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Medicare News
Hospital Groups Outraged with Medicare Rule They Say
Will Reduce Pay Increase
Back-door budget slashing and would cost
hospitals $2.4 billion
June 4, 2007 - 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).
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