Hospital groups blast 'flawed' inpatient payment rule

The major hospital associations are blasting the Centers for Medicare & Medicaid Services for its methodology behind the hospital inpatient prospective payment system proposed (IPPS) rule for fiscal 2013.

Called "flawed" by the American Hospital Association (AHA) and the Federation of American Hospitals (FAH), the current proposal would cut inpatient prospective payments by 2.7 percent during fiscal 2013. That includes a 1.9 percent cut to offset the documentation and coding changes that occurred between the 2007 and 2009 fiscal years. It also would include an additional 0.8 percent reduction to eliminate other changes that were made during fiscal 2007 and 2010.

FAH, the trade organization for investor-owned and managed community hospitals, said the IPPS methodology doesn't take into consideration the effects of increased case mix since the implementation of MS-DRGs in October 2007, FAH President and CEO Charles Kahn said in a letter Monday. Even though FAH supported MS-DRGs when CMS first introduced them, FAH said it is troubled by the federal agency sticking to a formula that doesn't account for real case-mix change, Kahn said.

"The FY 2010 claims-based reduction that CMS proposes is disconnected from the reality of how the system has swiftly and substantially evolved and matured following the introduction of MS-DRGs in 2007, rending the additional 0.8 percent reduction excessive and unnecessary."

FAH echoed similar criticisms from AHA last week.

"The AHA is extremely troubled by this proposal and by the fact that CMS continues to compare hospitals' documentation and coding practices to their documentation and coding under an entirely different system in [fiscal year] 2007; doing so is highly inappropriate," AHA said in a letter last Tuesday.  

In addition, AHA took issue with the Hospital Readmission Reduction Program, in which hospitals that have higher-than-expected readmission rates will see lower reimbursements. The hospital organization noted that the program doesn't account for planned and unrelated readmissions, which could unfairly penalize hospitals.

For more information:
- see the AHA letter
- here's the FAH letter

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