Hospital IPPS: CMS pressed to reduce $3.7 billion coding offset for FY 2011

The American Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges have sent a joint letter asking Donald Berwick, the newly installed administrator of the Centers for Medicare and Medicaid Services (CMS), to re-think the agency's proposal to reduce hospital inpatient prospective payment system (IPPS) payments by 2.9 percent, or an aggregate $3.7 billion, for fiscal year (FY) 2011 in a coding offset, reports The Hill. The coding offset is designed to recoup supposed overpayments in FYs 2008 and 2009 resulting from what CMS has described as "changes in hospital coding practices" following the implementation of the MS-DRGs (Medicare Severity Diagnosis-Related Groups) "that did not reflect increases in patients' severity of illness."

The associations expressed "significant concerns with CMS' approach to measuring documentation and coding change" and urged Berwick "to change the agency's methodology for determining documentation and coding change to better account for increasing patient severity, as documented by historical trends, and reduce the proposed cut to inpatient PPS payments for FY 2011."

The associations submitted two independent studies to support their position. An analysis by the Moran Company found that CMS didn't adequately determine exactly what caused changes in the case-mix index (CMI). "Our conclusion is that the CMS methodology does not adequately isolate documentation and coding from other factors when calculating changes in CMI," said the Moran Company.

And a study by Partha Deb, Ph.D, professor of economics for Hunter College and the Graduate Center at the City University of New York took issue with CMS' finding that case mix has recently been on the decline. "Multiple data sets and different measurement tools indicate that the Medicare population is indeed getting sicker," said Deb. In fact, one measure of in-hospital case mix for Medicare patients indicated a steady increase from 2000 to 2007, while a second measure showed a steady increase from 2002 to 2007.

The associations' call for action followed on the heels of similar letters by members of both the U.S. Senate and the House of Representatives. On July 16, a somewhat bipartisan group of 52 senators asked Berwick to revisit the coding offset, reports Health Data Management. Likewise, 242 House members submitted their own request on July 12, reports AHA News Now.

To learn more:
- read this blog post at The Hill
- read the associations' letter
- take a look at the Moran Company study
- read Professor Deb's study
- read this Health Data Management article
- read this AHA News Now article