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IPPS 2011 final rule implements PPACA
Payment reduction, ICD-10 coming
Probably the most incendiary change in the Centers for Medicare & Medicaid Services' inpatient prospective payment system (IPPS) rule for 2011 is an ultimate reduction in hospital payments. According to the American Hospital Association (AHA), the rule could decrease average inpatient payments by 0.4% and includes a 2.9% cut to offset the effect of documentation coding and DRG classification changes, which the AHA says does not reflect real changes in case mix.
Deborah Hale, CCS, president of Administrative Consultant Services LLC, a health care consulting firm based in Shawnee, OK, says this a "significant cut" and is "unfair because CMS has encouraged hospitals to improve documentation and coding for 'maximum' legal reimbursement, but then they penalize hospitals for doing so. If a hospital doesn't make improvements in coding and billing accuracy, they are still penalized the 2.9%."
The "bottom line," she says, "is that CMS projects an overall financial decrease of $311 million in FY11."
Also of significance is CMS' definitive decision to implement ICD-10 coding system effective Oct. 1, 2013, despite frenzied debates in the industry about delaying this.
James S. Kennedy, MD, CCS, is managing director of FTI Healthcare in Atlanta. "The fiscal year 2011 IPPS rule is the first salvo in the implementation of the Patient Protection and Affordable Care Act [PPACA]," he says. "The PPACA is a game-changer in how physicians and hospitals have to work together in order to provide more efficient, [high] quality delivery of health care.
"Medicare is trying to advocate and pay for quality and cost efficiency. Getting their arms around this has been difficult," he says.
Referring to the implementation of the ICD-10 coding set in 2013, he says "there are deficiencies within ICD-10 that do not transmit the specificity of disease that's essential in provider profiling and value-based purchasing. For example, there's only one code for coronary artery disease. Doesn't matter if it's one vessel, two vessel, three vessel... Now which person is going to be more likely to have an adverse event? Someone with one-vessel disease or someone with three-vessel disease?
"The ICD-10 code set does not address that. The message is that your readers need to scream loudly to CMS and to the ICD-9 coordination and maintenance committee before their meeting in September or October." What he sees in the preliminary ICD-10 code set are "some nonspecific codes that are problematic in severity and risk adjustment."
The current rule, Kennedy says, should highlight the need for specificity in physician definition of terms. For example, he says, "acute kidney injury" (often used interchangeably with "acute renal failure," which shares the same ICD-9-CM code) was changed from a major complication/comorbidity (MCC) to a complication/comorbidity (CC) and "therefore will not generate revenue for hospitals with patients who incur that condition, unless the physician links the term 'acute kidney injury' to an underlying cause.
"This will be very important, especially for tertiary medical centers caring for sicker patients so that their CMS-reflected databases reflect the severity of illness within their patient populations. There is also considerable confusion between the difference of the words acute renal insufficiency and acute renal injury, which physicians tend to use interchangeably with each other. And Medicare has put us on notice that we have to work with physicians to clarify the meanings of these words and the codes that are assigned to them," he says.
"Another area of concern is that Medicare will be investigating over the next year the term encephalopathy. Encephalopathy is a difficult word that doesn't have a standard definition, yet physicians use this word interchangeably with altered mental status and acute delirium. How risk-adjustment methodologies factor in the term 'encephalopathy' will have some outcome for hospitals that use coded databases."
According to Hale, new quality measures for the FY12 update include:
Moving forward, documentation will be more important than ever. "It's important for your audience to have a strong working relationship with the coding staff given that the numbers they type in their computer is what defines what bucket a patient gets placed in. Misplacing that patient in the incorrect bucket does not reflect well with Medicare Hospital Compare," Kennedy says. "It's very important that your audience communicate their risk-adjustment methodologies with the coding staff so that what the physician writes on paper is accurately transmitted and translated into accurate quality data for their hospitals."