CMS releases FY 2011 IPPS proposed rule

HCPRO Website, April 20, 2010

By Doreen Bentley, CPC-A

In the fiscal year (FY) 2011 Inpatient Prospective Payment System (IPPS) proposed rule, CMS proposes a 0.1% reduction—or $142 million—to total payments for operating expenses to IPPS hospitals, which reflects that the documentation and coding adjustment (DCA) overcomes the market basket inflation update.

CMS is proposing to update acute care hospital rates by 2.4% for inflation minus a DCA of 2.9 percentage points to help recoup half of the increase in FY 2008 and 2009 aggregate payments due to changes in hospital coding practices that did not reflect increases in patients’ severity of illness, according to CMS. This reduction is coupled with other adjustments to maintain budget neutrality and ensure proper payment of outlier claims.

“They held off applying [the DCA adjustment] last year, but they’re proposing to recoup some of the additional payments due to case mix increases by making a 2.9% reduction in payments this year, even though we only got a 2.4% market basket increase, resulting in an overall reduction,” says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc., in Marblehead, MA. “This resulted in the standardized amount actually going down for the first time in recent memory.”

Long-term care hospitals (LTCH) will see an update of 2.4% for inflation minus a DCA of 2.5 percentage points. Under the proposed rule, LTCH payments are estimated to increase by 0.8% or $41 million.

“I was surprised by the size of the documentation and coding adjustment,” says James S. Kennedy, MD, CCS, managing director of FTI Healthcare in Atlanta, citing that the Medicare Payment Advisory Commission (Medpac) had recommended up to a 2% reduction in their report published in March 2010.

“CMS wishes to recover monies they believe that they overspent as a result of improved physician documentation and compliant coding practices,” Kennedy explains.

Also of note is that the proposed rule does not implement any initiatives related to healthcare reform, Kennedy says.

CMS expects to provide further information on the implementation of healthcare reform provisions in the recently enacted Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively referred to as the Affordable Care Act) that affect FY 2010 and FY 2011 IPPS payments in the near future, according to an April 19 press release.

Changes to HACs
CMS proposed adding five new ICD-9-CM diagnosis codes to replace code 999.6 (ABO incompatibility reaction) for FY 2011. ICD-9-CM code 999.6 is currently the only code identified under the blood incompatibility hospital-acquired condition (HAC) category.

CMS proposed deleting code 999.6 and forming a new subcategory of 999.6 to identify new diagnoses relating to ABO incompatibility reaction due to transfusion of blood or blood products. The following new codes in the subcategory would all be HACs:

  • 999.60: ABO incompatibility reaction, unspecified (complication and comorbidity [CC])
  • 999.61: ABO incompatibility with hemolytic transfusion reaction not specified as acute or delayed (CC)
  • 999.62: ABO incompatibility with acute hemolytic transfusion reaction (CC)
  • 999.63: ABO incompatibility with delayed hemolytic transfusion reaction (CC)
  • 999.69: Other ABO incompatibility reaction (CC)

Based on an RTI International analysis of MedPAR IPPS claims from October 2008 through June 2009, a chart in the proposed rule shows that, of the 216,764 discharges with a HAC-associated diagnosis as a secondary diagnosis, 3,038 discharges ultimately resulted in MS-DRG reassignment.

“That seems like a low figure compared to what we would anticipate,” Hoy says. “But this supports the idea that patients with HACs often have other complicating factors that make them susceptible to HACs, so we aren’t seeing reassignment in the majority of cases.”

Expansion of quality measures

CMS is looking at risk-adjusted outcomes in cardiovascular surgery.

“Core measures have been mainly process-related in the past, but there’s an increasing trend toward quality measurement involving risk-adjusted mortality and readmission,” Kennedy says. “Hospitals need to pay attention to the fact that [clinical documentation improvement] not only affects revenue but also risk-adjusted outcomes, and we’ll continue to see more applications of ICD-9-CM coded administrative data in CMS’s hospital value-based purchasing program.”

Code freeze considerations

CMS also addressed in the proposed rule ongoing discussion regarding the need for a partial or total freeze in the annual updates to both ICD-9-CM and ICD-10-CM/PCS codes.

Comments CMS received in the last year ranged from those supporting a complete freeze for both coding systems to those recommending that both coding systems continue to be updated annually prior to ICD-10 implementation. There were also many comments that supported a more limited update process beginning on October 1, 2011, or
October 1, 2012, which would allow for only a small number of new codes to capture new technologies or new diseases.

“We welcome additional input on having the last regular code updates to
ICD-9-CM and ICD-10 on October 1, 2011, and to only add codes for new technologies
and diseases on October 1, 2012 and 2013,” CMS said in the proposed rule. “We also welcome additional input on having the next regular update to ICD-10 occur again on October 1, 2014.”

Kennedy, who opposes a freeze, encourages providers to weigh in on the issue by providing comments to CMS.

“As risk-adjusted methodologies become more important and more prevalent, code systems will need to be able to adapt and provide more precise codes that are integral to the integrity of a risk-adjustment process,” says Kennedy.

He gives as an example CMS’s proposal to transition code 584.9, acute renal failure, from a Major CC (MCC) to a CC (see below), creating a fifth digit designating the differing stages of acute renal failure or acute kidney injury. This will allow hospitals to report these more precisely and CMS to reimburse appropriately for the patients’ severity of illness and resource consumption.

The proposal related to acute renal failure could be due to changing definitions of acute kidney injury over the past five years and the increasing frequency with which the diagnosis is reported, Kennedy says. “This is a very surprising change, and I would strongly encourage people to comment on this because there will be repercussions if acute renal failure is a CC rather than an MCC.”

Proposed code changes

The proposed rule also included the following:

  • New codes. The proposed rule includes more than 60 new diagnosis codes and more than 50 new V codes. A number of the new codes fall under the 752 code series for congenital anomalies of genital organs. Almost 20 of the new codes fall under the 999 code series for complications of medical care, not elsewhere classified. Among the new V codes, a significant number relate to V13 (personal history of other diseases), V85 (Body Mass Index), as well as new series V90 and V91. The proposed rule also includes 12 new procedure codes.
  • Deleted codes. CMS proposed the deletion of procedure code 39.8 (Operations on carotid body, carotid sinus, and other vascular bodies).CMS also deleted the following diagnosis codes:
    • 275.0 (Disorders of iron metabolism)
    • 276.6 (Fluid overload)
    • 287.4 (Secondary thrombocytopenia)
    • 752.3 (Other anomalies of uterus)
    • 786.3 (Hemoptysis)
    • 787.6 (Incontinence of feces)
    • 970.8 (Poisoning by other specified central nervous system stimulants)
    • 999.6 (ABO compatibility reaction)
    • 999.7 (Rh incompatibility reaction)
    • V25.1 (Encounter for insertion of intrauterine contraceptive device)
    • V85.4 (Body Mass Index 40 and over, adult)
  • Revised codes. CMS revised only a handful of codes, including several related to pregnancy complications and a few V codes. Also minimal were revisions to procedure codes 00.55, 81.80, and 99.14.

MS-DRG revisions

CMS tweaked the individual DRG assignment of more conditions and procedures this year than in other recent years, Hoy says.

Proposed changes include the following:

  • To delete MS-DRG 009 and create the following two MS-DRGs
    • MS-DRG 014 (Allogeneic Bone Marrow Transplant)
    • MS-DRG 015 (Autologous Bone Marrow Transplant)
  • To add MS-DRG 014, which would include cases reported with one of the following ICD-9-CM procedure codes:
    • 41.02: Allogeneic bone marrow transplant with purging
    • 41.03: Allogeneic bone marrow transplant without purging
    • 41.05: Allogeneic hematopoietic stem cell transplant without purging
    • 41.06: Cord blood stem cell transplant
    • 41.08: Allogeneic hematopoietic stem cell transplant
  • To add MS-DRG 015, which would include cases reported with one of the following ICD-9-CM procedure codes:
    • 41.00: Bone marrow transplant, not otherwise specified)
    • 41.01: Autologous bone marrow transplant without purging)
    • 41.04: Autologous hematopoietic stem cell transplant without purging)
    • 41.07: Autologous hematopoietic stem cell transplant with purging)
    • 41.09: Autologous bone marrow transplant with purging)

Reduced paperwork for CAHs

Several changes are proposed for critical access hospitals (CAH) with the most significant one affecting CAHs that use the optional method billing, more commonly known as Method II billing. Previously a CAH had to elect this billing method for each physician on an annual basis and submit the necessary paperwork to their fiscal intermediary (FI) or Medicare Administrative Contractor (MAC) 30 days before the start of their cost reporting period. When CAHs missed this deadline, even by a few days, they would in turn miss out on all of the additional reimbursement for that entire cost reporting period.

However under the proposed rule, for cost reporting periods beginning on October 1, 2010, once an election is made, it remains in effect until the CAH terminates the election.

“This will reduce the paperwork burden for the annual election process and prevent CAHs from missing the election deadline with huge financial consequences,” says Debbie Mackaman, RHIA, CHCO, a regulatory specialist and Medicare Boot Camp® instructor at HCPro, Inc.

Under the proposed rule, CMS must create a method to terminate an election, and the CAH must terminate an election at least 30 days prior to the start of its cost reporting period.

“Although they no longer have to complete all the paperwork each year, they are responsible for letting their FIs or MACs know when they have physician staff changes,” Mackaman says.

CMS representatives discussed all the proposed changes for CAHs on the Rural Open Door Forum on April 20, stating that since the changes are positive for providers, they do not expect any negative comments and expect the rules to be finalized as proposed.

Editor’s note: Access the proposed rule at the Federal Register, under Special Filings.
Interested parties may submit comments electronically at www.regulations.gov (with file code “CMS-1498-P”, or by mail. Comments must be received by 5 p.m. June 18. CMS will issue the final IPPS rule for FY 2011 no later August 1, 2010.

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