On July 17 and 19, I conducted two webinars on the “Financial Impact of MS-DRGs.” Webinar attendees had the opportunity to ask me questions at the end of the presentation. Below are highlights of the questions and answers.

Question: Is Medicare or anyone else going to support Version 24?
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Yesterday, the Centers for Medicare and Medicaid Services (CMS) posted the comment letters that it received about its IPPS Proposed Rule. The deadline for comment letter submission was June 12. The comment letters can be accessed by clicking here.

These make for some interesting reading. While reviewing the comment letters, please let us know if you uncover an interesting topic that we haven’t covered in our blog. To do so, please send us an e-mail at msdrg@ingenix.com.
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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.
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Many payers contract or reimburse based on Medicare’s DRGs. These include Medicare itself, for long-term care and psychiatric admissions, the Department of Defense, many state Medicaid programs, numerous Blue Cross/Blue Shield organizations, and other commercial payers. These payers have not yet indicated that they will be adapting CMS's MS-DRGs.

As a result, most provider organizations will need the ability to code using MS-DRGs for their Medicare billing, and use another set (and possibly even multiple sets) of severity-adjusted DRGs for their contracts with non-Medicare payers. The DRGs used by non-Medicare payers are likely to differ from MS-DRGs, such as including DRGs for pediatric encounters and other scenarios that are not covered under MS-DRGs.
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All indications point to CMS changing to a severity-adjusted DRG on October 1. As your organization begins using severity-adjusted DRGs, you will want to understand what they’ve achieved by leveraging your financial and operational metrics. On a regular basis you should:

 
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The Centers for Medicare and Medicaid Services (CMS) is expected to publish its Final Rule regarding MS-DRGs in the Federal Register around August 1, although a draft format may get posted earlier. Interested parties should check the CMS website toward the end of this month to see if a draft format is posted.

The Final Rule will describe CMS’s plans for FY 2008, including the implementation of severity-adjusted DRGs. Organizations will need to act immediately on the contents of this rule. Once it becomes available, we recommend you do the following:
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Continuing with our previous posts on how to prepare for MS-DRGs, today we briefly focus on how to educate physicians about MS-DRG requirements. Accurate clinical documentation is the key for accurate reimbursement, and documentation improvement efforts will greatly decrease the number of times that coders must query clinicians for additional details when assigning codes. Coding holdups have the potential to significantly delay reimbursement.

Physicians need to understand that the assignment of the correct MS-DRG is directly dependent on their documentation. "Close" is not good enough. Without complete documentation, the correct codes cannot be assigned.
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In previous posts, we’ve briefly discussed how to conduct operational and historical claims reviews to analyze the impact of MS-DRGs. Use your findings to lay out an MS-DRG implementation plan. Development of this plan will require regulatory, operational and technological expertise. Be sure to:

• Involve all operational units, starting with task force members.
• Be proactive.
• Avoid last minute surprises.
• Identify potential problem areas.
• Develop improvement programs to correct identified problem areas.
• Document all improvement tasks and milestones, and assign responsibilities and completion requirements.
• Provide ample time for design, testing, certification and documentation of policies and procedures.
• Plan for continuing changes—anytime Medicare introduces significant change, additional adjustments can be expected in the coming months and years.

 
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With MS-DRGs, it is critical to read the entire medical record and code completely. Staffing pressures force many hospitals to code only enough to get an accurate DRG assignment. MS-DRGs also depend on accurate physician documentation. With the advent of MS-DRGs, you can anticipate decreased coder productivity and increased physician query, both of which may cause increased bill hold.

To help prevent these problems that may decrease productivity, organizations can perform an operational review and look for ways to prevent or address these anticipated issues.
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In advance of the proposed October 1 implementation date for MS-DRGs, organizations should calculate how MS-DRGs could impact their Medicare reimbursement. The proposed rule contains enough information to simulate Medicare Financial Year 2008 payments.

Remember, there will be winners and losers as Medicare funds are redistributed.
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In the past few months since the proposed rule was released, we at Ingenix have encountered a number of questions about how the change would affect reimbursement for pediatric patients. So we decided to turn some of our number crunchers for some answers. Based on an Ingenix analysis of 2.5 million claims, we found that if MS-DRGs were adopted by non-Medicare payers, payments could increase by almost 6 percent for all pediatric discharges.

That’s not small change, folks.
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The key to success under any severity-adjusted DRG system is complete and accurate documentation, coupled with complete and accurate coding. Start by asking the question, how accurate is my coding today? Organizations can use historical data and chart reviews to evaluate current coding and documentation practices.

As the CC/MCC list is very different in the MS-DRGs system than in V24, here are some areas where organizations should focus their efforts:
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Last week, at the Healthcare Financial Management Association's conference in San Diego, Calif., I talked to scores of finance types, including a number of CFOs, about MS-DRGs and the effect that the new methodology may have on their bottom line. No surprise: everyone I spoke with was concerned, and was either working on the issue personally or knew someone in their organization who was assigned to it.

It seems everyone agreed with what I believe: Every health care organization needs to figure out what MS-DRGs mean to them and how they're going to deal with them.
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Educating your staff about MS-DRGs is a vital step in the evaluation and implementation process. Since CMS has yet to publish its final rule (anticipated in August), the goal at this point should be to gather and distribute information to all staff that will be involved with the transition. This is a mechanism for keeping everyone in the facility apprised of the latest information regarding MS-DRGs, both during the start-up months an on an ongoing basis. A point person can be assigned this task.

We recommend--without bias, of course (wink, wink)--this blog as a source of updated MS-DRG information. Besides this blog, other good sources of information include:
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