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IPPS Proposed Rule: Lowest Updates in Years

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  • In CMS
  • June 3, 2009
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If you are looking for an indicator as to the state of the American economy, you need look no further than the Inpatient Prospective Payment System (IPPS) proposed rule for 2010. Issued May 1 by the Centers for Medicare & Medicaid Services (CMS), the proposed rule includes meager payment updates for approximately 3,500 acute care hospitals paid under the IPPS and 400 long-term care hospitals paid under the Long-Term Care Hospital Prospective Payment System (LTCH PPS), a few revisions mandated by legislation, and little else.

The bottom line: Affected acute care hospitals will experience an overall $979 million decrease for operating and capital payments in 2010.

Payment Updates

Aside from a sluggish economy, the payment decrease is due to a new severity of illness classification system for general acute and long term care hospitals Medicare adopted beginning Oct. 1, 2008. At the same time, hospitals changed their patient diagnoses documentation and coding, which CMS says led to an increase in aggregate payments without corresponding growth in actual patient severity.

To soften the blow, CMS is phasing in the document and coding adjustments over time. Beginning with discharges occurring on or after Oct. 1, CMS is proposing to update acute care hospital rates by 2.1 percent for inflation, less an adjustment of 1.9 percentage points; and long-term care hospital rates by 2.4 percent for inflation, less an adjustment of 1.8 percentage points.

“We understand hospitals will be concerned about lower than historical update amounts,” said CMS Acting Administrator Charlene Frizzera. “However, we are proposing an adjustment that minimizes the effects on FY 2010 payments while still meeting the requirements of the law, which may mean larger reductions in the next two years. We are asking for comments from the public to help us ensure that these proposals are the best ways to meet the requirements of the law.”

Acute care hospitals got hit with adjustments of -0.9 percent in 2009 and -0.6 percent in 2008. To fulfill the 8.5 percentage point adjustment requirement, further adjustments in 2011 and 2012 could amount to as much as -6.6 percentage points.

“We’re extremely disappointed with the level of payment for FY 2010,” said Tom Nickels, American Hospital Association (AHA) senior vice president for federal relations, in an AHA News Now report. “The reductions go well beyond what is appropriate and fly in the face of data showing still-falling Medicare wages that are at an all-time low. Hospitals cannot sustain these additional cuts in an already exceptionally underfunded system.”

CMS is also seeking public comment on a proposed -2.5 percent prospective adjustment to the hospital-specific rates, and addressing in the 2011 rulemaking cycle any changes in the 2009 case-mix due to changes in documentation and coding.

Quality Data Reporting

Under current Medicare law, hospitals that successfully report the 2010 quality measures included in the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program will get the full update. Hospitals that do not meet program requirements will get the update, less two percentage points (and less the document and coding adjustment).

For the 2011 payment determination, CMS is proposing to retain the current 41 quality measures and to combine PS104 – Death among surgical patients with treatable serious complications and Nursing Sensitive – Failure to Rescue (Medicare claims only) into a single measure.

Also for 2011, CMS is proposing to add two new chart-abstracted measures and two structural measures:

· SCIP: Infection-9 (Postoperative Urinary Catheter Removal on Post Operative Day 1 or 2)

· SCIP: Infection-10 (Perioperative Temperature Management)

· Participation in a systematic clinical database registry for stroke care

· Participation in a systematic clinical database registry for nursing sensitive care

MS-DRG Classifications

Proposed changes for medical severity diagnosis-related groups (MS-DRGs) are minimal. Of note, CMS is proposing to reassign the current MS-DRGs assignments for procedure codes 80.05 Arthrotomy for removal of prosthesis without replacement, hip and 80.06 Arthrotomy for removal of prosthesis without replacement, knee. Their current assignments under MS-DRGs 480, 481, and 482 (hip and femur procedures except major joint with Microcrystalline cellulose (MCC), with complication or comorbidity (CC), and without MCC/CC, respectively) and MS-DRGs 495, 496, and 497 (local excision of internal fixation device except hip and femur with MCC, with CC, and without CC/MCC, respectively) will be switched to MS-DRGs 463, 464, and 465 (wound debridement and skin graft except hand, for musculo-connective tissue disease with MCC, with CC, and without CC/MCC, respectively).

Consequently, CMS is proposing to re-title ICD-9-CM procedure codes 80.05 and 80.06 to “Arthrotomy for removal of prosthesis without replacement, hip or knee,” effective Oct. 1.


You won’t find much in the way of change for hospital acquired conditions (HAC) in the 2009 IPPS proposed rule; however, CMS is seeking public comment regarding its intention to add the following two diagnosis codes:

813.46 Torus fracture of ulna

813.47 Torus fracture of radius and ulna

If these proposed CC designations for ICD-9-CM codes 813.46 and 813.47 are finalized, they will be adopted within the fracture code range for the falls/trauma HAC category.

MCE Changes

You won’t find much new in the Medicare Code Editor (MCE) either. What you will find are corrections. CMS is adding the following four diagnostic codes that were inadvertently left off of the MCE last year:

603.0 Encysted hydrocele

603.1 Infected hydrocele

603.8 Other specified types of hydrocele

603.9 Hydrocele, unspecified

These codes are located in the chapter of the ICD–9–CM diagnosis codes entitled ‘‘Diseases of Male Genital Organs.’’

Similarly, ICD-9-CM codes 75.37 Amnioinfusion and 75.38 Fetal pulse oximetry were omitted from the MCE. CMS is proposing to add these female-only codes, once again.

ICD–9–CM code 00.01 Therapeutic ultrasound of vessels of head and neck was also inadvertently left out of the MCE tables. CMS had instructed Medicare contractors to override this edit for discharges on or after October 1, 2008. To make a conforming change to the MCE, CMS is proposing to add code 00.01 to the table of valid codes.

For 2008, a series of diagnostic codes were created at subcategory 209, Neuroendocrine Tumors. Medicare contractors, however, misinterpreted CMS’ instructional notes. To avoid further confusion, CMS is proposing to remove 209.0-209.69 codes from the MCE for unacceptable principal diagnoses. Meanwhile, CMS has issued instruction to Medicare contractors to override this edit.

Manifestation Codes

Manifestation codes describe the symptoms of an underlying disease, not the disease itself, so they cannot be used as a principal diagnosis. The National Center for Health Statistics (NCHS) has removed the advice ‘‘code first associated disorder’’ from the following three codes, thereby making them acceptable principal diagnosis codes:

365.41 Glaucoma associated with chamber angle anomalies

365.42 Glaucoma associated with anomalies of iris

365.43 Glaucoma associated with other anterior segment anomalies

Wrong surgery edits

In accordance with three national coverage determinations (NCDs) regarding coverage of wrong surgeries, CMS is proposing to create a new edit to identify cases in which wrong surgeries occurred. The NCHS has revised the title of one E code and created two new E codes to identify cases.

The revised code is:

E876.5 Performance of wrong operation (procedure) on correct patient

The two new E codes are:

E876.6 Performance of operation (procedure) on patient not scheduled for surgery

E876.7 Performance of correct operation (procedure) on wrong side/body part

A complete list of all E codes that will be implemented Oct. 1 can be found at www.cms.hhs.gov/ICD9ProviderDiagnosticCodes/07_summarytables.asp#TopOfPage

CC/MCC Changes

For 2010, CMS is proposing to make limited revisions to the complications and comorbidity CC Exclusions List to take into account the changes that will be made in the ICD–9–CM diagnosis coding system effective Oct. 1. Additions and deletions to the MCC and CC lists that occurred as a result of updates to the ICD–9–CM codes are summarized in the proposed rule. A complete list is available on the CMS Web site at www.cms.hhs.gov/AcuteInpatientPPS.

Noteworthy proposed additions to the MCC list include:

· Puerperal sepsis and septic thrombophlebitis (670.22, 670.24, 670.32, and 670.34)

· Omphalocele (756.72)

· Gastroschsis (756.73)

· Severe hypoxic-ischemic encephalopathy (768.73)

· Bilious vomiting in newborn (779.32)

Noteworthy proposed additions to the CC list include:

· Chronic pulmonary embolism (416.2)

· Chronic venous embolism and thrombosis of upper and lower extremities: axillary, subclavian, jugular veins, etc. (453.5x, 453.6x, and 453.7x)

· Acute venous embolism and thrombosis of upper and lower extremities: axillary, subclavian, jugular veins, etc. (453.8x)

· Puerperal endometritis (670.1x)

· Hypoxic-ischemic encephalopathy, unspecified (768.70)

· Mild hypoxic-ischemic encephalopathy (768.71)

· Moderate hypoxic-ischemic encephalopathy (768.72)

ICD-9-CM Code Changes

The proposed rule includes more than 100 diagnoses code changes, changes to ICD-9-CM codes for neoplasms and newborn conditions, and several new V codes.

Noteworthy changes include:

· Fifth digits to specify the type of antidepressants in a poisoning, such as MAOIs or SSRIs (969.00-969.09)

· Fifth digits to specify the type of psychostimulants in a poisoning, such as caffeine, amphetamine, and methylphenidate (969.70-969.79)

· [GJV1] New code 995.24 Failed moderate sedation during procedure

Noteworthy proposed changes include new V codes for:

· Personal history of failed moderate sedation (V15.80)

· Personal history of under-immunization status (V15.83)

· Encounter for fertility preservation counseling (V26.42) or procedure (V26.82)

· Fitting and adjustment of gastric lap band (V53.51)

· Foster care (status) (V60.81)

· Family disruption due to death (V61.07) or other extended absence (V61.08) of family member

· Counseling for parent-biological child (V61.23) and parent-adopted child (V61.24) problems

· Personal history of estrogen therapy (V87.43)

· Personal history of inhaled (V87.44) or systemic steroid therapy (V87.45)

Technology Updates

The proposed rule describes five applications for new technology add-on payments and CMS’ preliminary findings about those technologies. CMS also anticipates moving forward with testing the technical ability to accept data from electronic health records (EHRs) for the ED, Stroke, and VTE quality measures as early as July 1, 2010. The proposed rule, however, does not implicate or implement any Health Information Technology for Economic and Clinical Health Act (HITECH) Act provisions.

The proposed rule was placed on display at the Federal Register May 1, and can be found under Special Filings at: www.archives.gov/federal-register/public-inspection/index.html or on the CMS 2010 Proposed Rule Home Page at: www.cms.hhs.gov/AcuteInpatientPPS/FY2010RULE/List.asp.

CMS is accepting comments on the proposed rule until June 30. A final rule will be made publicly available no later Aug. 1.

[GJV1]If possible, list the code ranges affected.

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