Q&A about the CMS FY2008 Final Rule

The industry has numerous questions about MS-DRGs, as is evidenced by the many queries from participants in our IPPS Final Rule Webinar that we hosted on Aug. 14 and 16. Below are some highlights of the questions and answers.

As you read this post, keep in mind that Ingenix is hosting the following additional Webinars in the future to address your questions:

• MS-DRGs and the CMS FY2008 Final Rule, presented by Claire Kapilow, Aug. 21 and 23. (These additional dates are intended for the people who couldn’t participate in our webinars on Aug. 14 and 16 Webinar.)
• Preparing to Code Effectively under MS-DRGs, presented by Cheryl D'Amato, Aug. 28 and 30.
• The Adjustment Factor – Clinical Documentation Under MS-DRGs, presented by Mike Evans, Sept. 11 and 13. For more information about this Webinar, e-mail Don.Seamons@ingenix.com or call 801-982-3034.
• What the CMS FY2008 Final Rule Doesn't Tell You About MS-DRGs, presented by Claire Kapilow, Cheryl D'Amato, David Hochheiser, and Doug Kundel, Sept. 18 and 20. For more information about this Webinar, e-mail Don.Seamons@ingenix.com or call 801-982-3034
.

Questions and Answers from the Aug. 14 and 16 Final Rule Webinar

Question: Are the MS-DRGs that fall into the Post Acute Care Transfer rule listed in Table 5?
Answer: Yes, Table V contains all the new DRGs, including new titles, new weights, arithmetic and geometric mean lengths of stay. In addition, Table V includes the post-acute transfer indicators, which identify those MS-DRGs that were selected for inclusion in the post-acute transfer policy, either for the standard calculation, or for the “special” calculation with higher payment on the first day. Table V is available for download on the CMS Web site. Links to this table and all downloadable files from the final rule will be emailed to all Webinar participants.

Q: What is the biggest concern you see right now?
A: This answer will be different for every hospital and payer. Certainly there are major financial and operational concerns. Money will be substantially redistributed under the new system, and every hospital and payer will see financial impact. In particular, smaller rural hospitals may be on the losing end. Operationally, hospital HIM departments will be under great pressure to adjust their coding procedures based on the new DRGs, and must also add present on admission coding. Payers have to analyze all their DRG-based contracts and consider not only MS-DRGs but also commercial variations.

Q: How will claims be affected if a secondary commercial payer does not follow the MS-DRGs and Medicare is the primary payer?
A: Many secondary payers do not follow Medicare’s current DRG payment rules, and many will not implement the new MS-DRGs. Deductible, coinsurance and Medicare coverage rules are not changing due to MS-DRGs, nor is the basic structure of case-based reimbursement. The dollars will change, but the underlying mechanism of secondary payer crossovers should not fundamentally change.

Q: If the coding guidelines are not changing, is it just the grouping that is changing?
A: Correct. ICD-9 coding guidelines are not changing. It is the logic for DRG assignment that is changing, and these changes include new ways to identify and pay more for the more severely ill patients. This severity adjustment involves new sets of secondary conditions that are considered complications. It is these conditions that hospitals and physicians must focus on to more accurately report in the chart and on the claims.

Q: We implemented documentation improvement for physicians five years ago. Do they need to relearn everything under MS-DRGs?
A: Not really. The concept of thoroughly documenting patient conditions and services is not changing. The process of making sure that certain secondary conditions are thoroughly documented and coded is not changing. Medicare is changing the DRG classifications. These classifications are based on what is in the patient chart, and what is transcribed from the chart onto the claim. Physicians will need education on which conditions need improved documentation, since this list is changing substantially. Ideally, this list would be targeted for each physician’s specific caseload.

Q: If the secondary payer wants the old DRG system and Medicare wants the new system, do we need multiple groupers?
A: Yes, you most definitely will need to use multiple groupers. Although many state Medicaid programs and commercial payers will be evaluating the MS-DRGs for implementation, most will not be switching as of Oct. 1. Therefore, you will need the MS-DRGs for Medicare as well as non-severity DRGs, probably several versions, for all your other DRG-based payers and contracts.

Q: What payers are ready now to implement this new system? Just Medicare?
A: Well, most other payers just began analyzing the final details in the new system two weeks ago. At Ingenix, we have contacted many of the state Medicaid programs, as well as the Department of Defense, to find out their plans. All say they will be evaluating MS-DRGs for applicability, but none is planning an Oct. 1, 2007 implementation. Many of our commercial payer customers are beginning their analyses, and several vendors, including Ingenix, are already working to adapt MS-DRGs for the commercial population. So, although probably none, or very few, of the other payers will be adopting MS-DRGs for this October, most will be analyzing their contracts and their severity-DRG options in the coming months.

Q: Will the changes affect physician office coding?
A: No, this rule does not affect physician claims. This rule affects only acute inpatient hospital claims.

Q: Do surgeons understand these changes, and how they will impact the hospital's ability to be paid correctly?
A: Probably not, since the rule is only just out. It will be your responsibility to explain it to them. They need to know the details of the changes, and more specifically, the details of the changes that directly affect your hospital and their cases. This will require analysis. Assign the new MS-DRGs to your claims, and identify areas where increased documentation and coding of specific conditions will improve your severity classification. Ingenix has consulting programs that do just this. Send us your data, and we can tell you what to focus on. We also have targeted physician training programs that have been tailored to MS-DRGs.

Q: What are your recommendations on how we should approach physician education?
A: We recommend a two-pronged approach that includes targeted physician training coupled with data analytics to identify the specific focus areas for each physician and surgeon. Ingenix has several training programs for exactly this, and these can be coupled with a data analytics component. We will also be providing a physician documentation Webinar in September.

Q: When will the 2008 Ingenix DRG Expert be available?
A: DRG Expert will be available to customers by Oct. 1. In the interim, substantial information about the new DRGs will be posted to the Ingenix Web site over the next few weeks.

Q: In the past we have run reports for specific DRG code numbers. This calendar year there will be one code for the first 10 months, then one to three new codes for the last few months. How can we accommodate reporting for 2007?
A: This is a common question. You have several options. You could change the timeframe of your reports to be fiscal-year based. Or, you can break them into two sections. Or, you can assign a common set of DRGs to all 12 months – that is, either assign all claims to the current CMS-DRGs, or assign all claims to the new MS-DRGs, before categorizing the revenue. If you are focusing on specific clinical conditions, your challenge will be to identify which MS-DRGs are comparable to the specific DRGs that you report on currently. You can do this by assigning both the current DRGs and the MS-DRGs to your claims, and you can certainly get a basic idea using the crosswalk on the CMS Web site.

Q: Would the Ingenix "translation" solutions work in integrating with the current EASYGroup suite?
A: Yes, the new MS-DRG grouper (here’s a link to more info on our grouper based on V24), as well as the code translation software to allow you to continue to use the current CMS grouper with FY 2008 non-Medicare claims, are fully integrated in all of our software solutions.

Q: How will this system affect the risk-adjustment calculation?
A: For Medicare Advantage programs, the new DRGs won’t directly affect the HCC capitation rates just yet, since those are calculated based on historical experience. Eventually, these changes will work their way into the actuarial data, but probably not for several years.

Q: If your source of the code mapping is from CMS, how is your mapping more reliable than CMS's?
A: This presentation refers to two types of mappings. The first is the relationship between this year’s DRGs and the new MS-DRGs. This relationship is loosely documented in the DRG crosswalk that is available on the CMS Web site. By using this tool you can see basically how current DRGs are redistributed and severity adjusted in the new MS-DRGs. However, this crosswalk is a general guideline only. It cannot be used as the basis for reimbursement. To figure out which MS-DRG would be assigned to a current claim, you must assign the MS-DRG based on the actual claim data. And, if you don’t want to use the MS-DRGs in your contracts next year, but want to continue using this year’s CMS grouper, you must accommodate the ICD-9-CM coding changes. This year’s grouper does not know anything about next year’s coding changes. When you assign this year’s DRGs to FY 2008 claims, you must translate those new ICD-9-CM diagnosis and procedure codes back into comparable FY 2007 codes, before you invoke the grouper. Otherwise, the grouper will ignore them, or, if the new code is in the principal diagnosis slot, will consider the claim ungroupable. Ingenix and other vendors currently offer this type of code mapping software, because it is already in use in the industry today by the many Medicaid programs and commercial payers that don’t stay current with Medicare’s DRG changes, or that use the All-Payer DRGs.

Q: Does Ingenix have a significant database of commercial data in order to develop weights that would better suit a commercial population?
A: Yes, Ingenix maintains several large commercial databases. We often develop DRG weights for commercial customers, and we will be doing the same under MS-DRGs.

Q: Are there any reductions/eliminations proposed to the capital DSH factor?
A: No, not for this year, although CMS has indicated that they are looking at this factor and may adjust or eliminate it in the future.

Q: Did you address the change in the Final Rule on the FY2008 requirements of POA reporting?
A: Yes. Hospitals may begin reporting the new Present on Admission (POA) indicators this October, but CMS will not begin editing these fields until January, and will not withhold payment based on these edits until April of 2008. Beginning in April of next year, CMS will return for correction any claim that does not have valid and accurate POA reporting. You can learn more about Present on Admission reporting in Cheryl D’Amato’s webinar, Coding Effectively under MS-DRGs.

Q: Will the vendors who previously provided the groupers now automatically provide the new MS-DRGs?
A: Certainly Ingenix will be providing software to assign the new MS-DRGs. Probably several other vendors will be offering MS-DRG assignment software. The new grouper is substantially different from the current grouper, and presents a number of development challenges. Make sure your vendor will guarantee 100 percent accuracy when compared to the official CMS grouper. Also, CMS is making its assembler grouper available through the National Technical Information Service (NTIS), as it has done in prior years.

Q: Do you anticipate that there will be a last-ditch effort to change the required date of Oct. 1, 2007 for MS-DRG implementation?
A: Yes, there is an initiative in Congress to delay implementation and to eliminate the coding and documentation reduction in base rates. This is in the form of an amendment that has been added to the House version of the FY 2008 appropriations bill, which is now on the Senate docket. President Bush has said that he will veto this bill. However, this amendment was written before the Final Rule was published. In the Final Rule, CMS does address specifically the concerns in the amendment, by reducing the coding and documentation adjustment from 2.4 percent to 1.2 percent, and by phasing in the MS-DRG weights over two years. So, it may be that the amendment will die in the Senate. We will have to stay tuned to see what happens in the coming weeks.

Q: In the 4010 and 5010 transaction there is no indicator for the type of DRG code (CMS DRG or MS-DRG) that the hospital is submitting?
A: This is a good question that many have been asking. Actually, for Medicare, hospitals do not need to submit the DRG, as the fiscal intermediaries assign the DRG based on the claim data. There have been no transmittals with specific instructions to the fiscal intermediaries on how to indicate, on the 835, which type of DRG was used as the basis for payment. CMS must be getting the same types of questions and may be issuing some type of instruction to its fiscal intermediaries in the coming months. However, you can be assured that if a Medicare claim has a discharge date on or after Oct. 1, 2007, the payment will be based on the MS-DRGs, unless there is a congressional delay.

For commercial claims, the UB-04 has a place to indicate the DRG number, but not the version. The 837i has a place within the contract information. In loop 2300, CN101 can be used to indicate the contract type is based on DRG, the number can be reported in CN104 and the version can be placed in CN106. CN106 can accommodate up to 30 alphanumeric characters so that inputting V24 or V25 here should be fine. We may see additional instructions coming out of WEDI in the coming weeks or months.

Q: On the POA requirements, are there any indications in the Final Rule that more specific guidelines will be provided later on?
A: There have been a number of publications coming out recently with clarifications and details about POA coding requirements. Guidelines for POA reporting have been developed by AHIMA, AHA, CMS and NCHS, and are currently available as a supplement to the standard ICD-9-CM Coding Guidelines. The POA indicators must be reported on the claim form. CMS has issued several transmittals with instructions for where and how to report this new indicator on the UB-04 as well as the 837. It must be reported for the principal and all secondary diagnoses except for specific codes which have been exempted from this requirement.

If you couldn’t attend this week’s webinar on the Final Rule, feel free to sign up for it next week. Click here for details and pricing.