Under the Medicare inpatient prospective payment system (IPPS) for FY08, the case mix index is greater for teaching hospitals than for nonteaching hospitals, according to American Hospital Directory, a company that provides online data about more than 6,000 U.S. hospitals. The company based its analysis on the preliminary FY06 Medicare Provider Analysis and Review file that the Centers for Medicare and Medicaid Services (CMS) used in promulgating the regulations. The higher increases projected for teaching hospitals are most likely due to the types of cases treated, because teaching hospitals generally admit more severely ill patients.
However, changes in case mix index are not proportionate to the projected changes in IPPS payment. This discrepancy is affected by several components of payment, but most significantly by payment for outliers. Because Medicare severity diagnosis-related groups (MS-DRGs) introduce more categories for higher levels of severity, some patients that qualified as outliers prior to FY08 are classified into higher-weighted MS-DRGs but are not qualified for outlier payment. The number of outlier cases is projected to decrease 5 percent and total outlier payment is projected to decrease 10 percent from FY07 to FY08 due to regulatory changes.
This shift in outlier payment contributes to the disproportionate change in IPPS payment for large teaching programs that have the highest levels of severity under MS-DRGs. The shift is an indication that CMS may need to focus further on the equity of payment for the costliest cases. Read the analysis.
