” Dr. Berenson says. “One could enunciate a principle that providers should be rewarded for better performance.”

The biggest question is whether the current measures are up to that kind of challenge. In fact, some controversy already is building around HAC nonpayments, which most healthcare experts view as the low-hanging fruit of value-based purchasing in healthcare.

“One of the points of most discussion is how preventable some of these are, particularly when choosing those you are no longer going to pay for,” Dr. Meddings says. “Many of the complications currently under review have patients that are at higher risk than others.

“How much our prevention strategies can alleviate or reduce the risk varies widely among patients.”

She points to DVT as an example. For a certain number of patients, the guidelines can be followed perfectly, yet some factors specific to that individual result in a DVT occurring. Under the HAC rules, there is no method to account for this, and the only way to appeal a nonpayment decision is to contest or change the coding.

“Can we come up with good-enough measures to make this more than a token approach to quality at all levels?” Dr. Berenson asks. “Otherwise, we are putting a significant amount of revenues at risk, and some of us are not sure that is the best way we can get to higher quality.”—KU

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