Health Information Management

News: House urges CMS to mitigate coding reduction, MedPac says stay the course

CDI Strategies, July 22, 2010

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There may be hope for hospitals carefully watching the proposed IPPS rule, praying for some amelioration of the suggested 2.9% documentation and coding adjustment (DCA) it included. On July 12, 242 members of Congress sent a letter to CMS suggesting the agency erred in its claims that payment increases were due solely to increased documentation.

The DCA, according to the Congressional letter, fails to account for “hospitals' treatment of more complex and more severely ill patients.”
Members of the House noted that the Medicare Payment Advisory Commission (MedPac) projected a negative 5.9% overall Medicare margin for hospitals in FY 2010 and recommended a full inflation update for hospital payments in FY 2011. The projected cuts could cost hospitals some $3.7 billion in reduced Medicare revenue, the letter states.
However, in a May 27 letter to CMS Principal Deputy Administrator Marilyn Tavenner, MedPAC Chairman Glenn M. Hackbarth, JD, stated that “while documentation and coding improvements (DCI) help hospitals measure patient severity more accurately, they also increase payments without a real increase in patient severity or the resources hospitals must use to furnish inpatient care.”
According to MedPac the combination of CMS’ proposed recovery adjustment for 2011 (-2.9%) and a -3.9% adjustment to prevent further overpayments would total a 6.8% cut in IPPS payment rates. While MedPac acknowledged CMS’ concern that a 6.8% reduction in the rates, if taken, may be financially disruptive to many hospitals, it did not support delaying the cuts at this time.
“Delaying prevention of overpayments, however, also creates a problem because overpayments will continue to accumulate in 2010 and later years until the effect of DCI is fully offset in the payment rates. Thus CMS will not achieve budget neutrality unless Congress directs it to recover all overpayments,” the MedPac letter states.

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