According to the CMS, the regulations would decrease Medicare payment rates to hospitals by 0.55% because of a variety of upward and downward adjustments to the scheduled 1.5% payment increase. Among the downward adjustments is a 3.15% reduction for documentation and coding. As the rule explains, the CMS adopted the MS-DRG patient classification system for the IPPS in October 2007 as a way to better recognize severity of illness in Medicare payments for acute-care hospitals. There are currently 747 MS-DRGs, and the agency has proposed four more for 2012. The CMS said the use of these MS-DRGs could lead to higher payments without “corresponding increases in actual patient severity of illness due to the incentives for additional documentation and coding.”
Hospital associations were especially critical of the coding adjustment. In a statement, Federation of American Hospitals President and CEO Chip Kahn said the CMS' decision “is a flawed and incomplete analysis that does not properly account for increases in patient age and acuity.”
Don May, vice president for policy at the American Hospital Association, underscored that assessment in an interview.
“We believe they need to do an analysis to examine what is the average change in severity in case mix,” May said. “Once they determine that, subtract that from the total of what they expect it to be. Because we know what they have calculated is too high. CMS needs to make an adjustment to reduce that amount to accommodate for patient severity.”
Meanwhile, the proposed regulations would add four additional quality-reporting measures for fiscal 2014 while retiring eight measures that year and adding 17 new measures for fiscal 2015, according to the AHA. Hospitals would be required to report data on those measures in order to receive their full Medicare payment update.
“We're very encouraged that CMS is following Leapfrog's lead in terms of expanding the range of measures they'll be reporting on,” said Matt Austin, director of the Leapfrog Group's annual hospital survey. “I think giving patients and consumers and even providers a good sense of different types of care and measures to measure that care is important,” he added.
Long-term acute-care hospitals would also be subjected to quality reporting as a result of last week's regulations (See chart above).
Under the regulations, these hospitals would receive a payment increase of 1.9%, or $95 million, for fiscal 2012.
CMS will accept public comments on the proposed regulations until June 20 and expects to publish final regulations by Aug. 1.