All those people with red socks shuffling down the corridors of Albany Medical Center are not early harbingers of the holiday season.

Instead, they are the early signs of a Medicare payment policy change that is threatening hospitals’ bottom line and commercial health plan rates.

Albany Med last year starting issuing the red footwear to patients deemed at high risk of falling. The socks have rubber bottoms and provide visual cues to hospital staff that the patients wearing them are a little wobbly.

The apparel is one of many new tools medical professionals are adding to their arsenal for the fight against hospital-acquired conditions. HACs, as they are called, are injuries or ailments patients receive after admission.

Starting this Wednesday, the Centers for Medicare and Medicaid Services will cease paying hospitals for the extra care they have to provide to treat HACs, such as falls, pressure ulcers and catheter-associated infections.

Many CMS-defined HACs are often considered “never events” — things that should never happen in a hospital.

“They’re telling us this list is just going to get longer every year. They’re just going to stop paying for our mistakes,” said Louis Filhour, Albany Med’s senior vice president of clinical quality.

And those mistakes are costly. According to a 2002 Institute of Medicine report, medical errors, including those that result in HACs, are behind 98,000 deaths annually and up to $29 billion in billings.

Swallowing costs

After Wednesday, hospitals will have to swallow costs stemming from errors in care for Medicare patients — a move that could chip away at already thin profit margins and limit their ability to invest in workers or technology. CMS estimates the HAC provisions will save Medicare $21 million during the federal government’s 2009 fiscal year, which starts Wednesday.

“It’s going to start limiting the resources to provide the care,” Filhour said.

However, area hospitals in recent months have implemented a series of preventative measures to make sure it does not come to that. To further address the problem of patient falls, Albany Med also altered its rounding practices, which involves nurses periodically checking on patients.

Not wanting patients to put themselves at risk of falling by getting out of bed without assistance to go to the bathroom, Albany Med now requires nurses to check in on patients every two to three hours. The nurses see if patients have to go to the bathroom “rather than wait for the patient to get to that point,” Filhour said.

Also concerned about falls, Ellis Hospital has installed several beds with sensors that alert nurses when patients are getting up. The Schenectady hospital also installed low-rise beds that are easier to get out of than regular beds, and it placed cushioned matting around beds.

“I don’t think it’s going to be a burden for hospitals,” said Cindee McGuire, Ellis’ vice president of quality care.

Present when admitted

Under the policy change, CMS will only pay for the treatment of conditions that were present when a patient was admitted into the hospital. For example, if a patient has a stroke and dislocates his kneecap, CMS will fully reimburse the hospital the estimated $6,177 it costs to treat both conditions. But if that stroke patient broke his leg after being admitted to the hospital, its Medicare payment would be only $5,348, according to CMS.

With the Medicare policy change hinging on conditions that are “present on admission,” Northeast Health in Troy has intensified its screening of patients as they enter its hospitals. Northeast, which owns Albany Memorial Hospital and Samaritan Hospital in Troy, in March upgraded its electronic medical records system by rolling out a nursing documentation module.

The module enables nurses to electronically note any minor conditions that are present on admission but can worsen during a patients’ stay at the hospital. The electronic notes help ensure Northeast will not get stuck with the bill if a red rash that was present on admission turns into a pressure ulcer.

“We did it all the time, but it was on paper. But now it’s on the computer and can be used at the time of discharge,” said Dr. John Collins, Northeast’s chief medical officer.

The impetus behind CMS’ new stance on HACs came from the Deficit Reduction Act of 2005. The law authorized the secretary of the Department of Health and Human Services to draw up a list of HACs deemed “reasonably preventable.” The federal agency developed a list of preventable HAC categories and last year required hospitals to begin reporting whether certain conditions listed on claims were present on admission.

The American Medical Association in July voiced “strong over-arching concerns” about the Medicare policy changes and its “all or nothing” approach toward HACs.

The Chicago physicians organization disagreed with CMS that certain medical conditions and complications are “reasonably preventable.” It also argued that some conditions lie dormant and are not detectable during admission.

“Under an ‘all or nothing’ approach, hospitals may have an incentive not to treat high-risk patients that are likely to develop an HAC even though evidence-based guidelines are followed,” AMA Executive Vice President and Chief Executive Officer Dr. Michael Maves said in a July 13 letter to CMS’ acting director.

Hospitals were initially required to report on 30 quality measures, but CMS in July increased that figure to 42. CMS will shave 2 percent from scheduled reimbursement rate increases for hospitals that fail to properly report the quality measures. Many New York hospitals have profit margins of about 2 percent.

“If they’re losing money in the Medicare business, they will probably try to get it out of the commercial business,” Laurel Pickering, executive director New York Business Group on Health, a New York nonprofit coalition of 150 businesses that advocates a market-driven health care system.

First step

Pickering called the Medicare policy change a “good first step because we have to start paying for results and outcomes, as opposed to the current system where we pay for volume.” But she also warned that hospitals might try to shift costs incurred from HAC care not covered by Medicare onto commercial health plans by raising rates for other treatments.

“Obviously, we’re always concerned about cost shifting, but I think our feeling is we hope it does not happen here,” said Leslie Moran, president of the New York State Health Plan Association, an Albany trade organization that represents health insurers statewide.

Following CMS’ lead, a growing number of private health insurers have recently established policies against paying for certain HACs. They include Aetna in Hartford, Cigna in Bloomfield, Conn., and WellPoint in Indianapolis, the parent of Empire Blue Cross Blue Shield in New York.

Capital District Physicians’ Health Plan spokeswoman Kristin Marshal said the Albany health plan will monitor the impacts of the Medicare policy change. “We haven’t made any decisions on whether we will follow suit on the present on admission issue.”

MVP Health Care in Schenectady is working on the issue of billing practices for never events with the Healthcare Association of New York State, or HANYS, an Albany trade organization that represents hospitals statewide. MVP spokesman Gary Hughes said many New York hospitals have agreed not to bill for never events because of Medicare’s decision to not pay for them.

“We decided to do it cooperatively rather than contentiously by working with the hospital association,” Hughes said.

Preparing for change

HANYS has been advising its member hospitals on ways they can prepare for the Medicare policy change. And the changes hospitals are implementing are coming at their own expense.

“We’ve just had to get smarter at what we’re doing,” Filhour said.

Albany Med last year started using silver-tipped catheters that are four times more expensive than their all-plastic counterparts. But Filhour said the more sterile silver catheters deliver a payoff in the form of reduced usage of antibiotics for infections.

Ellis in May installed 36 hydraulic beds in its intensive care unit. The expensive beds automatically move patients lying in them to reduce the risk of pressure ulcers.

To cut down on infections caused by catheters running into vascular arteries in the jugular or near the collar bone, Ellis six months ago also began applying Biopatch dressing to those injection sites. The antiseptic skin patches provide an extra layer of protection against infectious microbes.

“It does add to the cost of patient care, but that’s not the focus,” McGuire said.