Inpatient Facility Coding & Compliance Alert

Prepare for the new MS-DRGs to evolve by 2018. 

Your MS-DRGs will stay the same for a good two years after ICD-10 comes in, says an article published this February in the Journal of AHIMA. Why? Because the ICD-10 MS-DRGs are a replication of the ICD-9 MS-DRGs. Read on for tips to plan your strategic moves accordingly.

Background: Currently, the ICD-10 MS-DRGs cannot include or take advantage of the increased specificity of ICD-10. Therefore, the same hospital inpatient medical record coded independently in ICD-10 and ICD-9 would have the same MS-DRG assigned by the ICD-10 MS-DRGs using the ICD-10 codes and the ICD-9 MS-DRGs using the ICD-9 codes. 

The hitch: Since there is no substantial database of ICD-10 coded records available as yet, there is no way of recalibrating the MS-DRG payment weights to upgrade to ICD-10 optimized MS-DRGs. This optimization will be possible only after sufficient ICD-10 data accumulates to allow calculation of ICD-10 optimized MS-DRG payment weights. Realistically, the earliest an ICD-10 optimized version of MS-DRGs can be implemented is FY 2018. 

Take the Pulse of ICD-9 and ICD-10

Think that greater specificity is the only major difference? Well, think again. ICD-10 differs from ICD-9 in more complex ways. “We will learn more as we go along,” says Duane C. Abbey, PhD, president of Abbey and Abbey Consultants Inc., in Ames, IA.

Here are few such points to ponder:

• Certain distinctions are no longer in common use. For example, benign versus malignant hypertension has been removed from ICD-10. 
• Basis of classifications are different. ICD-10 classifies certain obstetric conditions by the pregnancy trimester as opposed to ICD-9 which relies on the occurrence of a delivery.
• Unique coding guidelines in ICD-10. For instance, anemia as manifestation of a chronic disease is reported as a secondary diagnosis in ICD-10.

This clearly indicates that an exact replication of the 

MS-DRGs in ICD-10 would not be realistic.

“The re-programming of the MS-DRG grouper for ICD-10 has long been a concern,” explains Abbey. “Years will probably be needed to fully reprogram and then also fully recalibrate.  Individual hospitals should carefully review the results of grouping to identify any idiosyncrasies.” 

Find Out How the Current ICD-10 MS-DRGs Will Impact Payment 

As there is no ICD-10 database available currently, researchers from 3M Health Information Systems, Inc., therefore simulated the same by translating the ICD-9 codes on a record to create a correctly coded ICD-10 version of the same record. They selected ICD-10 codes that best represented the ICD-9 codes on the record collectively, not individually. 

How they did it: They utilized the FY 2013 Medicare Provider Analysis and Review (MedPAR) data, which contained all Medicare inpatient admissions from acute care hospitals with a discharge date from 10/1/2012 through 9/30/2013. The analysis data set contained 10,009,934 admissions from 3,205 hospitals. 

They, however, excluded non-IPPS hospitals, including skilled nursing facilities, long-term care hospitals, rehabilitation hospitals, psychiatric hospitals, critical access hospitals, children’s hospitals, and oncology hospitals. They also excluded hospitals with insufficient or inaccurate cost report information. They calculated payments based on a number of factors such as wage indices, cost to charge ratios, MS-DRG weights, etc.

Results:

• The ICD-9 MS-DRG and ICD-10 MS-DRG assignments differed for 1.07 percent of the admissions. The estimated change is relatively consistent across hospital types, with the 20 percent of hospitals with the smallest proportionate share having the smallest change in MS-DRG assignment (0.98 of a percent), and the 10 percent of hospitals with the biggest indirect medical education adjustment having the largest change in MS-DRG assignment (1.25 percent). 

• The net payment change due to differences in MS-DRG assignment was -0.04 of a percent.

The change again was consistent across hospital types, with the 10 percent of hospitals with the biggest indirect medical education adjustment having a -0.01 of a percent decrease in payment and the rural hospitals having a -0.06 of a percent payment decrease. 

• Although the transition from the ICD-9 version of the MS-DRGs to the ICD-10 version resulted in 1.07 percent of the patients being assigned to different MS-DRGs, overall payment increases and decreases due to a change in MS-DRG assignment essentially net out.

So, would the payments reduce? “Statistically, these changes even out at the national level.  However, at the local hospital level there could be some major surprises. Hospitals should track reimbursement and grouping with care,” opines Abbey.

Good news for now: The change in coding practices will have minimal impact on MS-DRG assignment because the ICD-10 MS-DRGs are a replication of the ICD-9 MS-DRGs and function at the same level of specificity as the ICD-9 MS-DRGs. 

Look Beyond 2018

The impact: When the MS-DRGs are optimized to take advantage of the detail in ICD-10, there may be a substantial impact on payments. The increased specificity of ICD-10 will require hospitals to improve documentation and coding precision. 

“There does not appear any discussion concerning a behavioral offset for better coding with ICD-10,” thinks Abbey. “In the past, overall reimbursement has sometimes been reduced presuming the coding staff will do a much better job with the new code set.”

Use the time well: The availability of two years of ICD-10 data gives you time for reviewing your coding practices under ICD-10 and making systematic changes if required. 

The ICD-10 data accumulating in the next two years will help us analyze the coding practices under ICD-10 that impact MS-DRG definitions and payment weights. This will mitigate potential opportunities for up-coding under ICD-10 as well.