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CMS proposes IPPS changes for 2012 and beyond

HCPRO Website, April 20, 2011

Agency continues coding adjustment, makes changes to HAC list

The Centers for Medicare & Medicaid Services (CMS) plans limited changes to complications and comorbidities (CC) in fiscal year (FY) 2012, but proposes new MS-DRGs for excisional debridement as well as an additional hospital-acquired condition (HAC). These and other changes are part of the inpatient prospective payment system (IPPS) proposed rule posted April 19. The proposals would make adjustments to existing IPPS policies and also pave the way for future changes as a result of the Patient Protection and Affordable Care Act (PPACA).

Overall, CMS expects a year-over-year reduction of 0.5% in payments to acute care hospitals under the FY 2012 IPPS. The reduction includes a documentation and coding adjustment of -3.15%, eliciting disappointment from the hospital community.

"We're very concerned that CMS continues to move forward with the inpatient PPS coding offset," says Joanna Kim, senior associate director for policy for the American Hospital Association in Washington, DC. "We feel that it's excessive and wrongly assumes spending on inpatient hospital care has increased solely due to changes in coding. We are, however, pleased that CMS has not proposed further documentation and coding cuts to the LTCH PPS [long-term care hospital prospective payment system]."

Gloryanne Bryant, RHIA, CCS, CCDS, regional managing director of HIM, NCAL Revenue Cycle, at Kaiser Foundation Health Plan, Inc. & Hospitals in Oakland, CA, agrees. "We believe that our efforts to improve documentation and coding actually do reflect patient severity, and we challenge CMS to look at other methodologies they're using." Bryant encourages hospitals to comment on the offset, especially if they can provide data to support their position.

CC/MCC changes
The 2012 proposed rule includes limited changes to the list of CCs/major CCs (MCC) and the associated CC exclusion list. James S. Kennedy, MD, CCS, managing director for FTI Healthcare in Atlanta, cautions that the rule does not include any CC/MCC updates or changes based on the new ICD-9-CM codes from the March ICD-9-CM Coordination and Maintenance Committee meeting. Instead, CMS will accept comments on the effect of these new codes after they are published in May. Kennedy believes that some of the new codes could have CC/MCC implications, such as new codes from the stages of acute kidney injury or drug-induced pancytopenia, which stakeholders should watch for.

One surprise is the continued inclusion of encephalopathy as an MCC, says Kennedy. "'Encephalopathy' is such a generic word," he explains. "I at least had thought that encephalopathy, nonspecified, would be lowered to a CC . . . much like CHF [congestive heart failure], nonspecified, is not a CC." The cost analysis that CMS used to reach this conclusion makes sense, Kennedy adds; however, from a physician documentation perspective, there is a need for increased specificity and guidance on this topic. (Learn more about encephalopathy from the Association of Clinical Documentation Improvement Specialists white paper.)

CMS also proposed removing pressure ulcer diagnosis codes 707.23 (stage III) and 707.24 (stage IV) from the CC exclusion list when listed with a principal diagnosis code from 707.00–707.09. This allows the stage III and IV pressure ulcer codes to be MCCs when reported with the pressure ulcer codes as principal diagnosis, explains Shannon McCall, RHIA, CCS, CCS-P, CPC, CEMC, CPC-I, CCDS, director of HIM and coding at HCPro, Inc., in Danvers.

The move is a response to commenters who contended that a patient admitted for treatment of a stage III or stage IV pressure ulcer likely requires resources that would qualify the case as a diagnosis with an MCC. McCall notes that the stage III or IV pressure ulcer present-on-admission reporting requirement still applies, so hospitals will need to identify that the pressure ulcer is not a HAC.

Excisional debridement
Among the proposed MS-DRG changes, CMS would create three new MS-DRGs for excisional debridement of skin and subcutaneous tissue and revise existing MS-DRGs 573–578 to include skin grafts only, to account for cost differences. CMS resisted classifying procedure code 86.22 (excisional debridement of wound, infection, or burn) as a nonoperative procedure, stating that inpatient facilities would be under-reimbursed if they were to do so. The proposed MS-DRG additions/revisions are as follows:

  • Proposed MS-DRG 570 (skin debridement with MCC), 2.5217 relative weight (RW)
  • Proposed MS-DRG 571 (skin debridement with CC), 1.5531 RW
  • Proposed MS-DRG 572 (skin debridement without CC/MCC), 0.9928 RW
  • Proposed MS-DRG 573 (skin graft for skin ulcer or cellulitis with MCC), 3.4604 RW
  • Proposed MS-DRG 574 (skin graft for skin ulcer or cellulitis with CC), 2.7057 RW
  • Proposed MS-DRG 575 (skin graft for skin ulcer or cellulitis without CC/MCC), 1.2322 RW

The new debridement DRGs would still be classified as operating room procedures but would result in lower payment, to reflect what CMS says is the lower cost of delivering these services. "We examined MedPAR claims data on all excisional debridement cases and found that these debridement cases use appreciably fewer resources than other cases in their current surgical DRGs," CMS states in the proposed rule.

The change is a reasonable one that may help hospitals that perform many skin graft procedures, whose reimbursement may have been skewed downward by the inclusion of excisional debridement in the same MS-DRGs, says Kennedy. However, because there are no changes to any of the underlying coding or documentation guidance for excisional debridement, coders will still face difficulty differentiating documentation of excision, removal, debridement, and excisional debridement. The fact that CMS maintained excisional debridement as an operating room procedure means that it will continue to generate interest from external reviewers such as the recovery audit contractors (RAC), adds McCall.

New HAC: Contrast-induced acute kidney injury
CMS proposes adding a new condition to the list of HACs subject to reduced payment provisions under the IPPS—contrast-induced acute kidney injury. Although CMS states that there is no unique code that identifies the varying stages of acute kidney injury, the agency would identify it as a subset of discharges with ICD-9-CM diagnosis code 584.9 (acute kidney failure, unspecified), which currently qualifies as a CC. CMS contends that it can accurately identify contrast-induced kidney injury when code 584.9 is listed in combination with specified procedure codes from the 88.xx code series. CMS lists these codes starting on p. 113 of the proposed rule display copy.

"All the more reason that providers must be attentive to the potential release of new acute kidney injury codes by the National Center for Health Statistics in May, what impact they may have in gauging contrast-induced nephropathy, and what impact it may have with the other acute renal failure codes, especially 584.5, acute kidney failure with lesion of tubular necrosis," Kennedy says.

Although CMS considered the use of E codes to identify contrast-induced acute kidney injury, it scrapped the idea because E codes are not required on IPPS claims.

Readmissions provisions
CMS is also using the proposed rule to lay the foundation for the coming hospital readmission reduction program mandated by PPACA. The agency proposes to include acute myocardial infarction, heart failure, and pneumonia—based on the current inpatient quality reporting measures—as applicable conditions under the readmissions program, starting in FY 2013.

However, this shouldn't stop providers from analyzing a full range of hospital-specific readmissions, says Bryant. "I would recommend that hospitals run some data to look at readmission rates to determine what their top 3–5 readmissions conditions are," she says. "It's clear that readmissions are a topic of concern for the federal government. Even though we in the industry have talked about readmissions for years, this federal mandate means we need to look at it even more closely."

CMS would adopt the National Quality Forum definition of readmission:

...as occurring when a patient is discharged from the applicable hospital to a non-acute setting (for example, home health, skilled nursing, rehabilitation or home) and then is admitted to the same or another acute care hospital within a specified time period from the time of discharge from the index hospitalization.

For the three proposed applicable conditions the specified time period would be 30 days.

Physicians' offices and the three-day payment window
In response to ongoing requests to clarify the applicability of the payment window policy to preadmission nondiagnostic services provided in hospital-owned or hospital-operated physicians' offices or clinics, CMS clarifies in the proposed rule that the three-day payment window policy applies to both preadmission diagnostic and nondiagnostic services furnished to a patient at physician practices that are wholly owned or operated by the admitting hospital.

Provider comments
The proposed rule will be published in the May 5 Federal Register. CMS will accept comments on the proposed rule after Federal Register publication, until June 20, and will respond to them in a final rule to be issued by August 1.

Kennedy notes that, with further changes coming as a result of PPACA and the ICD-10 transition, members of the hospital community may want to submit comments that will help inform CMS' development of the IPPS proposed rule for 2013. To do this, commenters should issue a letter by November to CMS separate from their comments on the current IPPS proposals for 2012.

Editor's note: Click here to access the proposed rule.

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