1. CMS Future HAC Plans? HAI Cost Impact on Hospitals? Rick Sites General Counsel & Senior Health Policy Director October 1, 2008

2. Section 1996(d)(4)(D) of the Deficit Reduction Act of 2005 DRA required Medicare to identify HACs that are: High cost, high volume or both Assigned to a higher paying DRG when present as a secondary diagnosis Could reasonably have been prevented through application of evidence based guidelines

3. Lower Reimbursement for IPPS Hospitals Only Beginning October 1, 2008, Medicare will pay a case with an HAC as though the HAC did not occur (i.e., a lower DRG amount) Critical access, long-term acute care, rehab, psychiatric, cancer, and children’s hospitals are exempt at this time

4. DRA Criteria for HACs Medicare data must support the selected conditions are high cost and/or high volume Selected conditions must have a diagnosis that identifies the condition and results in higher payment as a secondary diagnosis Selected HACs must be reasonably preventable through application of evidence-based guidelines

5. Key HAC Questions CMS Must Answer Is there high cost, high volume per HAC? Does ICD-9 code clearly identify the HAC? Are there evidence-based guidelines? Is the HAC reasonably preventable?

6. 10 Selected HACs Selected HACMedicare Data (2007) Foreign Object post op750 cases @ $68,631 per hospital stay Air Embolism57 cases @ $71,636/stay Blood Incompatibility24 cases @ $50,455/stay Pressure Ulcer Stages III & IV257,412 cases @ $43,180/stay Falls and Trauma193,566 cases @ $33,894/stay

7. 10 Selected HACs-Continued Catheter-Associated UTI12,185 cases @ $44,043 Vascular Catheter-associated Infection29,536 @ $103,027/stay Surgical Site Infection after CABG, Bariatric Surgery, Orthopedic Procedures 375 cases @ $184,398/stay* Poor Glycemic Control14,929 cases @ $41,495/ stay* Deep Vein Thrombosis/Pulmonary Embolism 4,250 cases @ $58,625/stay 73 FR 48434 at pp. 48473, 48490*average from combining DRGs

8. Rejected HACs Rejected HACMedicare Date (2007) Ventilator-Associated Pneumonia 30,867 cases @ $135,795/stay Staphylococcus Aureus Septicemia 27,737 cases @ $84,976/stay Clostridium Difficile-associated Disease 96,336 cases @ $59,153/stay Legionnaires’ Disease351 cases @ $86,014/stay Iatrogenic Pneumothorax22,665 cases @ $75,089/stay MRSA88,374 cases @ $32,049/stay

9. CMS Estimated Medicare Savings From 10 HACs Federal Fiscal YearMedicare Savings 2009$21 million 2010$21 million 2011$21 million 2012$22 million 2013$22 million

10. Additional Potential Candidate HACs Surgical site infection following device procedures Failure to rescue Death or disability associated with drugs, devices, biologicals Events on the NQF’s list of Serious Reportable Adverse Events Dehydration Malnutrition Water-borne pathogens

11. What Does the Future Hold for More HACs? There are 258 sets of DRGs with subgroups based on complication or comorbidity

12. What Does the Future Hold? CMS’s reduced payment for HACs has just begun –Submit comments to www.regulations.govwww.regulations.gov Medicaid and private insurers are or will follow the CMS lead As to CMS and Medicaid, participating in the rulemaking process especially by submitting meaningful comments is critical