PSAE Review Process (click here to view)

DPW Issues Proposed Bulletin Identifying Preventable Serious Adverse Events for Nursing Facilities

By Paula G. Sanders, Esq.; psanders@postschell.com; (717) 612-6027

On October 16, 2010, the Pennsylvania Department of Public Welfare (DPW) published the long-awaited proposed bulletin[1] that identifies Preventable Serious Adverse Events (PSAEs) for nursing facilities. Under the Preventable Serious Adverse Events Act (Act 1) ,[2] a health care provider [all types] may not knowingly seek payment from a health payer or patient for a PSAE or for any services required to correct or treat the problem created by a PSAE when that event occurred under his or her control.

Act 1 delegated the question of what constitutes a PSAE in a nursing facility to DPW. The Act directed DPW to issue a bulletin with a 30-day comment period and to address those comments before releasing a final bulletin. When the final bulletin is issued, which is anticipated to occur in the next three months, nursing homes will be prohibited from knowingly seeking payment from residents or the Medicaid program for a PSAE as defined in the bulletin.

Pennsylvania is one of the first states in the country to implement a non-payment policy for nursing home “never events” or PSAEs. It is also one of the first states to apply this type of policy on a prospective basis – if a nursing home knows that a PSAE has occurred in its facility, it may not knowingly seek payment. If it discovers that payment has unknowingly been sought for a PSAE or services required to correct or treat the problem, it must immediately notify the health payer or patient and refund payment within 30 days of discovery or receipt of payment, whichever is later. Although the bulletin only addresses payment provisions under the Medicaid program, there is a high probability that it will become a model for other payers.

A cursory review of the proposed bulletin highlights many of the challenges involved with applying a never event payment policy to nursing homes, and underscores the important role physicians will play in helping their facilities determine if certain events were truly within the nursing home’s ability to prevent.

Unlike acute care hospitals, nursing homes typically treat patients with chronic, as opposed to acute and episodic, illnesses. Due to their extended stays and multiple co-morbidities, an event that might otherwise appear to be a PSAE may be caused by an underlying medical condition that, if properly documented, would show that the event was not preventable. The Pennsylvania Medicaid program reimburses participating nursing homes under a complex case mix payment system, making it difficult, if not impossible, to quantify the true cost of a PSAE. One of the more troubling provisions of the bulletin, perhaps, is that in cases where a resident’s case mix index remains high after a PSAE, DPW will not accept a medical director’s or attending physician’s determination that a resident’s condition is no longer the result of a PSAE, but instead will require facilities to petition the DPW to review the clinical decisions before a payment restriction may be lifted.

Facilities should convene a PSAE committee consisting of physicians, clinical, front line, administrative and billing staff to review the bulletin and prepare for its implementation.  Medical directors should engage in the process and provide guidance on how to identify whether an event was preventable, as well as whether a resident’s change in condition is related to a PSAE. The deadline to submit comments to the DPW was November 15, 2010[3].

What is a PSAE?

In order for an event to be a PSAE, it must occur in the nursing facility, the following four conditions must be satisfied and the event has to be one that has been identified by the DPW as a PSAE. The four conditions are:  

1. The event was preventable. To be preventable, the event could have been anticipated and prepared for, but, nonetheless, occurred because of an error or other system failure; and

2. The event was serious. The event is serious if the event subsequently results in death or loss of body part, disfigurement, disability or loss of bodily function lasting more than seven days or still present at the time of discharge from a nursing facility; and

3. The event was within the control of the nursing facility. Control means that the nursing facility had the power to avoid the error or other system failure; and

4. The event is the result of an error or other system failure within the nursing facility.

There are six categories of PSAE events. They are listed below:

How will a PSAE be identified?

Facilities should review the list of PSAE events. If an event on the list occurs in the facility, the conditions surrounding the event should be reviewed to determine if all four criteria have been met.  If the internal review determines that the event is on the PSAE list and all four criteria have been met, the facility may not seek payment. DPW will be providing training in November to explain how facilities should code a PSAE non-payment event on their bills. This is a self-reporting requirement that is separate and distinct from reporting events to the Department of Health.

If the facility determines that the event is on the PSAE list but all four criteria are not met, the facility may seek payment. DPW may, however, perform a retrospective review and determine that a PSAE did occur. In such a case, DPW will recover any PSAE-related payments it has made pertaining to that event. 

Practice Tip: Because Act 1 prohibits a health care provider from “knowingly” seeking payment for a PSAE, providers should be able to show why they determined that an event is not a PSAE.  Lack of documentation or failure to review an event that is on the PSAE event list could expose the provider to other sanctions.  Facilities should establish systems to ensure that all events that are on the PSAE list are reviewed to determine whether the event is a true PSAE.

Once the event has been either self-reported or identified by DPW, it will send a written notice that it has initiated a review. As part of its review, DPW may request documentation from the facility. This may include any or all documentation concerning the facility’s policies, procedures, the resident, and the event. Based on its review, DPW may recover or adjust Medicaid payments or return money already refunded by the nursing facility. DPW will send a written determination to the facility, and the facility will have the ability to file an appeal with DPW’s Bureau of Hearings and Appeals if it believes DPW’s decision is in error.

DPW’s review process, including how its physicians will be used in the case review, and the opportunities that a nursing facility’s designated staff will have to interact with DPW through the review process, will be available on the DPW website. Medical directors and physicians should access this site as soon as DPW posts this information in order to help their facilities develop tools to capture additional information that may help to defend against adverse determinations.

How will the non-payment amounts be calculated?

Act 1 prohibits health care providers, including nursing facilities, from knowingly seeking payment from a health payor or patient (1) for a PSAE; or (2) for any services required to correct or treat the problem created by a PSAE. The bulletin provides detailed information about how nursing facilities will calculate claims relating to the PSAE event and claims relating to services required to correct or treat the problem created by a PSAE.

            Claims relating to the PSAE

The bulletin requires that in those instances where a PSAE occurs on a single day, the nursing facility may not submit a claim for payment of the resident care portion of the MA per diem rate. For certain PSAEs, such as a PSAE-identified Stage 3 or Stage 4 decubitus ulcer, the PSAE may occur over multiple days. Because Act 1 prohibits a nursing facility from knowingly seeking payment for a PSAE, in those instances where the PSAE occurs over several days, the nursing facility may not submit a claim or otherwise receive payment of the resident care portion of the MA per diem rate for any day that the PSAE occurs. Readers should know that at one point DPW had proposed that facilities should not be able to bill for the entire per diem payment if the PSAE occurred over several days.

If the resident is transferred to a hospital or other institution as a result of the PSAE, the nursing facility may not submit a claim to DPW, or otherwise receive payment, to reserve the resident’s nursing facility bed during the resident’s absence (the nursing facility remains obligated to reserve the bed in accordance with federal and state requirements).

Claims relating to services to correct or treat a PSAE

To determine the amount it may not bill for services to correct or treat a PSAE, a facility will compare certain resident Case Mix Index (CMI) scores and reduce the resident care portion of the MA per diem rate and the patient pay amount by any percent increase in those scores. Which CMI scores are compared to determine whether there was any increase will depend on whether the resident is hospitalized or transferred as a result of the PSAE. Furthermore, to reduce the resident care component, the CMI scores should be calculated using the RUG III 5.12 44 Grouper and related CMI table.

            i.          No Hospitalization or Transfer

In the event that the resident is not transferred, the resident’s CMI score based on the assessment immediately following the PSAE (post-PSAE CMI score) should be compared to the resident’s CMI score from the resident assessment immediately prior to the occurrence of the PSAE (pre-PSAE CMI score). If the post-PSAE CMI score is higher than the pre-PSAE score, the resident care portion of the MA per diem rate and the patient pay amount may be reduced by the percentage increase in the scores (i.e., post-PSAE CMI score minus pre-PSAE CMI score divided by pre-PSAE CMI score).  If the post-PSAE CMI score is equal to or lower than the pre-PSAE CMI score, there will be no reduction in the MA per diem rate as result of the PSAE. 

ii.          Hospitalization – Medicare is Payor of First Resort Upon Admission to the Same Nursing Facility

The bulletin provides that in the event of hospitalization due to a PSAE, Medicare may be the payor of first resort upon the resident’s return to the nursing facility; therefore, consideration must be given to both the Medicare coinsurance payment and to the MA per diem rate when MA resumes payments. With respect to Medicare coinsurance, if the resident’s CMI score based upon the readmission assessment (“readmission CMI score”) is greater than the resident’s pre-PSAE CMI score, DPW will not pay the Medicare coinsurance payment. If the Department does not pay the nursing facility for the Medicare coinsurance, in this circumstance, the nursing facility may not bill the resident. If the readmission CMI score is not higher, then the nursing facility may seek payment from the Department for the Medicare coinsurance payment.

When MA resumes payment, the resident’s CMI score based on the resident assessment immediately after MA resumes payment may be compared to the pre-PSAE CMI score. If the former is greater than the latter, the resident care portion of the MA per diem rate and the patient pay amount should be reduced by the percentage increase in those two scores. If the scores are equal or the pre-PSAE CMI is the greater of the two, there will be no reduction in the MA per diem rate as a result of the PSAE.

iii.         Hospitalization or Transfer – Medicare is not Payor of First Resort upon Admission to the Same Nursing Facility

When the MA Program pays for the resident’s stay immediately upon return to the same nursing facility from another institution, the readmission CMI score should be compared to the pre-PSAE CMI score.  If the former is greater than the latter, the resident care portion of the MA per diem rate and the patient pay amount should be reduced by the percentage increase in those two scores. If the scores are equal or the pre-PSAE CMI score is the greater of the two, there will be no reduction in the MA per diem rate as a result of the PSAE. 

            iv.         Durable Medical Equipment

In any circumstance, the nursing facility may not seek any payment through an exceptional durable medical equipment (DME) grant for equipment or services required to correct or treat a problem created by a PSAE.

How long will facilities forego payment for a PSAE?

This issue is likely to generate controversy and should be reviewed very carefully. Readers are urged to consider submitting comments to DPW. As mentioned earlier, DPW will not allow a facility to determine on its own whether it may seek payment when the facility’s medical director or the resident’s attending physician has concluded that the resident’s high CMI is no longer related to a PSAE. If the CMI returns to a lower level, the facility can seek payment. 

The bulletin provides that if a payment restriction is imposed, then the payment restriction will continue until the resident’s CMI score upon reassessment under normal procedures is equal to or less than the pre-PSAE CMI score or until DPW determines that the resident’s higher post-PSAE CMI score is attributable to reasons other than the PSAE.

If the nursing facility’s medical director or the resident’s attending physician concludes and documents in the resident’s medical record that the resident’s higher CMI is no longer a result of the PSAE, the nursing facility will be required to submit a written request asking DPW to conduct a clinical review to determine whether the PSAE-related rate reduction should continue.  Likewise, if there is a change in a resident’s medical condition unrelated to the PSAE which results in a higher CMI, as determined by the nursing facility’s medical director or the attending physician, the nursing facility will need to  request that DPW conduct a clinical review and redetermination.  The nursing facility will need to include the resident’s medical record and any other supporting documentation with their request.

DPW will use its best efforts to complete its review and make a determination of all such requests within 30 days of receipt of the resident’s medical record and any other supporting documentation from the facility. DPW will send a written notice of the results of its review to the nursing facility. If DPW determines that the resident’s CMI score is no longer the result of the PSAE, then the payment reduction shall cease, effective on the date determined by DPW that the PSAE-related services were no longer the cause of the higher CMI. If DPW determines that the resident’s higher CMI score is the result of the PSAE, the payment reduction will continue. 

If the nursing facility does not agree with the DPW’s determination, the nursing facility may appeal to the Bureau of Hearings and Appeals. Whether or not the facility files an appeal, the facility may ask DPW to conduct a clinical review and redetermination only once every 90 days.

Conclusion

Facilities should review the proposed Bulletin and prepare for its implementation. Watch for further publications in the Pennsylvania Bulletin and be sure to attend the Department’s November training sessions.

References

1  The proposed bulletin can be accessed at http://www.pabulletin.com/secure/data/vol40/40-42/1975.html

2 The Preventable Serious Adverse Events Act,  Act of June 10, 2009, P.L. 1, No. 1, codified at 35 P.S. §§ 449.91—449.97 (''Act 1''), passed unanimously on June 8, 2009 and was signed by Governor Ed Rendell on June 9, 2009. 

3 Comments should be sent to: Commonwealth of Pennsylvania, Department of Public Welfare/Department of Aging, Office of Long-Term Living, 555 Walnut Street, 5^th Floor, Harrisburg, PA  17101-1919, Attention: Yvette Sanchez-Roberts.