In the Aftermath of 2008 CMS Rule, Hospitals Seek to Prevent Infections, Retain Reimbursement


It has been about 14 months since a new directive from the Centers for Medicare and Medicaid Services (CMS) went into effect Oct. 1, 2008, essentially declaring that Medicare will no longer reimburse hospitals for extra costs related to certain infections acquired during a hospital stay: catheter-associated urinary tract infections (UTIs), catheter-associated bloodstream infections, mediastinitis, and some surgical site infections (SSIs) following certain orthopedic procedures.

According to Wright (2008) healthcare-acquired infections (HAIs) account for an estimated 1.7 million infections and 99,000 associated deaths each year; they affect 5 percent to 10 percent of hospitalized patients annually; and they add nearly $20 billion to healthcare costs each year.

The CMS ruling is part of an effort on the part of public and private agencies and organizations to address the lack of quality still evident in the U.S. healthcare system. Although the U.S. spends more per capita on healthcare than any other country in the world, U.S. healthcare system quality is often inferior to other nations and often does not meet evidence-based guidelines. In addition, the system is plagued by significant variations in quality and costs across the country.

In this ruling, CMS continues its quest to hitch payment to improved quality of care, something it undertook several years ago with its Quality Roadmap, comprised of five strategies to achieve higher quality of care for Medicare beneficiaries. One of these strategies is paying for healthcare services in a manner that reinforces CMS’s commitment to improving healthcare quality and outcomes, while avoiding unnecessary complications and costs. Straube (2006) says CMS acknowledges that strategies for quality improvement initiatives must involve promoting quality measurements as a foundation for supporting more effective quality improvement efforts, and that the agency must pay in a way that expresses its commitment to quality as well as helps providers and patients to take steps to improve health and avoid unnecessary costs. Straube (2006) also says that the federal system will rely on a number of factors to help it improve quality, including providing for greater transparency, supporting public reporting of quality and price information, promoting healthcare consumer informed choice, engaging in healthcare provider reimbursement and payment reform, and overall improved collaboration between public and private sectors.

Straube and Blum (2009) acknowledge that policies that decline payment in the event of hospital-acquired conditions have generated considerable public attention. They add that although the projected payment reductions are not large, small payment penalties have been effective in changing human behavior and ultimately in improving the hospital care experience for patients. They say that Medicare payment reductions for hospital-acquired conditions are only one component of several efforts to reduce their incidence; other CMS strategies to reduce hospital-acquired conditions include public reporting, quality improvement initiatives, value-based purchasing, quality metrics and guidelines development, and national coverage decisions.

For background purposes, on Feb. 8, 2006, then-President George Bush signed the Deficit Reduction Act (DRA) of 2005. Section 5001(c) of the DRA requires the identification of conditions that are high cost or high volume or both, result in the assignment of a case to a DRG that has a higher payment when present as a secondary diagnosis, and could reasonably have been prevented through the application of evidence-based guidelines. For discharges occurring on or after Oct. 1, 2008, hospitals will not receive additional payment for cases in which one of the selected conditions was not present on admission. That is, the case would be paid as though the secondary diagnosis were not present. CMS also required hospitals to report present on admission information for both primary and secondary diagnoses when submitting claims for discharges on or after Oct. 1, 2007.

Although the ruling has placed new responsibilities on hospitals, this mandate to eliminate infections CMS deems preventable must resonate with all healthcare stakeholders, from caregivers at the bedside level all the way through the ranks of hospital administration and executive management.

In a statement in October 2008, Kathy Warye, CEO of the Association for Professionals in Infection Control and Epidemiology (APIC), noted, “We are pleased that CMS took the comments of infection preventionists into consideration when drafting the new regulations. Infection preventionists work daily to educate healthcare workers and lead performance improvement initiatives that save both lives and scarce healthcare dollars. We appreciate that the agency based their decision to add new conditions on whether they could be considered reasonably preventable through application of evidence-based guidelines.” Warye continued, “APIC supports tying payment to conditions that have a high prevention rate and associated actionable evidence-based prevention guidelines. We stand ready to assist CMS with a value-based purchasing approach that recognizes not only the preventability of the condition, but also the institution’s track record in improving outcomes. We favor a balanced approach for payment that recognizes institutions that are making progress in reducing infections, rather than an all-or-nothing system based solely on non-payment for infections deemed preventable and welcome continued discussions on this topic. APIC applauds CMS for bringing much needed attention to the critical issue of HAIs. The new regulations... have catapulted the issue of infection prevention into the limelight. We hope that this increased attention will drive compliance with evidence-based interventions to reduce these infections. While not all infections are preventable, working toward zero should be the goal.”

Peter Pronovost, MD, PhD, FCCM, professor at the Johns Hopkins University School of Medicine in Baltimore, agrees that the CMS ruling has galvanized awareness of the need to prevent infections. “What we have learned is that there are many levers you can pull to drive patient safety and each of them have some small treatment effect but collectively they are much more profound,” says Pronovost, who is also medical director for the Center for Innovation in Quality Patient Care at Johns Hopkins.

That the ruling hits hospitals in the pocketbook isn’t lost on patient safety and quality experts; it might just be one of the best ways for facility administration and executive management to make the connection that clinicians and infection preventionists already have, and that is the humanizing of healthcare-acquired infections. HAIs destroy lives and drive up costs, and that’s the equation at the heart of the CMS ruling.

According to the Center for Innovation in Quality Patient Care, the total annual cost of preventable medical errors (including expense of additional care, disability, lost income and productivity) in the U.S. is estimated between $17 billion and $29 billion. Estimates of attributable cost-per-bloodstream infection range between $3,700 and $29,000, and ventilator-associated pneumonia (VAP) prolongs length of stay and adds an estimated $40,000 to the cost of a typical hospital admission. In terms of human life, in the U.S., annual deaths from bloodstream infections related to central line catheters is as high as 28,000. Infections at surgical sites complicate about 780,000 procedures annually, or more than 1 in 40. Patients with infections are two to three times more likely to die and are hospitalized an average of seven days longer than other patients.

McNair et al. (2009) say that the CMS policy has catalyzed efforts to realign payment incentives and patient safety efforts, despite the fact that the actual financial effects of the policy are likely minimal. They state that hospital-acquired conditions were present in just 0.11 percent of acute inpatient Medicare discharges, and that only 3 percent of these were affected by the policy. Based on California hospital discharge data, they estimate that the total nationwide Medicare payment reductions would amount to only $1.1 million yearly. They add that payment reductions were negligible and are unlikely to encourage providers to improve quality. Options to strengthen the incentives include further payment modifications for hospital–acquired conditions or expanding the hospital-acquired condition policy to exclude payment for consequences, additional procedures and readmissions associated with hospital-acquired complications.

“Payment incentives clearly help drive organizations,” Pronovost says. “The data to date on pay-for-performance shows it has had some relatively modest effect on improving clinical performance but it has a much bigger effect on getting hospital CEOs engaged. So what I think you are going to see is them being much more willing to invest their time and resources into reducing these infections.”

It seems to be working. “Although my VA hospital has not been directly affected financially by the new CMS rules, it has become more cognizant of the impact of healthcare-acquired infections,” says Rabih Darouiche, MD, a VA Distinguished Service Professor, and director of the Center for Prostheses Infection at Baylor College of Medicine in Houston, Texas. “This translated into more systematic monitoring of the rates of infection and stricter implementation of potentially protective infection control measures.”

Michelle L. Hawes, RN, MSN, CRNI, CEO of Vascular Access Specialists, LLC in Bloomington, Ind., says her company works with many facilities to provide vascular access services, with facilities ranging from small rural hospitals to large nation-wide corporations. “In my opinion the nation-wide corporations were quicker to get policies in place and slower to fully implement changes while the smaller rural hospitals (less than 60 beds) were slow to change but could consequently implement meaningful patient-related changes more rapidly.” Hawes adds, “I believe that the buzz about reimbursement has generated a culture that is attempting to understand the dynamics of infection control in the inpatient setting that was harder to emphasize before dollars were involved. Industry and hospitals are equipping the vascular access nurse with the tools necessary to perform our interventions under maximal sterile barrier precautions. Before the CMS ruling many of us were shouting that these changes were necessary, but we were rarely heard. We have a long way to go, but the intended focus on CRBSI has given the discussion more volume than before. Whether long-term effective change happens cannot be known but it is the hope of the nurse professionals in this country that we continue to have the ability to keep our patients safe.”

It may be too soon to tell to what degree hospitals have stepped up their infection prevention strategies and improved their infection rates because of the CMS ruling, but Hawes says it may involve some interesting calculations. “The improvement in infection rates may be an illusion and funny math for quite awhile,” she says. “I believe that facilities will produce the numbers to appear to have decreased their infections rates. This may seem that I think there is something insidious taking place but it is not that simple. In my opinion once the focus on HAI caused a serious look at the real infection rates many infection control practitioners were surprised by the numbers. Central lines outside of the ICU should have been in the data all along, now the data is potential more meaningful and hopefully the decreased rates will show a real impact eventually. In other words, when the focus caused a jump in the infection rate the reduced rates may have appeared higher than before the CMS ruling but in fact these rates are showing the actual improvements in process control.”

Now that hospitals have had a little more than a year to get used to the CMS rules, it’s a little easier to ascertain what facilities are doing to comply.

“I think most facilities have developed plans to review any payment reductions, and to develop interventions to prevent these events from happening,” says Tracy Cox, RN, CIC, infection control coordinator at St. Mary’s Hospital in Decatur, Ill. “However, I do know that some facilities are still working on this, or have chosen to do nothing. Many interventions have been put into place, starting with education of frontline staff on the basics of infection prevention, such as why we don’t need everyone to have a Foley catheter, why we ‘scrub the hub,’ etc.”

In terms of impediments to compliance, Cox notes, “I think one of the biggest is still the disconnect between the frontline infection preventionist (IP) and the hospital C-suite. There are still many places where the CEO still does not appreciate the important role the IP plays in preventing these adverse outcomes. Funding needs to be given for IP programs, and the money is not there most of the time.”

Cox says she believes the issue of what is considered to actually be preventable is still being debated in hospitals. “Medical staff will argue that we can’t prevent all infections. Unfortunately, most people outside of healthcare do not understand that. Can most infections be prevented? Yes! Can hospitals do a better job at preventing infections? Yes! Can every single infection be eliminated? No! I think the evidence clearly shows that many infections are preventable, that there are valid evidenced-based practices to put in place to prevent them. However, evidence also shows that there are some people who have a greater risk for developing an HAI; should hospitals be penalized for providing care to high-risk patients if they develop an infection? That is essentially what could happen. Some hospitals serve a much greater at-risk population than others. Is an across the board prevention requirement realistic? I would love to see process measures as a better indicator of hospital performance. Instead of not paying for the outcome of a single patient, pay an incentive to hospitals who implement evidence-based processes and monitor that they are being used. Penalize hospitals that do not have adequate infection prevention programs. Don’t look at just a single outcome, look at the overall process.”

What’s needed is a buy-in from all stakeholders in order to meet the CMS rules, Cox affirms, adding, “Culture change is needed. CEOs must realize the importance of infection prevention. It cannot just be telling the IP to reduce the rates. There has to be a conscious investment in the IP programs. The entire organization must be involved in prevention efforts. This is not the one man/woman show of IP, it is a culture of prevention, and I have found at my facility if it is embraced by the senior leadership then it is a trickle-down effect on the rest of the staff. When staff members see senior leaders embrace infection prevention as a goal of the facility, they become more involved.”

It’s clear that no matter what additional conditions or infections are added to its list by CMS, infection preventionists are key to compliance efforts.

“Infection preventionists have been and remain the experts on infection prevention and control,” Cox says. “IPs need to serve as the expert driver of prevention. IP is the person with the expertise necessary to develop evidence-based programs that will prevent as many infections as possible. This is an opportune time for those working in the field of infection prevention to stand up and be heard, to share your knowledge and share your experience. This focus on reimbursement has pushed us to the forefront, whether we want to be there or not. Now is the time to present the business case for infection prevention. It makes sense to invest in the experts, invest in the programs and reduce infections, thus reducing cost.”


McNair PD, Luft HS, Bindman AB. Medicare’s policy not to pay for treating hospital-acquired conditions: the impact. Health Affairs. 28:1485-1493. 2009.

Straube BM. Variations in cost and quality: What is to be done? AHR, NIHCM, RWJF Congressional Briefing. Sept. 8, 2006. PowerPoitn accessed at:

Straube BM and Blum JD. The policy on paying for treating hospital-acquired conditions: CMS officials respond. Health Affairs. 28(5):1494-1497.2009.

Wright D. HHS efforts to reduce healthcare-associated Infections. Association for Professionals in Infection Control conference PowerPoint presentation. Sept 23, 2008.

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