Hospitals to see lower payment updates but few changes to MS-DRGs, HACs, and the POA.

By Lisa Eramo, CPC

The long-awaited fiscal year (FY) 2010 Inpatient Prospective Payment System (IPPS) proposed rule is out, and with it comes good and bad news for hospitals.

Although there aren’t a whole slew of changes related to Medicare Severity DRGs (MS-DRG), hospital acquired conditions (HAC), and the present on admission (POA) indicator, hospitals will see historically low payment updates with a phased-in documentation and coding adjustment (DCA) to take place over time.

A slow rate of economic inflation and an increase in aggregate payments due to changes in hospital coding practices that do not reflect increases in patient severity of illness (SOI) are the reasons for the low updates, according to a CMS press release announcing the rule late Friday afternoon.

“We understand hospitals will be concerned about lower than historical payment update amounts,” said Charlene Frizzera, CMS acting administrator in a CMS press release. “However, we are proposing an adjustment that minimizes the effects on FY 2010 payments while still meeting the requirements of the law, which may mean larger reductions in the next two years.”

Payment updates
The proposed update for acute care hospitals means an update of 2.1% for inflation minus a DCA of 1.9 percentage points. Long-term care hospitals will see a proposed update of 2.4% for inflation minus a DCA of 1.8 percentage points. These DCA adjustments reflect the differences between the changes in documentation and coding that do not reflect real changes in case-mix for discharges occurring during FY 2008, according to CMS.

Experts agree that these low rates won’t help hospitals struggling to keep their doors open in the midst of a worsening economy. “Hospitals that are counting on some sort of increase won’t really see anything this year,” says Kimberly Hoy, JD, CPC, director of Medicare compliance for HCPro, Inc. in Marblehead, MA. “Payments are going to stay flat, and that’s going to be tough for a lot of hospitals.”

“The increase was practically eliminated by CMS’ contention that improved documentation and coding for MS-DRGs resulted in an underserved 2.5% improvement in reimbursement,” says James Kennedy, MD, CCS, director of FTI Healthcare in Atlanta.

The Medicare Actuary found based on analysis of 2008 data that additional coding did not reflect actual changes in SOI increased total payments under IPPS by 2.5% in FY 2008 and will further increase total payments in FY 2009. The percentage of cases with a major complication/comorbidity (MCC) increased by 5% while the percentage of cases without an MCC or complication/comorbidity decreased. The proposed lower updates would help ensure that estimated aggregate payments to hospitals will not increase solely as a result of MS-DRGs, according to CMS.

Still, it’s as though CMS is penalizing hospitals for documentation and coding improvement, Kennedy says. “It’s as if no good deed goes unpunished,” he says. “Hospitals that took care of these sick patients and had rigorous clinical documentation and coding integrity processes in place in 2007 will see their reimbursement decline. CMS is penalizing their ethical and compliance efforts to improve disease definition, documentation, and reporting.”

Clinical documentation improvement programs as well as more diligent efforts by HIM are most likely the reasons behind more accurate coding that led to higher payments, agrees Shannon McCall, RHIA, CCS, CCS-P, CPC-I, director of HIM and coding for HCPro, Inc. in Marblehead, MA. “CMS may have underestimated that facilities would create such effective clinical documentation improvement programs,” she says. “I think those programs were an integral part of all of this.”

And in light of decreased payment updates, hospitals that don’t currently have a clinical documentation program will need to think seriously about implementing one, says Gloryanne Bryant, RHIA, CCS, CHW senior director of corporate coding and HIM compliance in San Francisco. “Hospitals will need to assess their current efforts to capture patient severity and acuity through documentation and coding to see if opportunities remain,” she says.

HAC and the POA indicator
Although payment updates may reach historic lows, other proposed changes remain minimal. CMS proposes not to add or remove any categories of HACs, although it does propose to add two diagnoses in the falls and trauma category—torus fracture of ulna (813.46) and torus fracture of radius/ulna (813.47), both of which are CC conditions.

“I was surprised CMS didn’t mention additional exploration of adding ventilator-associated pneumonia as an HAC,” McCall says. The reason may be because CMS is most likely continuing to gather data on the condition for which it assigned a code (ICD-9-CM code 997.31) as of October 1, 2008, she adds. This condition failed to meet the criteria of being reasonably preventable according to evidence-based guidelines.

CMS also proposes not to make any changes to the payment implications of the POA indicator. It will continue to pay the CC/MCC MS-DRGs for HACs coded with Y (yes) and W (clinically undetermined) and not pay the CC/MCC MS-DRGs for those HACs coded with N (no) and U (insufficient documentation) indicators.

“This is a little of a relief in that this will allow hospitals more time to analyze their POA data similar to efforts that CMS and AHRQ will undertake,” Bryant says. “The proposed rule has a good review of the rationale and payment process for HAC and POA, which might be useful for hospital providers to review.”

MS-DRG changes
Although there are no major proposed changes to MS-DRGs, CMS does invite public comment regarding moving ICD-9-CM procedure code 88.59 (intraoperative fluorescence vascular angiography [IFVA]) from MS-DRGs 235 and 236 (coronary bypass without cardiac catheterization with and without MCC, respectively) into the following two MS-DRGs:

• MS-DRG 233 (coronary bypass with cardiac catheterization with MCC)
• MS-DRG 234 (coronary bypass with cardiac catheterization without MCC)

IFVA technology is used to test cardiac graft patency and technical adequacy at the time of coronary artery bypass grafting (CABG). Although this system does not involve fluoroscopy or cardiac catheterization, the manufacturer and clinical studies suggest that it yields results that are similar to those achieved with selective coronary arteriography and cardiac catheterization.

However, CMS analysis has found that these cases would be overpaid if reclassified. The cases in MS-DRGs 235 and 236 did not actually have a cardiac catheterization performed, a proposal to reassign cases identified by procedure code 88.59 would result in lowering the relative weights of cases in MS-DRGs 233 and 234 where a cardiac catheterization is truly performed. CMS, however, invites public comment regarding this proposal.

CMS analysis does, however, support the reclassification of procedure codes 80.05 (arthrotomy for removal of prosthesis without replacement, hip) and 80.06 (arthrotomy for removal of prosthesis without replacement, knee) from their current assignments under MS-DRGs 480, 481, and 482 (hip and femur procedures except major joint with MCC, CC, and without MCC/CC respectively) and MS-DRGs 495, 496, and 497 (local excision of internal fixation device except hip and femur with MCC, with CC, and without CC/MCC respectively) to the following MS-DRGs:

• MS-DRGs 463, 464, and 465 (wound debridement and skin graft except hand, for musculo-connective tissue disease with MCC, with CC, and without CC/MCC respectively)

In addition, CMS proposes to re-title ICD-9-CM procedure codes 80.05 and 80.06 respectively to “arthrotomy for removal of prosthesis without replacement, hip or knee.”

CC/MCC changes
Hospitals will also see minimal changes to the CC/MCC and CC exclusions list. The only proposed deletions from this list include those made to accommodate new codes that now have a 5th digit for added specificity.

Noteworthy proposed additions to the MCC list include:

• Puerperal sepsis and septic thrombophlebitis (670.22, 670.24, 670.32, and 670.34)
• Omphalocele (756.72)
• Gastroschsis (756.73)
• Severe hypoxic-ischemic encephalopathy (768.73)
• Bilious vomiting in newborn (779.32)

Noteworthy proposed additions to the CC list include:

• Chronic pulmonary embolism (416.2)
• Chronic venous embolism and thrombosis of upper and lower extremities: axillary, subclavian, jugular veins, etc. (453.5x, 453.6x, and 453.7x)
• Acute venous embolism and thrombosis of upper and lower extremities: axillary, subclavian, jugular veins, etc. (453.8x)
• Puerperal endometritis (670.1x)
• Hypoxic-ischemic encephalopathy, unspecified (768.70)
• Mild hypoxic-ischemic encephalopathy (768.71)
• Moderate hypoxic-ischemic encephalopathy (768.72)

The addition of several chronic conditions was surprising, McCall says. “Generally, CMS doesn’t include chronic conditions on the CC/MCC list,” she adds. “Chronic conditions generally don’t meet the criteria (requires intensive monitoring, complex services, or extensive care from multiple caregivers).”

ICD-9-CM code changes
The proposed rule includes changes to more than 100 diagnoses codes, with various changes to ICD-9-CM codes for neoplasms and newborn conditions, as well as several new V codes.

Noteworthy changes include:

• 5th digits to specify the type of antidepressants in a poisoning, such as MAOIs or SSRIs
• 5th digits to specify the type of psychostimulants in a poisoning, such as caffeine, amphetamine, and methylphenidate
• New code 995.24 (failed moderate sedation during procedure)

“I was surprised that they didn’t make any changes to the heart failure codes because they discussed these codes extensively during the ICD-9-CM Coordination and Maintenance meeting,” McCall says. “But just because they didn’t discuss them in the proposed rule doesn’t mean they can’t add them [in the final rule].”

The deadline for public comments on the proposed new codes—including changes to heart failure codes—discussed during the March 11-12, 2009 meeting is June 12.

Noteworthy proposed changes include new V codes for:

• History of failed moderate sedation
• History of underimmunization status
• Encounter for fertility preservation counseling or procedure
• Fitting and adjustment of lap band
• Foster care status
• Family disruption due to death of family member or prolonged absence
• Counseling for parent-biological child versus adopted
• Personal history of estrogen therapy
• Personal history of inhaled or systemic steroids

All in all, the proposed changes are minimal compared with previous years, and this could be indicative of the fact that ICD-9 cannot accommodate additional code expansion, McCall says. The highly anticipated implementation of ICD-10 in 2013 could also be a contributing factor. “CMS is going to have to revamp the entire system for ICD-10. It makes me wonder whether CMS will begin to decrease the number of changes it proposes each year for this very reason.”

Wrong surgery edits
CMS proposes to implement three new E codes to denote wrong surgery, such as surgery on the wrong body part, surgery performed on the wrong patient, or the wrong surgery performed on a patient. The E codes include:

• E876.5 (Performance of wrong operation [procedure] on correct patient)
• E876.6 (Performance of operation [procedure] on patient not scheduled for surgery)
• E876.7 (Performance of correct operation [procedure] on wrong side/body part)

These E codes come in the wake of three new National Coverage Determinations that CMS published to indicate that it would not pay for these types of wrong surgeries. Unlike HACs that yield no additional payment, wrong surgeries yield no payment at all, Hoy says.

As with HACs and conditions that are not POA, these edits represent another example of CMS’ intentions to not reimburse hospitals for mistakes made during the patient stay, McCall says.

Quality measures
CMS proposes to add four new measures for which hospitals must submit data under the Reporting Hospital Quality Data for Annual Payment Update program to receive the full market basket update, including:

• SCIP: Infection-9 (Postoperative Urinary Catheter Removal on Post Operative Day 1 or 2)
• SCIP: Infection-10 (Perioperative Temperature Management)
• Participation in a systematic clinical database registry for stroke care
• Participation in a systematic clinical database registry for nursing sensitive care

The SCIP measures, in particular, are designed to assess practices that reduce the risk of infections that surgical patients could acquire in the hospital. They have high relevance to the Medicare population, and address the growing concern regarding hospital acquired infections, according to CMS.

Other noteworthy changes
CMS proposes changes to regulations that affect payment adjustments to teaching hospitals and disproportionate share hospitals. It also clarifies the regulations implementing the Emergency Medical Treatment and Labor Act. CMS also proposes to add new cost centers to distinguish high cost supply items as part of an effort to revise and update the its cost report.

To view the rule, click here. CMS will accept comments until June 30.