CMS Issues Proposed Rule Prohibiting Medicaid Payments For Healthcare-Acquired Conditions

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The Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule, published in the Federal Register on February 17, 2011, setting forth policies for prohibiting Medicaid payments to states for any amounts spent toward medical assistance for healthcare-acquired conditions (HAC)—including the current list of Medicare HAC and also preventable, adverse conditions identified by states and occurring in any healthcare setting. The proposed rule was mandated by section 2702 of the Patient Protection and Affordable Care Act of 2010 (PPACA) and would go into effect on July 1, 2011. The proposed rule goes beyond the Medicare inpatient nonpayment rule for HACs, which went into effect in October 2007, by extending the nonpayment concept to state Medicaid programs.

Because the Medicare HAC rule did not require state Medicaid programs to implement nonpayment policies for HACs, CMS issued a letter to state Medicaid directors in 2008, encouraging them to adopt payment prohibitions on provider claims for HACs that coordinated with the Medicare HAC rule. In its recent review of existing state practices, CMS found that at least 21 states had adopted some form of nonpayment policy related to HACs. However, CMS found that the nonpayment policies varied greatly, with at least half of existing policies exceeding Medicare's current HAC requirements and rules in the conditions identified, the systems used to indicate the conditions or the settings where the nonpayment policies could be applied. As a result, when section 2702 of PPACA made it mandatory for CMS to implement Medicaid payment adjustments for HACs, CMS attempted to provide uniformity among state nonpayment polices for HACs, including identifying mandatory minimum HACs and provider reporting requirements.

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