Hospitals probably will be rushing to get ready for the significant changes expected to be included in the government’s final rule for Medicare’s inpatient prospective payment system.
The new system, which will go into effect on October 1, shifts the emphasis in reimbursing hospitals to place more emphasis on costs related to severity.There will be no transition time for hospitals to get used to severity-based reimbursement, and hospitals aren’t doing enough to prepare, experts say.
“Hospitals are waiting for the final rule, but are immature in their development of strategies, and we’ll see a scramble when the final rule is released in August,” said Michael Stitcher, COO at HP3 Inc., a Bethlehem, Pa.-based consulting firm. Stitcher spoke at a session June 26 at the Annual National Institute of the Healthcare Financial Management Association.
The revamped system will adjust DRG weights based on the severity of a patient’s condition, setting up three different levels based on complications and comorbidities. The new system will require hospitals to place more emphasis on including documentation in the medical record and retraining coders – some of whom have had years of experience with the current PPS system, Stitcher said.
Maryland has used a severity-adjusted system to reimburse its two academic medical centers since 2001; all payers have shifted to the system, which uses four tiers based on severity, since 2006, said Kathy Talbot, vice president of MedStar Health, an integrated delivery system.
Academic medical centers experienced substantial case mix growth, as a result of better coding. The federal government is anticipating similar growth; the proposed final rule proposes a cap of 2.4 percent for payment increases in anticipation of case mix growth resulting from better documentation and coding.