Fifty-two senators sent a letter to CMS Administrator Donald Berwick expressing their concern over the adjustment that CMS is proposing to make to payments to inpatient hospitals to account for what CMS thinks are coding changes that do not adequately reflect the health of a patient. Three hospital groups also sent a letter to Berwick, pointing out the results of two recent studies that question the methodology for CMS’ adjustment to hospital payments.
Under the Proposed rule for the inpatient hospital prospective payment system update for fiscal year (FY) 2011 (75 FR 23852, May 4, 2010, ¶220,759), acute care hospitals will receive a 2.4 percent market basket increase related to inflation, adjusted by a negative 2.9 percentage points to recoup one-half of the estimated excess spending in FY 2008 and 2009, due to changes in hospital coding practices that did not reflect increases in patients’ severity of illness. The Final rule will be published in August, and the proposed coding offset would take effect October, 1, 2010.
According to a study by the Moran Company, "The CMS methodology does not adequately isolate documentation and coding from other factors when calculating changes in [case-mix index]. CMS’ methodology cannot distinguish among the different causes of a change in average patient severity." The study, which can be accessed at http://www.aha.org/aha/content/2010/pdf/100712-codingmthdgy.pdf, was done on behalf of the American Hospital Association, Federation of American Hospitals, and the Association of American Medical Colleges
The second study, from City University of New York economics professor Partha Deb concluded that, contrary to CMS’ assumption that hospitals select codes that are not related to the severity of illness of their patients, thus warranting a coding adjustment, "multiple data sets and different measurement tools indicate that the Medicare population is indeed getting sicker." This study is available at http://www.aha.org/aha/content/2010/pdf/100715-CMItrends.pdf
The senators pointed out in their letter that if the Proposed rule becomes effective with no changes, it would cost hospitals $3.7 billion in 2011. The senators further noted that the proposed 2.4 percent market basket increase is much less than the actual rate of cost increases for hospitals in 2010.
CCH Chicago Bureau, July 21, 2010.For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
Visit our News Library to read more news stories.
