House votes to delay MS-DRGs

The House voted yesterday for a one-year delay in MS-DRGs. Will this news lull hospitals into a false sense of relief?

Yesterday, the U.S. House of Representatives passed an amendment that calls for a one-year delay in the implementation of MS-DRGs and abolishes CMS’s 2.4% “behavioral offset” cuts that would cut Medicare payments for hospital services by $24 billion.

What does this mean for hospitals?

1. This amendment is part of a broader fiscal 2008 bill to fund HHS, as well as the Labor and Education departments. The broader bill must be passed by the Senate and signed by the President to get enacted. Modern Healthcare reports that the President is likely to veto the broader bill. Read article by clicking here: (Free registration required).

2. The Final Rule is expected to be published by CMS around Aug. 1. Although there is wide speculation of how the House vote will impact the Final Rule, hospitals should presume that severity-adjusted reimbursement will be implemented in the near future, and their preparations should continue accordingly.

3. There has been much opposition among hospital associations to the "behavioral offset" that CMS proposed. While the final rule could modify or eliminate the proposed cuts, hospitals still need to improve their coding and documentation efforts to maximize reimbursement under severity-adjusted methodologies.

More about the House vote

The amendment was offered by Reps. John Lewis (D-GA), Peter Welch (D-VT) and Jerry Weller (R-IL), and passed with a vote of 412 to 12. Here is the text of the amendment, in full: 

None of the funds made available in this Act may be used to take any action to finalize (or otherwise implement) provisions contained in the proposed rule published on May 3, 2007, on pages 24680 through 25135 of volume 72, Federal Register, insofar as such provisions propose—

    (1) to alter payments for services under the hospital inpatient prospective payment system under section 1886(d) of the Social Security Act (42 U.S.C 1395ww(d)) based on use of a Medicare severity diagnosis related group (MS-DRG) system; or

    (2) to implement a prospective behavioral offset in response to the implementation of such a Medicare Severity Diagnosis Related Group (MS-DRG) system for purposes of such hospital inpatient prospective payment system.

American Hospital Association

Rep. Peter Welch’s Web site