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CMS Proposes an Additional Medicare Inpatient PPS Coding Offset for FFY 2013

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The Centers for Medicare and Medicaid Services’ (CMS) proposed Inpatient Prospective Payment System (IPPS) rule for federal fiscal year (FFY) 2013 includes reductions mandated by the Affordable Care Act (ACA) and continuing adjustments applied by CMS to offset assumed case mix increases attributed to coding improvements.  While the interaction of these factors results in an overall 2.3% rate increase, HANYS is extremely concerned about a new, proposed 0.8% coding improvement reduction.    

The proposed 2.3% update to the FFY 2013 operating rate includes:

  • Plus 3.0%:  CMS proposes to increase the operating rate by a marketbasket update of 3.0%.
  • Minus 0.8 percentage points:  Offsetting the marketbasket is an ACA-mandated productivity reduction of 0.8 percentage points. 
  • Minus 0.1 percentage points:  The update is further reduced by an ACA-mandated marketbasket reduction.
  • Plus 0.2%:  CMS proposes to increase the operating rate by 0.2% to account for the net effect of coding improvement adjustments including:

- Plus 2.9%:  Removal of a one-time retrospective adjustment that was applied in the FFY 2012 rate;

- Minus 1.9%:  Implementation of the remaining portion of the 3.9% prospective adjustment calculated last year (2.0% was removed in the FFY 2012 rate); and

- Minus 0.8%:  Addition of a new prospective adjustment related to an updated analysis based on additional claims data.

HANYS and the American Hospital Association have objected to prior CMS coding adjustment calculations, pointing to flaws in the CMS methodology and the failure to take into account data showing increased patient severity.  HANYS believes that CMS does not differentiate between case-mix increases due to changes in coding behavior and those that reflect real changes in patient characteristics and treatment patterns. 

The rule also includes proposals related to:

  • implementation of the ACA-mandated readmissions reduction;
  • the addition of two new conditions for the Hospital-Acquired Condition adjustment;
  • measures for the FFY 2015 Hospital Inpatient Quality Reporting Program; and
  • details of the FFY 2015 Hospital Value Based Purchasing Program including addition of an Efficiency Domain using the Medicare Spending Per Beneficiary measure. 

HANYS will provide members a detailed summary of the rule and facility-specific impact estimates. The IPPS proposed rule will be published in the May 11 Federal Register.  A display version of the IPPS rule is available on the CMS Web site.  Comments on these proposals are due to CMS by June 25.  HANYS will submit comments and encourages hospitals to send individual comments.  Contact: Stephen Harwell

Published April 25, 2012