200 Top Coding Hospitals Likely To Fare Better Under MS-DRGs

Hospitals listed on the 2007 “Top 200 Coding Hospitals” roster likely will transition to the new severity-adjusted reimbursement system mandated by the Centers for Medicare & Medicaid Services (CMS) with fewer problems because they have complete and compliant coding practices already in place. Those hospitals selected for placement on the fourth annual list “have attained a level of performance that other hospitals should strive to achieve,” said Steve Greenberg, Ingenix senior vice president, Provider Solutions Group.

High coding performance is a distinct asset as coding and compliance staff and hospital information management (HIM) departments begin to utilize the new Medicare Severity Diagnosis-Related Groups (MS-DRG) codes that went into effect Oct. 1.

This new reimbursement approach may put pressure on HIM departments, but it also provides a window of opportunity to those who have been preparing for the change, according to Greenberg. Hospitals that code more completely could get a larger share of the reimbursement pool than those that continue to code based on the previous DRG rules.

“The ball is in the hospitals’ court, because the Medicare base rate decrease under MS-DRGs will be phased in over three to five years,” Greenberg said. CMS is imposing the rate decrease to offset higher expected payments. Congress stepped in to ease the base rate reduction in fiscal year (FY) 2008 and FY 2009, which could be a boon for hospitals that optimize their coding for MS-DRGs.

“Hospitals that can get up and running with a new system in this first year could actually increase revenues in the short term and will experience fewer reimbursement headaches in the long term,” he predicted.

What is a top coding hospital?

Hospitals listed in the 200 Top Coding Hospitals report “are recognized for the completeness and accuracy of their medical coding and billing practices that are used to bill Medicare for inpatient medical services,” the report states.

Ingenix selected the top 200 coding hospitals by analyzing the 2006 Medicare Provider Analysis and Review file, limiting the study to hospitals with enough discharges to support a rigorous analysis and excluding hospitals with high levels of specialization. A total of 2,921 hospitals were included in the analysis. These hospitals were then broken down into four “peer” groups:

• Rural, non-teaching;
• Urban, non-teaching;
• Minor teaching; and
• Major teaching.

Within each of these groups, 50 hospitals were identified as achieving the best combination of complete and compliant coding, as assessed by higher-than-expected Medicare Case Mix Indexes – a good indicator of effective documentation and coding practices – and a low frequency of “high risk” upcoding. The Ingenix “OIG Report Card,” a standard report in its HospitalBenchmarks.com service, is used to help calculate each hospital’s aggregate “OIG Risk Score” across 15 high-risk DRGs.

Hospitals need to scale up for MS-DRGs

Under the new reimbursement system, hospitals must adjust to new and revised codes, track and report numerous quality indicators, and adapt to Medicare’s new stance on not paying for specific hospital-acquired conditions. These changes create an additional incentive for both small and large hospitals to improve their clinical documentation and coding efforts, which will be put to the test by the MS-DRGs in the coming years.

Considering the financial impact of these changes, it is surprising that many hospitals have not made a bigger push to upgrade and reform their coding practices.

“I am not sure what is holding them back,” Greenberg said. A last-ditch effort to halt the Medicare Fiscal Year 2008 Inpatient Prospective Payment System Final Rule just weeks before it was published may have led to delays on the part of some hospitals, he explained, but “now that the rule is out and hospitals see that the MS-DRGs are a reality, there is a mad scramble to get up to speed and a lot of people are looking for help.”

Smaller hospitals with fewer coding staff may have to work a little harder and a little smarter to accommodate the MS-DRG changes, Greenberg added, stating that smaller, more rural institutions with only a few coders will have to accept some reduced coding productivity while their coders get trained on MS-DRG codes, present on admission (POA) provisions, quality measures and other reporting requirements.

“For larger institutions with 50 coders, cycling five coders off for training won’t affect productivity that much,” he said, “but if you only have five coders, losing one to training can seem like a big hit. Hospitals should look at coder training education as an investment, though, because often big problems are caused not because someone is coding ‘wrong’ – they just don’t have any information on the details and that can cost you a lot of money.”

Address major areas of concern first

Hospitals that are just beginning to align their processes with the MS-DRGs need to get moving quickly, according to Greenberg, and should ensure that they have covered the major areas of potential concern listed below:

1. Understand the impact of the Final Rule on the facility by looking at how cases from previous years will be paid under the new scheme. “You want to know the overall impact,” he said, “but you also want to examine the details.” Profitability of many procedures will change under the MS-DRG.
2. Educate coders and physicians so they understand what the coding changes are (e.g., a greater number of codes, new code numbers and POA findings) and what clinical documentation is required to secure the most appropriate level of severity.
3. Beef up the physician query process to ensure both that coders feel comfortable slowing down to get additional information from physicians that would increase reimbursement and to reinforce with doctors that the assignment of the correct code is directly dependent on their clinical documentation. 
4. Check the system for hard-coded commands that relate to specific codes so that any commands based on an old DRG number are changed. For example, hospitals using systems that would automatically delete old DRG 470 claims (formerly “ungroupable”), would not want to automatically delete the new MS-DRG 470: “major joint replacement or reattachment of lower extremity without MCC.”
5. Check with software vendors to make sure that they will be sequencing complication and comorbidity (CC) information to the top of your coding list. Because the MS-DRGs allow only nine diagnosis codes, you will want to make sure the CC codes are listed first.
6. Make sure the MS-DRG message is spread to all stakeholders including the full continuum of Revenue Cycle departments and functions. These areas also need to review and retool business processes to assure that the facility maintains compliance, overall financial integrity and all important cash flow requirements.

Get the right support

For example, HospitalBenchmarks.com is a facility data portal that allows hospitals to use their own data to benchmark against other facilities’ coding- and reimbursement-related data. Further, Ingenix Web.Strat is a Web-based encoder that offers real-time compliance edits, reimbursement alerts, and automated regulatory content updates.

“Becoming a top coding hospital comes from an organization’s commitment to improving its documentation, accurately reflecting all of the care given and maintaining compliance,” Greenberg said. “That commitment will need to grow under MS-DRGs.”

For a copy of the Ingenix report, “4th Annual 200 Top Coding Hospitals,” please go to: http://www.ingenix.com/Top200/.

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