Case Management

Mentor moment: CMS publishes IPPS proposed rule for 2012

Case Management Weekly, April 27, 2011

Editor’s note: This blog by Kimberly Anderwood Hoy, director of Medicare and compliance at HCPro, Inc., first appeared on the Medicare Mentor blog.

On April 20, CMS put on display the proposed rule for IPPS services and other inpatient initiatives for 2012. This year’s proposed rule contains the widest variety of inpatient clarifications and initiatives we’ve seen in a number of years. It contains something for everyone, from the finance/accounting departments to the quality department, not to mention the coders and billers.

The proposed rule this year contains a proposed payment reduction of nearly half a billion dollars compared to payments in 2011. This reflects a controversial documentation and coding adjustment of -3.15%. This is greater than expected, although CMS indicates that it is required to recoup 3.9% and will recoup the remaining .75% in the future to avoid too great an impact on hospitals in 2012.

The documentation and coding adjustment is supposed to recoup increases in payments due to better coding and documentation, unrelated to real increases in the complexity of patients. However, it’s unclear whether CMS appreciates the increased use of observation in hospitals, resulting in less complex patients being taken out of the inpatient case mixes, causing case mixes to increase related to more complex patients rather than coding and documentation changes.

The proposed rule also includes some new quality initiatives, including a new proposed HAC for contrast-induced acute kidney injury and information on the readmission project required by the health care reform laws (PPACA). The new HAC works slightly differently than existing HACs because it will be triggered by the combination of the diagnosis code 584.9 (acute kidney failure, unspecified) and a procedure code for a diagnostic service using contrast (specific codes are listed in the rule). Current HACs require only the presence of a diagnosis code.

The hospital readmission reduction program will be implemented by an adjustment factor for excess readmissions that will apply to a particular hospital’s DRG base amount. The adjustment factor can be no more than 1% in FY2013, the first year the program will be implemented, and will be phased in until the full adjustment factor of 3% is reached in FY2015. The factor will be based on the excess readmission ratio for each hospital for applicable conditions, defined as acute myocardial infarction, heart failure, and pneumonia in FY2013, and may be expanded by four additional conditions by FY2015.  The readmission timeframe is specified as 30 days, and there are exclusions for readmissions unrelated to the original diagnosis, as specified by the National Quality Forum monitoring of readmissions for these three conditions.

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