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IPPS final rule means hospitals must do more with less
Pressure, responsibilities may increase for case managers
The inpatient prospective payment system (IPPS) final rule, issued by the Centers for Medicare & Medicaid Services on July 30 makes it clear that the health care agency expects hospitals to do more with less reimbursement.
In the final rule, the annual market basket update increase of 2.35% is offset by a 2.9% documentation and coding adjustment, resulting in a decrease in payments of 0.4%, or a total of $440 million for hospitals throughout the country.
The final rule also clarifies changes to the three-day payment window as mandated by Congress in legislation passed June 25, 2010, and requires hospital staff to determine whether outpatient therapeutic services are clinically associated with the inpatient admission. Another provision in the final rule adds 10 quality measures to the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) set and retires one measure mortality for selected surgical procedures.
The documentation coding adjustment, which cuts reimbursement, makes it important for hospitals to place great emphasis on compliant and effective clinical documentation in order to receive all the reimbursement to which they are legally entitled. This may mean increased responsibilities for case managers, says Susan Wallace, MEd, RHIA, CCS, CCDS, director of inpatient compliance for Administrative Consultant Services LLC, a health care consulting firm based in Shawnee, OK.
"In addition, CMS specified in the final rule that clinical decision-making will be involved in determining whether the outpatient services should be combined with the inpatient bill. That role could potentially fall to case managers," adds Deborah Hale, CSS, CCDS, president and CEO of Administrative Consultant Services.
The details contained in the IPPS final rule mean that hospitals are going to get less money from Medicare, which means that they are going to have to increase efficiency and effectiveness in order to survive, adds Quint Studer, CEO of Studer Group, a health care consulting firm based in Gulf Breeze, FL.
Many times, when faced with challenges, hospitals look at changing their strategy and structure; but in order to do more with less reimbursement, hospitals have to look at improving efficiency, and case managers can be a central figure in the process, he adds.
Case managers are in the position to be a leader in the hospital's initiatives to improve clinical outcomes, to increase efficiency and effectiveness, and to maximize resources, Studer says.
CMS included the 2.9% documentation and coding adjustment in the final rule despite strong opposition from the hospital community.
"America's hospitals strongly disagree with the Centers for Medicare & Medicaid Services' final inpatient rule. The rule cuts billions of dollars from the health care system at a time when patient are sicker, more people are losing coverage due to the economic downturn, and hospitals are dealing with significant changes contained in the health reform bill," Rich Umbdenstock, president and CEO of the American Hospital Association, said in a statement.
"In issuing the final rule, CMS failed to acknowledge independent studies that show CMS' methodology does not take into account what we all know: Hospital patients are increasingly sicker," he adds.
CMS says in a statement that the increased payments following the adoption of the MS-DRG system did not reflect actual increases in patients' severity and that the reimbursement adjustment is intended to eliminate the effect of coding or classification changes that CMS feels do not reflect real changes in case mix.
The adjustment is mandated by legislation passed in 2007, which requires CMS to recoup the entire amount of increased spending that occurred in fiscal years 2008 and 2009 as a result of the adoption of the MS-DRG system.
The adoption of the MS-DRG system was intended to be budget-neutral, but the Medicare Actuary estimates that the cumulative effect of the documentation and coding increased spending by 5.8% in fiscal years 2008 and 2009.
By law, CMS must recoup excess spending by fiscal 2012. The agency announced its intention to further adjust reimbursement by 2.9% in fiscal year 2012.
CMS is using changes in payment structure as a measure to force hospitals to become more efficient and effective, Studer says.
"The government has no tool other than money that it can use to increase efficiency and effectiveness and lower health care costs," he adds.
The final rule doesn't make many changes in the proposed IPPS rule CMS issued earlier this year, Wallace says.
The biggest change is further clarification of the three-day payment window as mandated by Congress in a section of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010.
The final rule clarifies a section of the act passed by Congress, regarding Medicare's three-day payment window, also called the "72-hour rule," which sets out which diagnostic and non-diagnostic outpatient services must be bundled into the bill for the inpatient stay.
The new law continues the Medicare policy that all diagnostic services, including diagnostic laboratory tests, that occur on the day of admission and the three calendar days prior to the admission be included in the bill for the inpatient stay if they are provided by the hospital or an entity that is wholly owned or wholly operated by the hospital.
The act specifies that all non-diagnostic outpatient services (other than ambulance and maintenance renal dialysis) that are provided by the hospital or a wholly owned or operated entity on the date of the inpatient admission must be billed as part of the inpatient stay.
The law also stipulates that all other non-diagnostic services provided by the hospital or its wholly owned or operated entity in the three calendar days preceding the admission must be bundled with the bill for the inpatient stay if they are related to the reason for the admission.
If they are unrelated to the admission, the hospital may separately bill Medicare Part B.
Congress left it up to CMS to create a definition for services related to the inpatient stay.
In the IPPS final rule, CMS issued a definition of services related to the inpatient stay, declaring that an outpatient service is related to the admission if it is clinically associated with the reason for the admission.
However, rather than requiring hospitals to bill only services clinically related to the stay, CMS specified that all outpatient non-diagnostic services on the three calendar days before the inpatient admission must be billed with the inpatient stay unless the hospital attests that the preadmission services are clinically distinct and independent from the reason for the admission.
The rule also specifies that the patient's medical record must contain complete documentation as to why the services are unrelated. In addition, CMS announced its intention to review separately billed outpatient services.
Before the changes in the rule, hospitals could bill separately for any therapeutic service provided within the three-day window, if it was unrelated to the reason for admission. The CMS definition of "unrelated" at that time meant that the 5-digit ICD-9 codes were not the same, Wallace says.
That means that if the ICD-9 codes did not match exactly, the hospital could bill separately for the therapeutic services.
For instance, if a patient came in for an outpatient procedure and then required inpatient admission for cardiac arrhythmia, the hospital would bill Medicare Part B for the outpatient procedure and bill for inpatient services related to the arrhythmia because the ICD-9 codes were different.
On the other hand, if the patient received an outpatient procedure and experienced minor signs and symptoms (such as nausea, vomiting, and pain) that were associated with the procedure, and the surgeon wanted to admit the patient, the hospital would bundle the services because the hospitalization was related to the outpatient procedure and both the reason for the procedure and the reason for admission were represented by the same ICD-9 code.
Originally, it was the coders who were major players in determining if the services could be split into two bills because they are the ones familiar with the ICD-9 codes, Wallace adds.
When the Recovery Audit Contractors began looking at hospital records, they pointed out that hospitals were bundling some services that could have been billed separately. At an open door forum, CMS said that it was legal to split the bills and that hospitals could go back and break out the outpatient services and rebill Medicare.
When the CMS Medicare Administrative Contractors were flooded with new claims, this prompted Congress to include legislation in the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 prohibiting Medicare from reopening a claim or adjusting a claim that was not submitted prior to June 25, 2010.
The final rule adds 10 quality measures that hospitals must report in order to receive the full market basket update and retires one measure, mortality for selected surgical procedures. In the proposed rule, CMS announced its intention to add 45 measures but backed away from adding registry-based measures at this time.
Of the 10 additional quality measures, eight of the 10 categories of hospital-acquired condition measures will be considered in determining the hospital's update for fiscal year 2012. These include foreign objects retained after surgery, air embolism, blood incompatibility, pressure ulcer Stages III and IV, falls and trauma, vascular catheter-associated infection, catheter-associated urinary tract infection, and manifestations of poor glycemic control.
The remaining two measures to be reported in 2011 and considered in determining the hospitals' fiscal year 2013 update, are post-operative respiratory failure and post-operative pulmonary embolism or DVT.
[For more information, contact:
Deborah Hale, president of Administrative Consultant Services LLC, e-mail: email@example.com; Beverly Cunningham, RN, MS, vice president, clinical performance improvement, Medical City Dallas Hospital, e-mail Beverly.Cunningham@hcahealthcare.com; Quint Studer, CEO of Studer Group, e-mail: firstname.lastname@example.org.]