MS-DRG Q&A: Questions and Answers on MS-DRGs and the IPPS Proposed Rule

Hundreds of participants took part in several Ingenix MS-DRG Webinars that I hosted in May. In addition to the presentation, participants had the opportunity to post questions. Below are several questions and answers from the Webinars:

Q: Will CMS be prepared to implement MS-DRGs beginning October 1st?

A: It is certainly possible that CMS will back off from severity adjustment for another year, which will give the agency time to review the final RAND report and provide hospitals with another year to prepare. On the other hand, there is nearly universal agreement that some type of severity adjustment to the current DRGs is much needed and long overdue. It may be that CMS will proceed with the MS-DRGs, but will back off on some of the proposed financial adjustments, such as the 2.4 percent reduction in base rates to compensate for expected up-coding.

Q: Is CMS planning to increase the number of diagnosis and procedure codes that are accepted off the claims when they go to severity DRGs?

A: CMS has specifically stated that it is not planning to increase the number of ICD-9-CM diagnosis and procedure codes (currently nine diagnosis codes and six procedure codes) used for DRG assignment by its fiscal intermediaries for fiscal year 2008.

Q: Does Ingenix have a batch MS-DRG assignment program available for purchase?

A: Ingenix is not planning on selling grouper software based solely on the proposed rule, but we will have the MS-DRG assignment software based on the final rule available for purchase. This software is expected to ship in late August or early September of this year. For MS-DRG assignment based on the proposed rule, you can send Ingenix a batch of claims data, and we will return them to you with assignment of both the current CMS-DRGs as well as the proposed MS-DRGs, along with analytical reports highlighting the financial impact. You can contact us at 866-222-1298 or at msdrg@ingenix.com for more information on the final MS-DRG grouper or the proposed rule DRG assignment and analytical services.

Q: Will the age breaks in the current DRGs be removed for MS-DRGs?

A: Yes, that is correct. There are no age breaks in the proposed MS-DRGs.

Q: Will we have to run dual Groupers: one severity-adjusted, the other not?

A: CMS has stated that it plans to implement severity DRGs for long-term care hospitals, psych hospitals and distinct part units. The Department of Defense has stated that it does not plan to implement severity adjusted DRGs for fiscal year 2008. Many of the state Medicare programs utilize the Medicare DRGs for inpatient reimbursement. Each of these will certainly be evaluating the new MS-DRGs and making decisions as to which way to go. Commercial payers will evaluate their DRG-based contracts for possible conversion to MS-DRGs. And finally, for comparison and trending, you will most likely want to be able to assign the current DRGs to new cases for any multi-year trend analyses. You will not be able to compare the MS-DRGs to any prior years because all the DRGs have been redefined.

Q: What affect will the MS-DRGs have on my HCC capitation rates?

A: For Medicare Advantage participants, the new MS-DRGs won’t directly affect your HCC capitation rates, since those are calculated based on historical experience. Eventually, these changes may work their way into the actuarial data, but probably not for several years.

Q: This was an excellent presentation! Will there be any additional sessions. More of our hospital staff would benefit from this session!

A: We will be providing a similar presentation summarizing Medicare’s inpatient final rule, which will be published by August 1, 2007. This presentation will be delivered twice, once on August 14 and again on August 16. We will also be providing webinars on the financial, contracting and coding impacts of MS-DRGs. We’ll post more information on this blog, or feel free to call us at 866-222-1298 or email us at msdrg@ingenix.com.