Hospital Associations Object to Proposed Medicare Rule
Hospital associations are "in a state of outrage" over a Medicare rule proposed by CMS that they say would reduce a scheduled increase in hospital reimbursements by assuming hospitals will "game the new system," the Philadelphia Inquirer reports.
The rule -- which is under a comment period until June 12 and would go into effect in October if approved -- would increase the number of diagnosis-related groups from 538 to 745 to more accurately classify hospital care and provide higher reimbursements for treating sicker patients.
Medicare reimbursements for hospitals are scheduled to increase an average of 3.3%, or $3.28 billion, this year in accordance with the market-basket rate. However, the CMS rule includes a "behavioral offset" of 2.4%, which the agency says is necessary to compensate for anticipated higher average patient severity scores that will result from the updated DRG system.
CMS in the proposed rule says, "More accurate and complete documentation and coding may occur because it will result in higher payments."
Hospital associations say that the offset would reduce the average reimbursement increase from 3.3% to 0.9%, the Inquirer reports.
American Hospital Association Vice President for Policy Don May said the offset was "back-door budget slashing" and would cost hospitals $2.4 billion.
AHA is arguing that CMS should determine how hospitals use the updated system before penalizing them.
New Jersey Hospital Association spokesperson Ron Czajkowski said, "Hospitals are entitled to the full, market-basket increase without any tinkering."
Robert Greenwood, vice president for health care finance at the Hospital and Healthsystem Association of Pennsylvania, said that the offset would encourage hospitals to take advantage of the updated system. "Everyone is going to have to code at an amount greater than what should be coded properly to break even," Greenwood said.
However, Herb Kuhn, acting deputy administrator for CMS, said, "For hospitals to say that this is a cut in their payment system ... is a terrible mischaracterization." Kuhn added, "We don't want to spend a lot more as a result of these coding changes" (Burling, Philadelphia Inquirer, 6/2).