Response to CMS’ Preventable HAI Policy FY2009

On July 31, the Centers for Medicare and Medicaid Services (CMS) released its final ruling regarding its hospital reimbursement policy. The ruling, as anticipated, does not name MRSA as a condition that will no longer be reimbursed by CMS. However, the ruling specifically acknowledges that MRSA could be the cause of many of the conditions named below that will cease to be reimbursed commencing October 1, 2008.

Note that the following represents Cepheid’s interpretation of CMS’s Preventable HAI Policy, and readers are advised to review the ruling in its entirety at www.cms.hhs.gov/AcuteInpatientPPS/downloads/CMS-1390-F.pdf.

Effective October 1, 2008, CMS will no longer pay for complications associated with the following Healthcare Acquired Conditions (HAC), unless they were present on admission:

  • foreign object retained after surgery;
  • air embolism;
  • blood incompatibility;
  • pressure ulcer stages III and IV;
  • certain falls, trauma or injuries;
  • catheter-associated urinary tract infection (UTI);
  • vascular catheter associated infection; and
  • SSI – mediastinitis after coronary artery bypass graft.

Additionally, the ruling extended its reach into HACs with the addition of the following conditions:

  • manifestations of poor glycemic control;
  • SSI following certain orthopedic surgeries involving repair, replacement or fusion of various joints, including the shoulder, elbow and spine, or following bariatric surgery for obesity; and
  • deep vein thrombosis/pulmonary embolism following total knee replacement or hip replacement.

Note that many Medicare beneficiaries have more than one secondary diagnosis, including older individuals with coexisting conditions. To trigger denial of payment for complication(s), all of the secondary diagnoses that are complications/comorbidities (CCs) or major complications/comorbidities (MCCs) must be selected on the HAC non-payment list.

Conditions not selected from proposed list published April, 2008, but which may be considered as HACs in future as evidence accumulates to support preventability and/or better diagnostics:

  • delirium, excluded due to difficulty in diagnosis and questionable preventability;
  • ventilator associated pneumonia, excluded due to difficulty in diagnosis and questionable preventability;
  • S. aureus septicemia, excluded as vast majority of preventable cases are expected to be captured by provisions applying to indwelling catheters;
  • C. difficile associated disease (CDAD), excluded due to difficulty in distinguishing community-acquired from hospital acquired conditions;
  • Legionnaires’ disease;
  • Iatrogenic pneumothorax;
  • MRSA (no CC/MCC).

However, CMS acknowledges that (emphasis added) “for every infectious condition selected as an HAC, MRSA could be the etiology of that condition (e.g., vascular catheter associated infection), and the payment provision would apply to that infection... Colonization by MRSA is not a reasonably preventable condition according to the current-based guidelines. Therefore MRSA does not meet the “reasonably preventable” statutory criterion for an HAC.” While MRSA colonization is not preventable, CMS acknowledges that there are guidelines to prevent MRSA infection.

In a positive move, CMS classified MRSA septicemia (038.12) and MRSA pneumonia (482.42) as MCCs because the SA codes were already MCCs. However, CMS did not classify MRSA infection (041.12) as a CC because “all codes in the 041.00-041.9 category of bacterial infection in conditions classified elsewhere and of unspecified site are non-CCs”. Therefore, CMS urges facilities to code first by the site of infection (e.g., urinary tract, infected toenail bed) and then by organism so that the site triggers the CC/MCC classification.

Additional conditions identified by the CMS for future consideration:

  • SSI following cardiac device implantation (e.g. pacemakers);
  • failure to rescue;
  • death or disability associated with drugs, devices, orbiologics;
  • events on National Quality Forum’s (NQF) list of serious reportable adverse events;
  • dehydration;
  • malnutrition; and
  • water-borne pathogens.

CMS is also considering a number of policy options, including working with the Agency for Healthcare Research and Quality (AHRQ) and CDC to develop new initiatives to treat and prevent infections, and reduce their spread, and extend the HAC payment provision to other payment systems, including outpatient departments, skilled nursing facilities, and physician practices. Further, CMS is working with other government and private agencies to propose development of quality measures under the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program for several HAIs, including MRSA, CDAD and several SSIs.

Finally, CMS has sent a letter to all Medicaid directors requesting their agencies adopt the same payment policy on HACs. Currently, almost twenty states have or are in the process of revising their state Medicaid regulations to eliminate payment of some or all of the twenty-eight Never Events as identified by the National Quality Forum. This includes Maine, that enacted legislation earlier this year not to pay for 28 hospital acquired conditions, Massachusetts and New York have made it state policy to not reimburse providers for these types of events, and California has pending legislation not to pay for certain HACs.


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This document contains forward-looking statements that are not purely historical regarding Cepheid's or its management's intentions, beliefs, expectations and strategies for the future, including those relating to future regulatory developments and CMS developments and policies. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results could differ materially from Cepheid’s current expectations. Factors that could cause actual results to differ materially include risks and uncertainties such as those relating to: uncertainties related to regulatory processes; changing interpretations of regulations and rulings; and changing policies with respect to best practices. Readers should also refer to the section entitled “Risk Factors” in Cepheid’s Annual Report on Form 10-K for 2007 and its other reports filed with the SEC.

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