Health Information Management

News: MedPac recommends payment reductions to offset documentation improvements

CDI Strategies, January 21, 2010

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In its January release, The Medicare Payment Advisory Commission (MedPAC) recommended Congress adjust Medicare’s hospital inpatient payments over three years to recover overpayments that have resulted from recent documentation and coding changes.
It said:
“To restore budget neutrality, the Congress should require the secretary [of HHS] to fully offset increases in inpatient payments due to hospitals’ documentation and coding improvements. To accomplish this, the Secretary must reduce payment rates in the inpatient prospective payment system by the same percentage (not to exceed 2 percentage points) each year in 2011, 2012, and 2013. The lower rates would remain in place until overpayments are fully recovered.”
The update reflects agency recommendations from last year, which the American Hospital Association estimated at the time, would have resulted in $1 billion less in 2010 hospital reimbursements.
“Everyone is asking why CMS would punish people by reducing their payments when they’ve actually improved their documentation and coding,” said Gloryanne Bryant, RHIA, CCS, CCDS, ACDIS board member and HIM managing director at Kaiser Permanente in Oakland, CA. (Read the complete article in the CDI Journal archives.)
Last year’s threat may have actually spurred CDI program growth. When the news hit, Bryant encouraged facilities to concentrate their improvement efforts even further, to make up the projected financial offset, she says.
“The documentation and coding adjustment is the big reason to implement a CDI program,” Bryant said. “Every single day, hospitals are losing money because of a lack of documentation specificity. We’ve got to work harder and put more effort and resources into getting this documentation improved.”
In the final rule, CMS decided not to make the adjustment due to a lack of data, but said it would consider implementing the adjustment beginning in fiscal year 2011. CMS typically publishes its IPPS proposal in late April or early May, followed by a 60-day public comment period. CMS typically publishes the IPPS final rule in July.

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