Now that the policy issues surrounding the major change in the inpatient prospective payment system that went into effect Oct. 1 are mostly settled, there is a not-so-small matter of implementation in hospital billing departments.
The transformation to a more finely tuned reimbursement system that aims to better reward quality is creating backups for providers while coders learn the new system. Despite the potential benefit of more equitable Medicare reimbursement, in the short term it could delay the filing of claims.
Anecdotally, hospital coders responsible for preparing the Medicare claims to receive higher reimbursements for severity-adjusted diagnoses are anticipating a slowdown in productivity, which will lengthen hospitals’ accounts receivable days, impeding cash flow. “It will slow the system down. There is a learning curve ... a whole query process,” said Carol Spencer, the manager of professional practice resources at the American Health Information Management Association. “There is definitely some impact.”
No one seems to have quantified what the economic impact might be for hospitals, but there is definitely a learning curve to scale, she said. In the short term, coders need to “retrain themselves to code for the complications and morbidities and major complications and morbidities that can boost reimbursement considerably. The system went to 745 MS-DRGs from 538 DRGs—a new system that is “so overhauled it will seem brand new,” Spencer said.
For example, Richard Gundling, vice president of product development for the Healthcare Financial Management Association, noted that under the new payment system, hospitals will be reimbursed $8,983 for a major large-bowel procedure, $14,114 with more severe comorbidity and $21,980 for the most severe cases.
“The challenge is there is a total transformation on every code,” Spencer said.
Coders will probably figure that out quickly as that is what they do, but the longer-term problem will be getting physicians onboard, she said. There are documentation requirements that can be accomplished only with physicians’ cooperation. It requires some physician education, delaying the coding process while coders query doctors for the documentation and affecting the accounts receivable, Spencer said.
Spencer predicted that hospitals that already have strong documentation improvement programs in place in which coders are working closely with the medical staff will be the least affected by the new payment system.
“I’m recommending facilities analyze their (complication and comorbidity) data to determine where education needs to occur on some of their high-volume changes,” Spencer said. “What they want to do is compare last year’s (data) to this year’s, and that gap is what they need to evaluate whether documentation or process improvement measures can be made to minimize potential losses in revenue.”
If that were not enough, by Jan. 1, 2008, all hospitals are under a mandate to document whether diagnoses were “present on admission.” “There are a lot of questions by the coding (community) whether that will impact productivity,” Spencer said. “I hear varying responses because every single code has to go through another process if that code was present at the time of admission,” Spencer said. “Every 30 seconds add up.”
One hospital ahead of the game because of a clinical documentation improvement program already in place is the University of Michigan Health System in Ann Arbor. “They recouped millions because they are on top of documentation, which drives coding which drives reimbursement,” Spencer said.
Even still, there are some bumps, said Gwen Blackford, the University of Michigan’s coding manager in health information management. Just a few weeks into the new system, she said, “We are already seeing where coders have to keep cases open longer for queries. I’ve heard other (hospitals) say they think there will be a 20% decrease in productivity. I’m thinking we’ll need two months.”
The hospital has had a clinical documentation improvement program since early 2005 with six specialists who interact with residents right on the floor to make certain they are specifying more than just the basic DRG when applicable. With the new MS-DRGs, they are educating all the clinical services all over again, she said.
In preparing for the inpatient PPS overhaul, the University of Michigan addressed its top DRGs by volume to determine “where we need to put our resources in the reshuffle,” Blackford said. The conclusion there was that general surgery services presented “the most opportunity for improvement.”
Despite all that, queries are taking a little longer and accounts receivable days are inching up. “It’s hard to tell now, but I can tell already the coders are struggling,” Blackford said.
On the other hand, the present-on-admission requirements should not hamper productivity as the University of Michigan already has been doing it for about two years as a quality initiative, she said.
