Medical Staff

Welcome to Never Land: Growing in Leaps and Bounds

Medical Staff Affairs Monthly, May 14, 2008

In October 2007, this column addressed the impending and dramatic restructuring of the diagnosis-related group (DRG) system that will begin in October 2008. This initiative from the Centers for Medicare &Medicaid Services (CMS) is called Medicare Severity DRGs (MS-DRGs).
 
Under this system, severity of illness will be determined based only on what is documented at the time of admission, as opposed to the time of discharge, which is the current standard. Also, hospitals will no longer be paid a higher rate for eight hospital-associated complications, as is the current practice. The eight conditions initially listed for nonpayment included air embolism, blood incompatibility, catheter-associated UTI, falls/injuries in hospital, object left in surgery, surgery-associated infections, and vascular-catheter–associated infections. Welcome to Never Land!
 
In our October 2007 column, we also noted that more never-to-be-paid-for conditions would follow the initial eight conditions. The wait for further conditions has been remarkably short; CMS has now listed nine more proposed “never events”—i.e., preventable errors or conditions for which Medicare will not pay. The new proposed conditions include Legionnaires’ disease, delirium, surgical site infections following certain elective procedures, and certain bloodstream infections. In addition, the current 30 quality measures would increase by 43. This would make a total of 72 quality measures (assuming that all are approved by the National Quality Forum [NQF]). The HFMA survey prioritizing concerns about hospital finances over the next three years listed the cost of accreditation and regulatory compliance with the new MS-DRGs as a major concern. Welcome to the growth of Never Land!
 
Not surprisingly, many payers are following the lead of CMS. Aetna, the Blue Cross and Blue Shield Association, Cigna, and WellPoint members have also taken memberships in Never Land, thus ensuring a bright and vigorous future for these initiatives. Welcome to the expansion of Never Land!
 
The intent of Never Land is good: namely, to improve patient safety and clinical outcomes by avoiding the perverse incentive of higher payments to providers for potentially avoidable complications. To get the same or increased payment under the new system will require a much greater degree of admission documentation than currently is needed. In a sense, this new system is the opposite of pay-for-performance systems, in which higher quality outcomes are rewarded with a differentially higher payment. Under MS-DRGs, lower quality in either admission documentation or actual hospital care directly translates into lower hospital payments.
 
The question becomes: What kind of effect will the new MS-DRGs have? Will this be another case in which the incentives of medical staffs and hospitals are not aligned? The new rules place the burden squarely on the hospital, through denial of its payment, but are dependent on the documentation on admission by members of the medical staff. What aligned incentive exists for the medical staff member to spend more time providing high-quality documentation? Beyond the issue of basic quality care, what’s in it for the physician?
 
This leads to the question of which is more important: physician success or organizational success. Truly successful organizations recognize that the answer is not “either-or,” but rather “yes-and.” In a highly regulated healthcare environment in which scant attention is paid to aligned incentives, the successful medical staff–hospital combination establishes the leadership necessary for both to succeed. Medical staffs and hospitals that have invested in the leadership training necessary to acquire and implement the skills of effective communication, fruitful collaboration, and successful management of change and conflict have laid the basis for success in managing MS-DRGs, as well as other challenges. It is only through leadership that organizations can create a new culture, in which convincing reasons can be offered to change behaviors and align incentives that are not addressed in the strict interpretation of the letter of the law or regulations.
 
The Greeley Company has long provided practical strategies to many organizations facing these challenges. Let us know if we can be of help. Until next time, be the best that you can be.

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