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Start preparing for October when reimbursement rules change
CMS proposes switching to MS-DRG system in fiscal year 2008
The Centers for Medicare & Medicaid Services (CMS) has not yet issued its final rule for fiscal year 2008, but it's not too soon for case managers to start familiarizing themselves with the new Medicare Severity-DRG (MS-DRG) system that CMS has proposed using as a basis for reimbursement for inpatient services, asserts Carol H. Eyer, senior manager of clinical compliance with Pershing Yoakley & Associates' Atlanta office.
When it issued its proposed changes to the inpatient prospective payment system in April, CMS announced its intention to switch to the MS-DRG system as a basis for reimbursement. The agency solicited comments on its proposed rule through June 12 and is expected to issue a final rule in August.
It's too early to know exactly what CMS will require when it issues its final rule, but it is anticipated that the rule will largely mirror the proposed one, Eyer points out.
"Every time CMS issues a change in its reimbursement policies, in a sense, the industry takes action but with somewhat of a wait-and-see approach. As with any major change, the first year will be very telling toward future changes that may be implemented. We'll all work our way through the first year and go from there. CMS is likely to tweak the system in the following year," she explains.
The MS-DRGs represent a significant increase in the number of DRGs, from 538 to 745, Eyer points out. The new system creates a distinction between severity levels by separating major comorbidities and complications from comorbidities and complications, she adds.
Hospitals shouldn't start making changes without understanding the full scope of what is going on, but case managers can start preparing for the new system by familiarizing themselves with the MS-DRGs and increasing physician awareness of the need for documentation that reflects true patient severity of illness, adds Cassandra Barnes, RN, MS, CCM, senior consultant for case management with Pershing Yoakley
Case managers can look at their hospital's top 20 DRGs based on MEDPAR data and get acquainted with the correlating MS-DRGs to analyze how the MS-DRG system may affect them, Barnes suggests.
Documentation even more important
"If documentation improvement was important before, it's going to be 1,000 times more important with the new system," Eyer adds.
The MS-DRG system most often distinguishes DRGs by three severity levels: those with an "MCC" or major complication/cormorbidity; those with a "CC" or complication/comorbidity; and those classified as "non-CC" — neither.
For instance, DRG 89 (simple pneumonia and pleurisy with a CC) and DRG 90 (simple pneumonia and pleurisy without a CC) will be replaced by three MS-DRGs.
MS-DRG 193 is simple pneumonia and pleurisy with a major complication or comorbidity. MS-DRG 194 is simple pneumonia and pleurisy with a complication or comorbidity, and MS-DRG 195 is simple pneumonia and pleurisy without a complication or comorbidity.
"CMS took the existing comorbidities and complications and largely carved out those representing the greatest severity in order to create the major CCs and more accurately capture the patient's severity of illness," Eyer says.
There's a huge difference in reimbursement between the three MS-DRGs, Eyer points out.
Eyer projected the impact on one hospital client as an example. Based on the CMS proposal, this hospital would receive reimbursement of $6,463.19 for MS-DRG 193 (pneumonia and pleurisy with a major CC). Reimbursement for MS-DRG 194 (simple pneumonia and pleurisy with a CC) would be $4,508.49 vs. MS-DRG 195 (simple pneumonia and pleurisy without a CC) with a proposed reimbursement of $3,272.16.
"The severity level of the patient is going to drive the reimbursement more than ever before, which makes sense as an overall goal. A patient is going to have to be really sick to fall into an MS-DRG with a major CC. With a big disparity in reimbursements between the severity-adjusted MS-DRGs, it will be imperative that hospitals that treat the sickest patients ensure accurate documentation in order to be accurately paid for the care they provide," Eyer says.
In some instances, the current DRGs are split into two MS-DRGs, with or without a major CC, Eyer points out.
For instance, the current DRG 576 (septicemia without mechanical ventilation for more than 96 hours) is split between MS-DRG 871 (septicemia without mechanical ventilation for more than 96 hours with a major CC) and MS-DRG 872 (septicemia without mechanical ventilation for more than 96 hours without a major CC).
"In this and other scenarios, there is not enough difference between the major CC and CC severity to warrant an additional distinguishing level," Eyer says.
Case managers who are involved in documentation enhancement initiatives will have the challenge of assuring documentation with a more complex set of DRGs, Barnes points out.
"Documentation supports the hierarchy of the comorbidities and complications. To receive appropriate reimbursement, the hospital must be able to show through the documentation how sick the patient really was," she adds.
If a hospital is treating more severely ill patients, it will be essential that the documentation support a patient's condition so the hospital will be reimbursed for the cost of care accordingly, she adds.
CMs role bigger than before
Case managers are likely to have a bigger role than ever before in clinical documentation improvement, Barnes says.
As documentation becomes more important than ever before, it's likely that case managers will be more involved in documentation improvement programs since they are in the charts every day, she adds.
Regardless of whether the case managers or the coding professionals are responsible for assuring documentation, the clinical staff will need a lot of education on the new process, Barnes adds.
Eyer recommends that case managers begin to familiarize themselves with two tables in the proposed inpatient prospective patient system rule, which outline the conditions that CMS is considering as either major complications or comorbidities and the complications and comorbidities. The 1,200-page proposed rule for 2008 is available on-line at www.cms.hhs.gov. Table 6J "Major Complications and Comorbidities List" begins on page 882. Table 6K "Complication and Comorbidity List" begins on page 940.
"The proposed changes for fiscal [year] 2008 reflect CMS' increased initiative to ensure federal health care program integrity and funding with appropriate care for its beneficiaries as well as reimbursement to providers for the severity treated. In the bigger picture, Medicare is doing everything it can to preserve the program. Every year, CMS peels back another layer of the proverbial onion with the goal of ensuring that the dollars are well spent," Eyer says.
In addition to a new reimbursement system, CMS has announced its intention to hold hospitals more accountable for quality by withholding payment for the cost of treating hospital-acquired infections.
(For more information, contact Carol H. Eyer, senior manager of clinical compliance with Pershing Yoakley & Associates, e-mail: email@example.com. Cassandra Barnes, RN, MS, CCM, senior consultant for case management with Pershing Yoakley & Associates, e-mail: firstname.lastname@example.org.)