CMS issues IPPS proposed rule for FY 2013

HCPRO Website, April 25, 2012

by Michelle A. Leppert, CPC-A

Inpatient acute care hospitals could see a 2.3% increase in payment rates under the fiscal year (FY) 2013 Inpatient Prospective Payment System (IPPS) proposed rule, released April 24. The 2.3% is a net update after inflation, improvements in productivity, a statutory adjustment factor, and adjustments for hospital documentation and coding changes.

In addition, the IPPS proposed rule contains provisions to strengthen the Hospital Inpatient Quality Reporting (IQR) Program and proposes new policies and measures for the Hospital Value-Based Purchasing (VBP) Program.

“It's good that they're lowering the burden on hospitals from tracking so many quality issues, but they're coming up with a couple other things, like [hospital-acquired conditions (HAC)],” says Robert S. Gold, MD, CEO of DCBA, Inc., in Atlanta.

“If the goal is to reward excellence, hospitals have to ensure that their coders are up to speed with appropriate identification of complications and with [present on admission] POA indicators as well as the over-documentation issues that could lead to financial penalties,” Gold says. CMS also proposes a methodology to calculate the readmissions adjustment factor for inpatient hospitals that could result in a 0.3% decrease in overall payments to hospitals.

CMS did not propose any major changes to the ICD-9-CM code set, which stands true to the original plan of doing a minimal update to ICD-9-CM for 2012, says Shannon E. McCall, RHIA, CCS, CCS-P, CPC, CPC-I, CEMC, CCDS, director of HIM and coding for HCPro, Inc, in Danvers, Mass. “Since we are proposing to use ICD-9-CM until October 1, 2014, it potentially adds another year of limited updates.”

For FY 2013, CMS proposes to reassign cases with a principal diagnosis code 487.0 (influenza with pneumonia) and a one of a list of pneumonia codes listed as a secondary diagnosis codes from MS-DRGs 193, 194, and 195 to MS-DRGs 177, 178, and 179. CMS proposes to make three additional codes complications and comorbities (CCs) and change one major CC (MCC) to a CC for FY 2013. It does not plan to add any MCCs or delete any CCs.

CMS proposes adding these diagnoses to the CC list:

  • 263.0, Malnutrition of moderate degree
  • 263.1, Malnutrition of mild degree
  • 440.4, Chronic total occlusion of artery of the extremities

It also is proposing to change the severity level of diagnosis code 584.8 (acute kidney failure with other specified pathological lesion in kidney) from an MCC to a CC.

"While I support many of their CC/MCC changes, such as making mild and moderate malnutrition a CC, I am saddened that CMS still refuses to make heart failure not otherwise specified a CC," says James S. Kennedy, M.D., C.C.S., C.D.I.P., managing director at FTI Consulting in Brentwood, Tenn.

IQR proposed changes

The IQR program currently includes 72 quality measures. CMS has proposed reducing that number to 59 for the FY 2015 payment determination, and 60 for the FY 2016 payment determination.

Hospitals choose to participate in the IQR program, but CMS reduces the annual payment update for those that do not successfully participate by 2%. CMS proposes adding perinatal care and readmissions, including overall readmissions and readmissions relating to hip and knee replacement procedures, to the IQR quality measures for FY 2013. In addition, CMS would also measure how well hospitals use a surgery checklist designed to reduce errors.

VBP proposed changes

Beginning in FY 2013 and continuing annually, CMS will adjust hospital payments based on how hospitals perform or improve their performance on a set of quality measures.

For the FY 2014 VBP Program, the proposed rule includes a new outcome measure that rewards hospitals for avoiding central line-associated bloodstream infections that can develop during inpatient hospital stays.

For the FY 2015 Hospital VBP Program, CMS proposes grouping and scoring measures in four domains—clinical process of care, patient experience of care, outcome, and efficiency. CMS also proposes adding a total of four new measures to the list.

Readmissions reduction program methodology

In the FY 2012 IPPS final rule, CMS began implementation of the Readmissions Reduction Program for three conditions: acute myocardial infarction (i.e., heart attack), heart failure, and pneumonia. CMS also finalized its definition of readmission as “occurring when a patient is discharged from the applicable hospital and then is admitted to the same or another acute care hospital within a specified time period [30 days] from the time of discharge from the index hospitalization.”

In the FY 2013 IPPS proposed rule, CMS proposes to codify the definition of “excess readmission ratio” as a:

In addition, CMS proposes defining “base operating DRG payment amount” under the Readmissions Reduction Program as the wage-adjusted DRG operating payment plus any applicable new technology add-on payments. CMS also proposes to exclude the difference between the hospital’s applicable hospital-specific payment rate and the federal payment rate from the definition of “base operating DRG payment amount.”

CMS also addresses these areas related to the program:

  • Adjustment factor (both the ratio and floor adjustment factor)
  • Aggregate payments for excess readmissions and aggregate payments for all discharges
  • Applicable hospital
  • Limitations on review
  • Reporting of hospital-specific information, including the process for hospitals to review and submit corrections

Additions to the HAC list

CMS proposes adding two conditions to the list of hospital acquired conditions (HACs) for 2013: surgical site infection following cardiac implantable electronic device (CIED) and iatrogenic pneumothorax with venous catheterization.

Inpatient facilities do not receive higher MS-DRG payments for patients with complications or major complications caused by the conditions on the HAC list. CMS also plans to add two codes, 999.32 (bloodstream infection due to central catheter) and 999.33 (local infection due to central venous catheter) to the existing vascular catheter-associated infection HAC category.

With these additions, there was no need for new codes. CMS just states that the combination of these diagnosis and procedure codes would be identified as a HAC, McCall says.

This is not the first time CMS has proposed to add pneumothorax to the HAC list. CMS proposed adding pneumothorax associated with transbronchial biopsy several years ago, but it was not finalized, McCall says.

This condition does seem to meet HAC the criteria of occurring commonly and can cause a significant increase in resource consumption in order to treat this condition, she says. It is also labeled as a complication and comorbidity. However, HACs must also be reasonably preventable, according to evidence-based research, and this has also kept other conditions, such as ventilator-associated pneumonia, off the list in the past.

The addition of the surgical site infections from CIEDs seems to follow along with the inclusion of other site infections already on the HAC list, especially given an increased focus on ensuring sterile environments to avoid contamination of a primary infection at the time of placement of such devices, McCall says.

Coding and documentation adjustment

CMS expects the FY 2013 proposed documentation and coding adjustment (DCA) to net an aggregate increase of 0.2%. The DCA was originally established at the time CMS implemented MS-DRGs. It was thought that due to the increased need for specificity, facilities would focus attention on improvements to documentation. The shift in coding would not necessarily indicate that facilities were treating sicker patients than they had previously, only that they were now better able to capture that specificity. The last two years, the DCA has resulted in a payment offset of -2.0% and -2.9%.

"In good news, the documentation and coding adjustment actually works in the provider’s favor this year, increasing reimbursement by 0.2%," Kennedy says. "That’s a substantial increase from the previous years."

Comment on the proposed rule

CMS will accept comments on the proposed rule until June 25 and will respond to all comments in a final rule to be issued by August 1, 2012. Facilities can download a display copy of the proposed rule here.

The proposed rule will appear in the May 11, 2012 Federal Register.



    …hospital-specific ratio for each applicable condition for an applicable period, which is the ratio (but not less than 1.0) of (1) risk-adjusted readmissions based on actual readmissions for an applicable hospital for each applicable condition to (2) the risk-adjusted expected readmissions for the applicable hospital for the applicable condition.

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