Lawmakers and hospital groups have sent letters to CMS urging the agency to scale back a proposed 2.9% rate reduction on Medicare payments to hospitals related to changes in coding practices for fiscal year 2011, CQ HealthBeat reports.
The Medicare Payment Advisory Commission endorsed the proposed rule after it was announced in April and agreed that hospitals were receiving higher overall payments when they switched to a new patient classification system. The new system, known as MS-DRGs, increased hospital payments because it modified how patients are classified.
In a letter about the proposal dated May 27, MedPAC wrote, "CMS actuaries were correct in estimating that the new MS-DRGs coupled with improved coding increased payments by $6.9 billion over 2008 and 2009," adding, "We expect an additional $4.8 billion in overpayments in 2010, and overpayments will continue until CMS makes a prospective offsetting adjustment" to the payment rates (Reichard, CQ HealthBeat, 7/20).
Lawmakers Concerned About Effect on Patient Care
In a letter sent last week to CMS Administrator Donald Berwick, 52 senators called for a review of the proposed payment rate cut, stating that coding offsets are based on the assumption that hospital payments "have increased solely due to changes in coding or classification of patients."
However, the senators wrote that there are other reasons for such changes, such as the likelihood that some patients might have more serious illnesses or complex conditions (Simmons, HealthLeaders Media, 7/20).
The letter also noted that enactment of the proposed cut "would cost hospitals across the country an estimated $3.7 billion in fiscal 2011."
According to the senators, "MedPAC has shown that hospitals are currently being paid substantially less than the cost of delivering care to Medicare patients," adding, "In fact, MedPAC projected a negative 5.9% overall Medicare margin for hospitals in fiscal year 2010 and therefore recommended Congress should provide a full inflation update for hospital payments for fiscal year 2011" (CQ HealthBeat, 7/20).
The senators also cautioned that before any change is implemented, "we need to confirm that the appropriate and correct methodology" has been used and that any effect on patient severity is taken into consideration. "Otherwise, this cut to hospital payments may adversely affect their ability to care for patients and serve their communities," the letter stated.
On July 12, 242 House members signed a similar letter to Berwick, requesting that CMS review the proposed cut (HealthLeaders Media, 7/20).
Proposed Rule Based on Inaccurate Data, Hospitals Say
On Tuesday, three hospital associations sent a letter to Berwick noting that a pair of recent studies found that the proposed payment rate cut was based on inaccurate data about higher payments to hospitals as a result of the switch to the MS-DRGs, The Hill's "Healthwatch" reports.
The Federation of American Hospitals, the American Hospital Association and the Association of American Medical Colleges wrote that the two studies "highlight significant concerns with [CMS'] approach to documentation and coding change."
The studies were conducted by the Moran Company and City University of New York Economics professor Partha Deb.
The letter urged CMS to alter its "methodology for determining documentation and coding change to better account for increasing patient severity, as documented by historical trends, and reduce the proposed cut to inpatient PPS payments for FY 2011" (Pecquet, "Healthwatch," The Hill, 7/20).