The new payment system for hospitalized Medicare patients spells big changes for hospitals and hospitalists.
On Aug. 1, 2006, the Centers for Medicare and Medicaid (CMS) issued final regulations for Medicare payments to hospitals in 2008. This update to the hospital inpatient prospective payment system (IPPS) is designed to improve the accuracy of Medicare payments and includes a new reporting system with new incentives for participating hospitals, restructured inpatient diagnosis-related groups (DRGs), and the exclusion of some hospital-acquired conditions.
The IPPS contains a number of provisions that will affect hospital medicine, and the incentives paid will come from many hospitalist-treated patients. “Realistically, the majority of patients that hospitalists admit are Medicare patients,” says Eric Siegal, MD, regional medical director of Cogent Healthcare in Madison, Wis., and chair of SHM’s Public Policy Committee.
27 Quality Measures
Under the IPPS, hospitals must now report on 27 quality measures to receive their full update. These include 30-day mortality measures for acute myocardial infarction and heart failure for Medicare patients, three measures related to surgical care, and the Hospital Consumer Assessment of Healthcare Providers and Systems patient satisfaction survey.
The set of measures will be expanded for 2009 to include a 30-day mortality measure for pneumonia and four additional measures related to surgical care, contingent on their endorsement by the National Quality Forum (NQF).
More Precise DRGs
The new IPPS uses restructured DRGs to better account for the severity of each patient’s condition. Now, 745 severity-adjusted DRGs have replaced the previous 538. This means hospitals that serve more severely ill patients will receive increased payments in an effort to prevent rewards for cherry-picking the healthiest patients.
“At least conceptually, this is a better way of doing things,” says Dr. Siegal. “Hospitals have been effectively penalized for taking care of really sick patients, because the DRGs weren’t really differentiating degrees of serious illness. Now that hospital comparison is becoming a big deal, people look at a statistic like mortality rates,” and the figures don’t specify which patients were mortally ill upon admission.
What’s Not Covered?
One interesting aspect to IPPS is that it specifies that Medicare will not cover additional costs of eight preventable, hospital-acquired conditions. These conditions include an object mistakenly left in a patient during surgery, air embolism, blood incompatibility, falls, mediastinitis, catheter-associated urinary tract infections (UTIs), pressure ulcers, and vascular catheter associated infections. For 2009, CMS will also propose excluding ventilator associated pneumonia, staphylococcus aureus septicemia, and deep-vein thrombosis/pulmonary embolism.