Updates for MS-drg for coding and reimbursement - Admission/Application Essay Example

What is new about Medicare Severity DRG (MS-DRG) ? On October 2008, the Centers for Medicare and Medical Services (CMS) adopted the MS-DRGs system with the purpose of improving patient care and reduce unnecessary health care cost. The new system differs from the old DRG of 1983 in that now, it is tied up to the severity of the illness and complications which should be properly documented upon admission. It has strict regulations such that reimbursement of cost is specific only to the documented illness upon admission.

Medicare will not pay for any additional costs incurred by hospitals due to other hospital-inquired infections of errors. Moreover, there are instances wherein Medicare will not allow payments for complication related costs such as “foreign objects retained after surgery, air embolism, blood incompatibility, stage III & IV pressure ulcers, falls and trauma, catheter-associated urinary tract infection (UTI), vascular catheter-associated infection or Mediastinitis after coronary artery bypass graft (CABG)” (US Payer News, 08 July 2008).

The new system requires the hospital to overhaul the payment system of DRGs and be ready for the possibility of reductions in reimbursements. Hospitals will be required to do a lot of reporting to Medicare such as reports for hospital-acquired conditions. It is expected that hospitals will hand in quality reporting in an expanded set up. Hospitals are supposed to report also pricing changes. According to Ingenix, the implication of the new Medicare ruling is that by adjusting according to severity, cases without complications will be paid less and cases with high complications will be paid more.

Medicare anticipates that in order to be paid more, hospitals tends pay more attention to coding of cases as high severity DRG. To check this practice of coding, the CMS proposed the “Behavioral Offset” that cuts Medicare payments to hospital by 4.8 percent over a three year period. This will mean costs to hospitals of $1.2 billion for the fiscal year 2008. Further, CMS eliminates capital payments to urban hospitals by 0.3 percent and retaining only 0.8 percent update for rural hospital DRG rates.

CMs believes that the new DRG rules will lead to efficient coding implementation and reduce the number of outlier cases, and because of this CMS proposed to reduce the “outlier-fixed loss threshold” from $24,865 to $22,650. CMS and hospitals do not agree on the affectivity of the new rule because of the disparity of benefits and cost reduction. CMS contends that reimbursement levels tends to improve and increase by as much as 3.5% or by nearly $4 billion and benefits 3,500 acute hospitals in 2008.

However, this increase will depend on the quality of data furnished by the hospital to Medicare. On the other hand, AHA hospitals argue that the “behavioral cost” and elimination on the capital add-on for large urban hospitals will reduce payments by about $22 billion for over five years. The objective behind the new severity system as set by the CMS is to give maximum reimbursements to hospitals. However, in the changes prescribed, revenues of the hospitals will depend on the compliance of the new system.

A large cut on reimbursements is expected but CMS believes that new system will bring in more efficiency and on a long term proposes an upscale reimbursement for the DRG cases. In the present set up, there is no recourse for the hospitals but to follow, because if they do not appraise code and comply with the new reimbursement practices, there is a tendency of losing significant revenue. References Ingenix, 2006. Coding, compliance, and reimbursement management under MS- DRGsIntelligence for Health Care.

Viewed 14 April 2011www.ingenix.com. US Payer News. 08 July 2008. Medicare Severity DRG (MS-DRG) News. Vol. 1, Issue 1.