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.
“Some of this stuff will be easy. Some cases, like ‘object left in patient during surgery’ are so obvious as to be laughable,” says Dr. Siegal. “Others are a tougher call, such as a catheter-associated UTI. These are not always as clear-cut as [CMS] says they will be. Philosophically, I think this is the right thing to do—it’s not right to pay a hospital for treating something they caused.”
Hospitalists and hospital staff are likely to see added paperwork as a result of this rule. “I can guarantee that there will be an added checklist for these conditions on admission,” says Dr. Siegal. “We’ll have to check for pressure ulcer, UTI, etc.—and that’s not necessarily a bad thing.”
Key Role for Hospitalists
When hospital payment based on reporting is involved, hospitalists are quickly drawn in. “This puts more money for hospitals at risk,” explains Dr. Siegal. “There’s a clear imperative to document better, and to identify who’s really sick. This will all land squarely on the shoulders of hospitalists—and, in fact, it already [has].”
On average, hospitals that comply with all provisions of the rule will earn an additional 3.5% in Medicare payments. This is really a result of the 3.3% market basket increase.
“The difference between doing this well and doing it poorly can add up to the margin for some hospitals,” stresses Dr. Siegal. “There’s absolutely no question that if I’m a hospital and I’m shelling out for a hospital medicine program, the single thing I want them to do and do well is report properly on these measures.”
Careful documentation includes the DRGs. Dr. Siegal points out that there’s a $4,000 swing between the DRG for low-acuity heart failure (a $3,900 payment) and high-acuity heart failure (a $7,900 payment). “Clearly, there will be a shift in reimbursement to those hospitals with sicker patients—or those that do a better job of documenting those patients,” he says. “You can bet that hospitals will make this a priority. They’re going to get much more finicky about how we document.”
Here’s an example: If presented with a patient with sepsis and a UTI, different physicians will have different diagnoses—or rather, use different terms, whether it’s sepsis, severe sepsis, urosepsis, SIRS, or something else. “Hospitals will try to force all physicians to get more crisp in their definitions,” says Dr. Siegal. “This could be good, because we’ll all be using the same language. But some aspects of this will just be a pain … like any other broadly applied rule. If you admit someone with chest pains, you will no longer be able to note ‘chest pains’; you’ll have to describe the pains.”
Starting now, the new IPPS will force hospitalists to perform more—and more careful—documentation for each patient. “It feels like one more hoop to jump through,” says Dr. Siegal. “But there should be no doubt that this is the future of healthcare, like it or not.” TH
Jane Jerrard has been writing for The Hospitalist since 2005.