Summary of CMS's IPPS FY2007 Changes
In 2006, the Centers for Medicare and Medicaid Services (CMS) proposed a new case-mix classification system: Consolidated Severity-adjusted DRGs (CSA DRGs), based on 3M’s All-Patient Refined DRG Grouper. CMS received over 2,100 comment letters, many of which expressed concern that CMS would use a proprietary, overly complicated grouper system without reviewing other proposals. In response, CMS scaled back and delayed their proposal, and, in the meantime, developed a more transparent, less complicated system based on the familiar DRG system. Below is some S-DRG Report content from 2006 that highlighted some of the industry's concerns:
About CMS Reimbursement Changes
On April 25, 2006, CMS issued its proposed changes to the Medicare IPPS with the goal of improving the accuracy of payment rates for inpatient stays. These changes include the addition of severity of illness refinements to current DRGs and the application of hospital-specific relative value (HSRV) weights to DRGs. These changes are designed to increase the accuracy of Medicare payments and prevent hospitals from “cherry picking” cases that would be the most profitable.
CMS’ first phase of the changes, effective October 1, 2006, is a transition to using estimated hospital costs, rather than list charges, to set payments. These changes will be phased in over a three-year period. The second phase of changes, planned for implementation in fiscal year 2008, entails the introduction of severity-adjusted reimbursement and a weighting system, both of which are used to modify payments based on the severity of a patient’s condition and resource utilization.
CMS initially proposed to use its Consolidated Severity-Adjusted DRGs (CSA-DRGs) methodology to implement the severity-adjusted reimbursement and weights. CSA-DRGs are a derivative of All Patient Refined Diagnosis Related Groups (APR-DRGs), a proprietary methodology owned by 3M Health Information Systems. However, concerns about the system’s complexity and the lack of transparency within the logic used to determine reimbursement, prompted numerous hospitals, industry associations, software vendors and members of Congress to voice their concerns during CMS’ public comment period on the proposed rule.
In response to the more than 2,100 comment letters that it received, CMS modified the details of its proposed changes when it issued its final rule on August 1, 2006. Included in the modifications was a provision that CMS would evaluate alternative methodologies to support its implementation of severity-adjusted reimbursement. These evaluations are currently in progress.
CMS is asking interested parties to submit comments on DRG classification issues by December so that they can be considered for inclusion in the next proposed rule.
APR-DRGs are a registered trademark of 3M Health Information Systems.
Congressional Letters
July 10, 2006 – Senator Grassley’s (R-Iowa) press release and comment letter to CMS
June 12, 2006 – U.S. Congress – More than 200 members of the U.S. House of Representatives and the Senate have signed a letter sent to CMS requesting a one-year delay in the implementation of the proposed rule.
Click here to view House of Representatives letter
Click here to view Senate letter |
