April 18, 2007
Late last Friday, CMS issued its proposed rule for the Medicare inpatient prospective payment system for FY08. The rule includes a proposal to restructure the inpatient diagnosis related groups (DRGs) to account more fully for the severity of the patient's condition.
An analysis performed by Ingenix in the April 2007 issue of hfm notes that although the precise characteristics of the severity-adjusted DRGs were not known at the time of this writing, all options that CMS is considering have a common structure. Each option groups cases into an initial set of categories based primarily upon the principal diagnosis and the presence or absence of an operating room procedure. These categories are then subdivided based on the presence or absence of complications and comorbidities, in what is referred to as a CC split.
Unlike the current CMS DRG system, severity-adjusted DRGs typically distinguish among CCs based on their clinical significance. For example, cases with major CCs might be distinguished from those with moderate CCs. Also, the CC structure is likely to be applied uniformly across all cases, which will raise the importance of secondary diagnoses in determining how much Medicare pays a hospital for any particular case. There has been concern that some hospitals will respond to new incentives by increasing the frequency with which they code CCs among secondary diagnoses.
A review of the percentage of Medicare discharges in 2005 that contained one or more CCs among secondary diagnoses discloses that hospitals already code CCs on most of their bills. This finding suggests that presence of a CC on a bill may not be as influenced by financial incentives as some would suggest. Although the proportion of cases containing a CC among medical DRGs that do not currently have a CC split is slightly smaller than the proportion among medical DRGs with a CC split (77.3 percent versus 84 percent), the pattern is actually reversed among surgical cases. That is, the proportion of cases with a CC is actually higher among surgical cases where there is no current CC split--and no financial incentive to code CCs--than among surgical cases where there is such an incentive (73 percent versus 71.9 percent). Indeed, data suggest that hospitals have been coding CCs at high rates for years, although there does appear to be a slight upward drift over time.
Trends in CC Coding Rates by Type of Case and Presence of a CC Split in Current CMS DRG Structure, 2001-2005
| |
2001 |
2002 |
2003 |
2004 |
2005 |
|
Medical cases w/ CC split |
81.8% |
82.6% |
83% |
83.5% |
84% |
|
Medical cases w/o CC split |
72% |
73.1% |
74.9% |
76.1% |
77.3% |
|
Surgical cases w/ CC split |
71.7% |
72.4% |
73.4% |
72% |
71.9% |
|
Surgical cases w/o CC split |
71.8% |
72% |
72.3% |
73% |
73% |
These findings suggest that the potential for upcoding in response to the introduction of severity-adjusted DRGs may be relatively small. They also suggest that coding practices may be less influenced by financial incentives than by coding guidelines and professional standards that are designed to ensure that hospitals record as much clinically significant information as possible on their bills.
SOURCE: Will CMS's Adoption of Severity-Adjusted DRGs Promote Upcoding?, hfm magazine, April 2007
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HFMA Wants You to Know ISSN: 1540-0697. Volume VI, Issue 8. Copyright 2007, Healthcare Financial Management Association. All rights reserved.