"Behavioral offset" or "backdoor budget cuts?"

What CMS has termed as "behavioral offset" cuts in its IPPS Proposed Rule are being called "backdoor budget cuts" by the American Hospital Association.

In a formal comment letter sent to CMS June 4, AHA Vice President Rick Pollack said that CMS "has gone well beyond its charge by recommending arbitrary and unnecessary cuts in this proposed rule. These backdoor budget cuts will further deplete scarce resources, ultimately making hospitals' mission of caring for patients even more challenging."

The AHA comments are directed at CMS's planned 2.4 percent cuts to both operating and capital payments in fiscal years 2008 and 2009. CMS claims that the implementation of MS-DRGs will lead to coding and documentation improvements that will increase reimbursement, but do not reflect real changes in case mix. The AHA estimates that the cuts will represent a $24 billion decrease in payments over five years.

In the letter, the AHA also opposed the elimination of the capital payment update for urban hospitals and the capital payment add-on for large urban hospitals, which together would reduce payments to urban hospitals by $880 million over five years, according to the AHA.

"While we believe that the MS-DRGs provide a reasonable framework for patient classification, a transition is necessary given that the change redistributes between $800 million and $900 million among hospitals," the AHA comment letter stated.

The full AHA letter can be accessed by clicking here.

What's your opinion? Do you think CMS's proposed changes will be budget neutral for your organization, or will the changes cost you? Talk about it in the comments.