Some marginal improvement
But future adjustments concern hospitals
Hospitals were pleasantly surprised last week when the CMS reversed course and announced a 1.1% increase in Medicare payments for 2012. But they remain concerned about future adjustments for coding and certain elements of the hospital readmission reduction program in the agency’s final inpatient PPS rule.
Earlier this year, the CMS had proposed what would have amounted to a 0.55% reduction in payments for acute-care hospitals. Instead, the CMS issued a payment increase in its final rule Aug. 1 that the agency expects will raise payments for these facilities by about $1.13 billion next year.
The boost is due in part to a higher market basket update of 3%, compared with the proposed rule’s recommendation of 2.8%. But even more significant was a lower adjustment for documentation and coding of -2% versus the -3.15% the CMS had proposed.
“Clearly, CMS made the right choice from our viewpoint by deciding to even out the effect over time for the coding adjustment for MS-DRGs,” said Chip Kahn, president and CEO of the Federation of American Hospitals. The MS-DRG, or Medicare Severity Diagnosis Related Group, took effect for fiscal 2008.
Jessica Roth, director of legislation and policy at the law firm McDermott, Will & Emery in Washington, said the documentation and coding adjustment is likely the biggest change in the final rule from the pro- posed rule. This change offered a greater level of detail for coding—increasing the number of diagnosis-related groups to 999 from 467—to distinguish the severity of cases, Roth explained.
The American Hospital Association still believes the number the CMS has established for changes to coding is too high, according to Don May, vice president for policy at the AHA. “They had said that they believed there was a total of 3.9% remaining” to adjust for coding changes, he said. “We would argue with that number.” And while the final rule called for a lower adjustment than was anticipated, it indicated that the CMS will revisit the issue.
“In CMS’ proposed rule, it alluded to a future adjustment that would be required since it is not taking the full -3.9% in 2012,” said a research note from Deutsche Bank Securities. “In keeping with its policy intent to recover program dollars perceived to be lost to higher document and coding, the CMS stated that because only a -2% will be made in 2012, an additional 1.9% will be