Health Reform WK-EDGE OIG REPORTS: CMS can help states with rule about no payments for PPCs
Tuesday, March 31, 2020

OIG REPORTS: CMS can help states with rule about no payments for PPCs

By Cathleen Calhoun, J.D.

Provider-preventable conditions are not payable under Medicaid and the OIG recommends action by CMS.

The Office of the Inspector General (OIG) is recommending that CMS take steps to help states to comply with the rule that disallows Medicaid payments for provider-preventable conditions (PPC). The OIG audited nine states for compliance and found that none of the states fully complied. Based on those nine audits, OIG conducted another audit to determine actions that CMS could take to help improve states’ compliance and to help expand the quality of care for Medicaid beneficiaries. OIG recommended certain verification processes and the issuing of specific guidance by CMS (OIG Report, No. A-09-18-02004, March 19, 2020).

PPC rule. The Patient Protection and Affordable Care Act (ACA) (P.L 111-148) required CMS to identify and incorporate into new Medicaid PPC regulations any suitable existing state practices prohibiting payment for healthcare-acquired conditions. In 2011, CMS created a rule that prohibited federal Medicaid payments for services related to PPCs. PPCs are certain reasonably preventable conditions caused by medical accidents or errors in a healthcare setting. The conditions include surgical site infections, foreign objects left inside the body after surgery, a wrong surgical or other invasive procedure performed on a patient, a surgical or other invasive procedure performed on the wrong body part, and a surgical or other invasive procedure performed on the wrong patient. According to CMS, the goal of the rule was to improve the quality of care by disallowing Medicaid payments for medical errors.

Audit findings. The audit found that states have not been stopping Medicaid payments for all services related to treating PPCs. Also, none of the nine states audited had state plans that included all of the federal requirements related to payment for PPCs. Specifically, five of the nine states did not identify PPCs on inpatient claims from all inpatient hospitals, four states did not correctly use the Medicare Hospital Acquired Conditions (HAC) list to identify all PPCs, four states did not identify PPCs on Medicare crossover claims, and one state did not use all of the diagnosis codes reported to it by inpatient hospitals to identify PPCs. OIG noted that lack of CMS guidance or the existence of unclear guidance may have contributed to the failings.

Recommendations. OIG recommended that CMS take the following actions:

  1. Verify that all state plans fully comply with federal requirements prohibiting Medicaid payments for inpatient hospital services related to treating PPCs. This can be done in part by issuing a revised state plan preprint that contains he provisions identified in federal requirements, if CMS continues to require states to use the preprint.
  2. Issue clarifying guidance to address specific areas where states did not comply with those requirements. According to OIG, the guidance should help states ensure that they identify PPCs on inpatient claims from all inpatient hospitals, correctly use the Medicare HAC list to identify PPCs, acquire from all inpatient hospital providers the information necessary to determine whether Medicare crossover claims contain PPCs, understand how and when to apply the "reasonably isolate" language in 42 CFR § 447.26(c)(3)(ii) as it relates to the limitation of reduction in payment for PPCs, and use all of the diagnosis codes that inpatient hospitals report to them to identify PPCs.

OIG also recommends that CMS make the necessary corrections to the FY 2016 Medicare HAC list and work with states to ensure that their systems for identifying PPCs use all diagnosis codes reported by inpatient hospitals.

ReportsLetters: OIGReports AgencyNews HealthCareAcquiredConditionNews MedicaidNews QualityNews

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