[Federal Register: May 3, 2007 (Volume 72, Number 85)]
[Proposed Rules]
[Page 24679-25135]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03my07-14]
[[Page 24679]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 411, 412, 413, and 489
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2008 Rates; Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411, 412, 413, and 489
[CMS-1533-P]
RIN 0938-AO70
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2008 Rates
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs to implement changes arising from our continuing experience with
these systems, and to implement certain provisions made by the Deficit
Reduction Act of 2005 (Pub. L. 109-171), the Medicare Improvements and
Extension Act under Division B, Title I of the Tax Relief and Health
Care Act of 2006 (Pub. L. 109-432), and the Pandemic and All-Hazards
Preparedness Act (Pub. L. 109-417). In addition, in the Addendum to
this proposed rule, we describe the proposed changes to the amounts and
factors used to determine the rates for Medicare hospital inpatient
services for operating costs and capital-related costs. We also are
setting forth proposed rate-of-increase limits for certain hospitals
and hospital units excluded from the IPPS that are paid in full or in
part on a reasonable cost basis subject to these limits or that have a
portion of a prospective payment system payment based on reasonable
cost principles. These proposed changes would be applicable to
discharges occurring on or after October 1, 2007.
In this proposed rule, we discuss our proposals to further refine
the diagnosis-related group (DRG) system under the IPPS to better
recognize severity of illness among patients--for FY 2008, we are
proposing to adopt a Medicare Severity DRG (MS-DRG) classification
system for the IPPS. We are also proposing to use the structure of the
proposed MS-DRG system for the LTCH prospective payment system
(referred to as MS-LTC-DRGs) for FY 2008.
Among the other policy changes that we are proposing to make are
changes related to: Limited revisions of the reclassification of cases
to proposed MS-DRGs, the proposed relative weights for the proposed MS-
LTC-DRGs; the wage data, including the occupational mix data, used to
compute the wage index; applications for new technologies and medical
services add-on payments; payments to hospitals for the indirect costs
of graduate medical education; submission of hospital quality data;
provisions governing application of sanctions relating to the Emergency
Medical Treatment and Labor Act of 1986 (EMTALA); provisions governing
disclosure of physician ownership in hospitals and patient safety
measures; and provisions relating to services furnished to
beneficiaries in custody of penal authorities.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 12, 2007.
ADDRESSES: In commenting, please refer to file code CMS-1533-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period''. (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1533-P, P.O. Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1533-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-7195 in advance to schedule your arrival
with one of our staff members. Room 445-G, Hubert H. Humphrey Building,
200 Independence Avenue, SW., Washington, DC 20201, or 7500 Security
Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain proof of filing by
stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Marc Hartstein, (410) 786-4548, Operating Prospective Payment,
Diagnosis-Related Groups (DRGs), Wage Index, New Medical Services and
Technology Add-On Payments, and Hospital Geographic Reclassifications
Issues
Tzvi Hefter, (410) 786-4487, Capital Prospective Payment, Excluded
Hospitals, Graduate Medical Education, Critical Access Hospitals, and
Long-Term Care (LTC)-DRG Issues
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Issues
Sheila Blackstock, (410) 786-3502, Quality Data for Annual Payment
Update Issues
Thomas Valuck, (410) 786-7479, Hospital Value-Based Purchasing Issues
Jacqueline Proctor, (410) 786-8852, Disclosure of Physician Ownership
in Hospitals and Patient Safety Measures Issues
Fred Grabau, (410) 786-0206, Services to Beneficiaries in Custody of
Penal Authorities Issues
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-1533-P
[[Page 24681]]
and the specific ``issue identifier'' that precedes the section on
which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking.
Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web; the Superintendent of Documents' home page address
is http://www.gpoaccess.gov/, by using local WAIS client software, or
by telnet to swais.access.gpo.gov, then login as guest (no password
required). Dial-in users should use communications software and modem
to call (202) 512-1661; type swais, then login as guest (no password
required).
Acronyms
AHA American Hospital Association
AHIMA American Health Information Management Association
AHRQ Agency for Health Care Research and Quality
AMI Acute myocardial infarction
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis Related Group System
ASC Ambulatory surgical center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L.
106-113
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Pub. L. 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CART CMS Abstraction & Reporting Tool
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCR Cost-to-charge ratio
CDAC Clinical Data Abstraction Center
CIPI Capital input price index
CPI Consumer price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Pub. L. 99-
272
CPI Consumer price index
CY Calendar year
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DRG Diagnosis-related group
DSH Disproportionate share hospital
ECI Employment cost index
EMR Electronic medical record
EMTALA Emergency Medical Treatment and Labor Act of 1986, Pub. L.
99-272
FDA Food and Drug Administration
FFY Federal fiscal year
FIPS Federal information processing standards
FQHC Federally qualified health center
FTE Full-time equivalent
FY Fiscal year
GAAP Generally Accepted Accounting Principles
GAF Geographic Adjustment Factor
GME Graduate medical education
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCFA Health Care Financing Administration
HCRIS Hospital Cost Report Information System
HHA Home health agency
HHS Department of Health and Human Services
HIC Health insurance card
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HSA Health savings account
HSCRC Maryland Health Services Cost Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Edition,
Procedure Coding System
IHS Indian Health Service
IME Indirect medical education
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPPS Acute care hospital inpatient prospective payment system
IRF Inpatient rehabilitation facility
JCAHO Joint Commission on Accreditation of Healthcare Organizations
LAMCs Large area metropolitan counties
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MAC Medicare Administrative Contractor
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MCV Major cardiovascular condition
MDC Major diagnostic category
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act, Division B of
the Tax Relief and Health Care Act of 2006, Pub. L. 109-432
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MPN Medicare provider number
MRHFP Medicare Rural Hospital Flexibility Program
MSA Metropolitan Statistical Area
NAICS North American Industrial Classification System
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NQF National Quality Forum
NTIS National Technical Information Service
NVHRI National Voluntary Hospital Reporting Initiative
OES Occupational employment statistics
OIG Office of the Inspector General
OMB Executive Office of Management and Budget
O.R. Operating room
OSCAR Online Survey Certification and Reporting (System)
PRM Provider Reimbursement Manual
PPI Producer price index
PMSAs Primary metropolitan statistical areas
PPS Prospective payment system
PRA Per resident amount
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PS&R Provider Statistical and Reimbursement (System)
QIG Quality Improvement Group, CMS
QIO Quality Improvement Organization
RHC Rural health clinic
RHQDAPU Reporting hospital quality data for annual payment update
RNHCI Religious nonmedical health care institution
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RRC Rural referral center
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SFY State fiscal year
SIC Standard Industrial Classification
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSA Social Security Administration
SSI Supplemental Security Income
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
UHDDS Uniform hospital discharge data set
VBP Value-based purchasing
Table of Contents
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded From the IPPS
a. Inpatient Rehabilitation Facilities (IRFs)
b. Long-Term Care Hospitals (LTCHs)
c. Inpatient Psychiatric Facilities (IPFs)
3. Critical Access Hospitals (CAHs)
4. Payments for Graduate Medical Education (GME)
B. Provisions of the Deficit Reduction Act of 2005 (DRA)
C. Provisions of the Medicare Improvements and Extension Act
Under Division B of the Tax Relief and Health Care Act of 2006
D. Provisions of the Pandemic and All-Hazards Preparedness Act
E. Major Contents of this Proposed Rule
1. Proposed DRG Reclassifications and Recalibrations of Relative
Weights
2. Proposed Changes to the Hospital Wage Index
3. Other Decisions and Proposed Changes to the IPPS for
Operating Costs and GME Costs
4. Proposed Changes to the IPPS for Capital-Related Costs
5. Proposed Changes to the Payment Rate for Excluded Hospitals
and Hospital Units: Rate-of-Increase Percentages
6. Services Furnished to Beneficiaries in Custody of Penal
Authorities
7. Determining Proposed Prospective Payment Operating and
Capital Rates and Rate-of-Increase Limits
8. Impact Analysis
9. Recommendation of Update Factors for Operating Cost Rates of
Payment for Inpatient Hospital Services
10. Discussion of Medicare Payment Advisory Commission
Recommendations
II. Proposed Changes to DRG Classifications and Relative Weights
A. Background
B. DRG Reclassifications
1. General
2. Yearly Review for Making DRG Changes
C. MedPAC Recommendations for Revisions to the IPPS DRG System
D. Refinement of DRGs Based on Severity of Illness
1. Evaluation of Alternative Severity-Adjusted DRG Systems
a. Overview of Alternative DRG Classification Systems
b. Comparative Performance in Explaining Variation in Resource
Use
c. Payment Accuracy and Case-Mix Impact
d. Issues for Future Consideration
2. Development of Proposed Medicare Severity DRGs (MS-DRGs)
a. Comprehensive Review of the CC List
b. Chronic Diagnosis Codes
c. Acute Diagnosis Codes
d. Prior Research on Subdivisions of CCs Into Multiple
Categories
e. Proposed Medicare Severity DRGs (MS-DRGs)
3. Dividing Proposed MS-DRGs on the Basis of the CCs and MCCs
4. Conclusion
5. Impact of the Proposed MS-DRGs
6. Changes to Case-Mix Index (CMI) from the Proposed MS-DRGs
7. Effect of the Proposed MS-DRGs on the Outlier Threshold
8. Effect of the Proposed MS-DRGs on the Postacute Care Transfer
Policy
E. Refinement of the Relative Weight Calculation
1. Summary of RTI's Report on Charge Compression
2. RTI Recommendations
a. Short-Term Recommendations
b. Medium-Term Recommendations
c. Long-Term Recommendations
F. Hospital-Acquired Conditions, Including Infections
1. General
2. Legislative Requirements
3. Public Input
4. Collaborative Effort
5. Criteria for Selection of the Hospital-Acquired Conditions
6. Proposed Selection of Hospital-Acquired Conditions
7. Other Issues
G. Proposed Changes to the Specific DRG Classifications
1. Pre-MDC: Intestinal Transplantations
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Implantable Neurostimulators
b. Intracranial Stents
3. MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth, and
Throat)--Cochler Implants
4. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Hip and Knee Replacements
b. Spinal Fusions
c. Spinal Disc Devices
d. Other Spinal DRGs
5. MDC 17 (Myeloproliferative Diseases and Disorders, Poorly
Differentiated Neoplasm): Endoscopic Procedures
6. Medicare Code Editor (MCE) Changes
a. Non-Covered Procedure Edit: Code 00.62 (Percutaneous
Angioplasty or Atherectomy of Intracranial Vessel(s))
b. Non-Specific Principal Diagnosis Edit 7 and Non-Specific O.R.
Procedures Edit 10
c. Limited Coverage Edit 17
7. Surgical Hierarchies
8. CC Exclusion List Proposed for FY 2008
a. Background
b. Proposed CC Exclusions List for FY 2008
9. Review of Procedure Codes in CMS DRGs 468, 476, and 477
a. Moving Procedure Codes From CMS DRG 468 (Proposed MS-DRGs 981
Through 983) or CMS DRG 477 (Proposed MS-DRGs 987 Through 989) to
MDCs
b. Reassignment of Procedures Among CMS DRGs 468, 476, and 477
(Proposed MS-DRG 981 Through 983, 984 Through 986, and 987 Through
989)
c. Adding Diagnosis or Procedure Codes to MDCs
10. Changes to the ICD-9-CM Coding System
11. Other Issues
a. Seizures and Headaches
b. Devices That Are Replaced Without Cost or Where Credit for a
Replaced Device Is Furnished to the Hospital
H. Recalibration of DRG Weights
I. Proposed MS-LTC-DRG Reclassifications and Relative Weights
for LTCHs for FY 2008
1. Background
2. Proposed Changes in the LTC-DRG Classifications
a. Background
b. Patient Classifications Into DRGs
3. Development of the Proposed FY 2008 MS-LTC-DRG Relative
Weights
a. General Overview of Development of the Proposed MS-LTC-DRG
Relative Weights
b. Data
c. Hospital-Specific Relative Value Methodology
d. Proposed Treatment of Severity Levels in Developing Relative
Weights
e. Proposed Low-Volume MS-LTC-DRGs
4. Steps for Determining the Proposed FY 2008 MS-LTC-DRG
Relative Weights
J. Proposed Add-On Payments for New Services and Technologies
1. Background
2. Public Input Before Publication of a Notice of Proposed
Rulemaking on Add-On Payments
3. FY 2008 Status of Technologies Approved for FY 2007 Add-On
Payments
a. Endovascular Graft Repair of the Thoracic Aorta
b. Restore[reg] Rechargeable Implantable
Neurostimulators
c. X STOP Interspinous Process Decompression System
4. FY 2008 Application for New Technology Add-On Payments
5. Technical Correction
III. Proposed Changes to the Hospital Wage Index
A. Background
B. Core-Based Statistical Areas for the Hospital Wage Index
C. Proposed Occupational Mix Adjustment to the Proposed FY 2008
Wage Index
1. Development of Data for the Proposed FY 2008 Occupational Mix
Adjustment
2. Timeline for the Collection, Review, and Correction of the
Occupational Mix Data
3. Calculation of the Proposed Occupational Mix Adjustment for
FY 2008
4. Proposed 2007-2008 Occupational Mix Survey for the FY 2010
Wage Index
D. Worksheet S-3 Wage Data for the Proposed FY 2008 Wage Index
1. Included Categories of Costs
[[Page 24683]]
2. Contract Labor for Indirect Patient Care Services
3. Excluded Categories of Costs
4. Use of Wage Index Data by Providers Other Than Acute Care
Hospitals Under the IPPS
E. Verification of Worksheet S-3 Wage Data
F. Wage Index for Multicampus Hospitals
G. Computation of the Proposed FY 2008 Unadjusted Wage Index
1. Method for Computing the Proposed FY 2008 Unadjusted Wage
Index
2. Expiration of the Imputed Floor
3. CAHs Reverting Back to IPPS Hospitals and Raising the Rural
Floor
4. Application of Rural Floor Budget Neutrality
H. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2008 Occupational Mix Adjusted Wage
Index
I. Revisions to the Proposed Wage Index Based on Hospital
Redesignations
1. General
2. Effects of Reclassification/Redesignation
3. FY 2008 MGCRB Reclassifications
4. Hospitals That Applied for Reclassification Effective in FY
2008 and Reinstating Reclassifications in FY 2008
5. Clarification of Policy on Reinstating Reclassifications
6. ``Fallback'' Reclassifications
7. Geographic Reclassification Issues for Multicampus Hospitals
8. Redesignations of Hospitals under Section 1886(d)(8)(B) of
the Act
9. Reclassifications Under Section 1886(d)(8)(B) of the Act
10. New England Deemed Counties
11. Reclassifications under Section 508 of Pub. L. 108-173
12. Other Issues
J. Proposed FY 2008 Wage Index Adjustment Based on Commuting
Patterns of Hospital Employees
K. Process for Requests for Wage Index Data Corrections
L. Labor-Related Share for the Proposed Wage Index for FY 2008
M. Wage Index Study Required Under Pub. L. 109-432
N. Proxy for the Hospital Market Basket
IV. Other Decisions and Proposed Changes to the IPPS for Operating
Costs and GME Costs
A. Reporting of Hospital Quality Data for Annual Hospital
Payment Update
1. Background
2. FY 2008 Quality Measures
3. New Quality Measures and Data Submission Requirements for FY
2009 and Subsequent Years
a. Proposed New Quality Measures for FY 2009 and Subsequent
Years
b. Data Submission
4. Retiring or Modifying RHQDAPU Program Quality Measures
5. Procedures for the RHQDAPU Program for FY 2008 and FY 2009
a. Procedures for Participating in the RHQDAPU Program
b. Chart Validation Requirements
c. Data Validation and Attestation
d. Public Display
e. Reconsideration and Appeal Procedures
f. RHQDAPU Program Withdrawal Requirements
6. Electronic Medical Records
7. New Hospitals
B. Development of the Medicare Hospital Value-Based Purchasing
Plan
C. Rural Referral Centers (RRCs)
1. Proposed Annual Update of RRC Status Criteria
a. Case-Mix Index
b. Discharges
2. Acquired Rural Status of RRCs
D. Indirect Medical Education (IME) Adjustment
1. Background
2. IME Adjustment Factor for FY 2008
3. Time Spent by Residents on Vacation or Sick Leave and in
Orientation
a. Background
b. Vacation and Sick Leave Time
c. Orientation Activities
d. Proposed Regulation Changes
E. Hospital Emergency Services Under EMTALA
1. Background
2. Recent Legislation Affecting EMTALA Implementation
a. Secretary's Authority to Waive Requirements During National
Emergencies
b. Provisions of the Pandemic and All-Hazards Preparedness Act
c. Proposed Revisions to the EMTALA Regulations
F. Disclosure of Physician Ownership in Hospitals and Patient
Safety Measures
1. Disclosure of Physician Ownership in Hospitals
2. Patient Safety Measures
G. Rural Community Hospital Demonstration Program
V. Proposed Changes to the IPPS for Capital-Related Costs
A. Background
B. Proposed Policy Change
VI. Proposed Changes for Hospitals and Hospital Units Excluded From
the IPPS
A. Payments to Existing and New Excluded Hospitals and Hospital
Units
B. Separate PPS for IRFs
C. Separate PPS for LTCHs
D. Separate PPS for IPFs
E. Determining Proposed LTCH Cost-to-Charge Ratios (CCRs) Under
the LTCH PPS
VII. Services Furnished to Beneficiaries in Custody of Penal
Authorities
VIII. MedPAC Recommendations
IX. Other Required Information
A. Requests for Data From the Public
B. Collection of Information Requirements
C. Response to Public Comments
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts, Update Factors,
and Rate-of-Increase Percentages Effective With Cost Reporting Periods
Beginning On or After October 1, 2007
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital
Inpatient Operating Costs for FY 2008
A. Calculation of the Proposed Adjusted Standardized Amount
1. Standardization of Base-Year Costs or Target Amounts
2. Computing the Proposed Average Standardized Amount
3. Updating the Proposed Average Standardized Amount
4. Other Adjustments to the Average Standardized Amount
a. Proposed Recalibration of DRG Weights and Updated Wage
Index--Budget Neutrality Adjustment
b. Reclassified Hospitals--Budget Neutrality Adjustment
c. Case-Mix Budget Neutrality Adjustment
d. Outliers
e. Proposed Rural Community Hospital Demonstration Program
Adjustment (Section 410A of Pub. L. 108-173)
5. Proposed FY 2008 Standardized Amount
B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
1. Proposed Adjustment for Area Wage Levels
2. Proposed Adjustment for Cost-of-Living in Alaska and Hawaii
C. Proposed DRG Relative Weights
D. Calculation of the Proposed Prospective Payment Rates for FY
2008
1. Federal Rate
2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs)
a. Calculation of Hospital-Specific Rate
b. Updating the FY 1982, FY 1987, FY 1996, and FY 2002 Hospital-
Specific Rates for FY 2008
3. General Formula for Calculation of Proposed Prospective
Payment Rates for Hospitals Located in Puerto Rico Beginning On or
After October 1, 2007 and Before October 1, 2008
a. Puerto Rico Rate
b. National Rate
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2008
A. Determination of Proposed Federal Hospital Inpatient Capital-
Related Prospective Payment Rate Update
1. Projected Capital Standard Federal Rate Update
a. Description of the Update Framework
b. Comparison of CMS and MedPAC Update Recommendation
2. Proposed Outlier Payment Adjustment Factor
3. Proposed Budget Neutrality Adjustment Factor for Changes in
DRG Classifications and Weights and the GAF
4. Proposed Exceptions Payment Adjustment Factor
5. Proposed Capital Standard Federal Rate for FY 2008
6. Proposed Special Capital Rate for Puerto Rico Hospitals
B. Calculation of the Proposed Inpatient Capital-Related
Prospective Payments for FY 2008
C. Capital Input Price Index
1. Background
2. Forecast of the CIPI for FY 2008
IV. Proposed Changes to Payment Rates for Excluded Hospitals and
Hospital Units: Rate-of-Increase Percentages
A. Payments to Existing Excluded Hospitals and Units
B. New Excluded Hospitals and Units
[[Page 24684]]
V. Tables
Table 1A--National Adjusted Operating Standardized Amounts,
Labor/Nonlabor (69.7 Percent Labor Share/30.3 Percent Nonlabor Share
If Wage Index Is Greater Than 1)
Table 1B--National Adjusted Operating Standardized Amounts,
Labor/Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share If
Wage Index Is Less Than or Equal to 1)
Table 1C--Adjusted Operating Standardized Amounts for Puerto
Rico, Labor/Nonlabor
Table 1D--Capital Standard Federal Payment Rate
Table 2--Hospital Case-Mix Indexes for Discharges Occurring in
Federal Fiscal Year 2006; Hospital Wage Indexes for Federal Fiscal
Year 2008; Hospital Average Hourly Wages for Federal Fiscal Years
2006 (2002 Wage Data), 2007 (2003 Wage Data), and 2008 (2004 Wage
Data); and 3-Year Average of Hospital Average Hourly Wages
Table 3A--FY 2008 and 3-Year Average Hourly Wage for Urban Areas
by CBSA
Table 3B--FY 2008 and 3-Year Average Hourly Wage for Rural Areas
by CBSA
Table 4A--Wage Index and Capital Geographic Adjustment Factor
(GAF) for Urban Areas by CBSA--FY 2008
Table 4B--Wage Index and Capital Geographic Adjustment Factor
(GAF) for Rural Areas by CBSA--FY 2008
Table 4C--Wage Index and Capital Geographic Adjustment Factor
(GAF) for Hospitals That Are Reclassified by CBSA--FY 2008
Table 4F--Puerto Rico Wage Index and Capital Geographic
Adjustment Factor (GAF) by CBSA--FY 2008
Table 4J--Out-Migration Wage Adjustment--FY 2008
Table 5--List of Proposed Medicare Severity Diagnosis-Related
Groups (MS-DRGs), Relative Weighting Factors, and Geometric and
Arithmetic Mean Length of Stay
Table 6A--New Diagnosis Codes
Table 6B--New Procedure Codes
Table 6C--Invalid Diagnosis Codes
Table 6D--Invalid Procedure Codes
Table 6E--Revised Diagnosis Code Titles
Table 6F--Revised Procedure Code Titles
Table 6G--Additions to the CC Exclusion List (Available only
through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/
)
Table 6H--Deletions from the CC Exclusion List (Available only
through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/
)
Table 6I--Complete List of Complication and Comorbidity (CC)
Exclusions (Available only through the Internet on the CMS Web site
at: http://www.cms.hhs.gov/AcuteInpatientPPS/)
Table 6J--Major Complication and Comorbidity (MCC) List
Table 6K--Complications and Comorbidity (CC) List
Table 7A--Medicare Prospective Payment System Selected
Percentile Lengths of Stay: FY 2006 MedPAR Update--December 2006
GROUPER V24.0 CMS-DRGs
Table 7B--Medicare Prospective Payment System Selected
Percentile Lengths of Stay: FY 2006 MedPAR Update--December 2006
GROUPER V25.0 CMS DRGs
Table 8A--Proposed Statewide Average Operating Cost-to-Charge
Ratios--March 2007
Table 8B--Proposed Statewide Average Capital Cost-to-Charge
Ratios--March 2007
Table 8C--Proposed Statewide Average Total Cost-to-Charge Ratios
for LTCHs--March 2007
Table 9A--Hospital Reclassifications and Redesignations--FY 2008
Table 9C--Hospitals Redesignated as Rural under Section
1886(d)(8)(E) of the Act--FY 2008
Table 10--Geometric Mean Plus the Lesser of .75 of the National
Adjusted Operating Standardized Payment Amount (Increased to Reflect
the Difference Between Costs and Charges) or .75 of One Standard
Deviation of Mean Charges by Proposed Medicare Severity Diagnosis-
Related Groups (MS-DRGs)--March 2007
Table 11--Proposed FY 2008 MS-LTC-DRGs, Relative Weights,
Geometric Average Length of Stay, and 5/6ths of the Geometric
Average Length of Stay
Appendix A--Regulatory Impact Analysis
I. Overall Impact
II. Objectives
III. Limitations on Our Analysis
IV. Hospitals Included In and Excluded From the IPPS
V. Effects on Excluded Hospitals and Hospital Units
VI. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs
A. Basis and Methodology of Estimates
B. Analysis of Table I
C. Effects of the Proposed Changes to the DRG Reclassifications
and Relative Cost-Based Weights (Column 2)
D. Effects of Proposed Wage Index Changes (Column 3)
E. Combined Effects of Proposed DRG and Wage Index Changes
(Column 4)
F. Effects of the Expiration of the 3-Year Provision Allowing
Urban Hospitals That Were Converted to Rural as a Result of the FY
2005 Labor Market Area Changes to Maintain the Wage Index of the
Urban Labor Market Area in Which They Were Formerly Located (Column
5)
G. Effects of MGCRB Reclassifications (Column 6)
H. Effects of the Adjustment to the Application of the Rural
Floor (Column 7)
I. Effects of Expiration of the Imputed Rural Floor (Column 8)
J. Effects of the Expiration of Section 508 of Pub. L. 108-173
(Column 9)
K. Effects of the Proposed Wage Index Adjustment for Out-
Migration (Column 10)
L. Effects of All Proposed Changes With CMI Adjustment Prior to
Assumed Growth (Column 11)
M. Effects of All Proposed Changes With CMI Adjustment and
Assumed Growth (Column 12)
N. Effects of Proposed Policy on Payment Adjustment for Low-
Volume Hospitals
O. Impact Analysis of Table II
VII. Effects of Other Proposed Policy Changes
A. Effects of Proposed Policy on Hospital-Acquired Conditions,
Including Infections
B. Effects of Proposed MS-LTC-DRG Reclassifications and Relative
Weights for LTCHs
C. Effects of Proposed New Technology Add-On Payments
D. Effects of Requirements for Hospital Reporting of Quality
Data for Annual Hospital Payment Update
E. Effects of Proposed Policy on Cancellation of Classification
of Acquired Rural Status and Rural Referral Centers
F. Effects of Proposed Policy Change on Payment for Indirect
Graduate Medical Education
G. Effects of Proposed Policy Changes Relating to Emergency
Services Under EMTALA
H. Effects of Proposed Policy on Disclosure of Physician
Ownership in Hospitals and Patient Safety Measures
I. Effects of Implementation of Rural Community Hospital
Demonstration Program
J. Effects of Proposed Policy Changes on Services Furnished to
Beneficiaries in Custody of Penal Authorities
VIII. Effects of Proposed Changes in the Capital IPPS
A. General Considerations
B. Results
IX. Alternatives Considered
X. Overall Conclusion
XI. Accounting Statement
XII. Executive Order 12866
Appendix B--Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2008
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system (PPS). Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at
[[Page 24685]]
predetermined, specific rates for each hospital discharge. Discharges
are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located; and if the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of low-income patients, it
receives a percentage add-on payment applied to the DRG-adjusted base
payment rate. This add-on payment, known as the disproportionate share
hospital (DSH) adjustment, provides for a percentage increase in
Medicare payments to hospitals that qualify under either of two
statutory formulas designed to identify hospitals that serve a
disproportionate share of low-income patients. For qualifying
hospitals, the amount of this adjustment may vary based on the outcome
of the statutory calculations.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS, known as
the indirect medical education (IME) adjustment. This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any outlier payment due is added to the DRG-adjusted base payment rate,
plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid the higher of a hospital-specific rate based on their costs in a
base year (the higher of FY 1982, FY 1987, FY 1996, or FY 2002) or the
IPPS rate based on the standardized amount. For example, sole community
hospitals (SCHs) are the sole source of care in their areas, and
Medicare-dependent, small rural hospitals (MDHs) are a major source of
care for Medicare beneficiaries in their areas. Both of these
categories of hospitals are afforded this special payment protection in
order to maintain access to services for beneficiaries. (Until FY 2007,
an MDH has received the IPPS rate plus 50 percent of the difference
between the IPPS rate and its hospital-specific rate if the hospital-
specific rate is higher than the IPPS rate. In addition, an MDH does
not have the option of using FY 1996 as the base year for its hospital-
specific rate. As discussed below, for discharges occurring on or after
October 1, 2007, but before October 1, 2011, an MDH will receive the
IPPS rate plus 75 percent of the difference between the IPPS rate and
its hospital-specific rate, if the hospital-specific rate is higher
than the IPPS rate.)
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital IPPS, payments are adjusted by the same DRG for the case as
they are under the operating IPPS. Capital IPPS payments are also
adjusted for IME and DSH, similar to the adjustments made under the
operating IPPS. In addition, hospitals may receive outlier payments for
those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
specialty hospitals and hospital units are excluded from the IPPS.
These hospitals and units are: rehabilitation hospitals and units;
long-term care hospitals (LTCHs); psychiatric hospitals and units;
children's hospitals; and cancer hospitals. Religious nonmedical health
care institutions (RNHCIs) are also excluded from the IPPS. Various
sections of the Balanced Budget Act of 1997 (Pub. L. 105-33), the
Medicare, Medicaid and SCHIP [State Children's Health Insurance
Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), and
the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000 (Pub. L. 106-554) provide for the implementation of PPSs
for rehabilitation hospitals and units (referred to as inpatient
rehabilitation facilities (IRFs)), LTCHs, and psychiatric hospitals and
units (referred to as inpatient psychiatric facilities (IPFs)), as
discussed below. Children's hospitals, cancer hospitals, and RNHCIs
continue to be paid solely under a reasonable cost-based system.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
a. Inpatient Rehabilitation Facilities (IRFs)
Under section 1886(j) of the Act, as amended, rehabilitation
hospitals and units (IRFs) have been transitioned from payment based on
a blend of reasonable cost reimbursement subject to a hospital-specific
annual limit under section 1886(b) of the Act and the adjusted facility
Federal prospective payment rate for cost reporting periods beginning
on or after January 1, 2002 through September 30, 2002, to payment at
100 percent of the Federal rate effective for cost reporting periods
beginning on or after October 1, 2002. IRFs subject to the blend were
also permitted to elect payment based on 100 percent of the Federal
rate. The existing regulations governing payments under the IRF PPS are
located in 42 CFR part 412, subpart P.
b. Long-Term Care Hospitals (LTCHs)
Under the authority of sections 123(a) and (c) of Pub. L. 106-113
and section 307(b)(1) of Pub. L. 106-554, the LTCH PPS was effective
for a LTCH's first cost reporting period beginning on or after October
1, 2002. LTCHs that do not meet the definition of ``new'' under Sec.
412.23(e)(4) are paid, during a 5-year transition period, a LTCH
prospective payment that is comprised of an increasing proportion of
the LTCH Federal rate and a decreasing proportion based on reasonable
cost principles. Those LTCHs that did not meet the definition of
``new'' could elect to be paid based on 100 percent of the Federal
prospective payment rate instead of a blended payment in any year
during the 5-year transition. For cost reporting periods beginning on
or after October 1, 2006, all LTCHs are paid 100 percent of the Federal
rate. The existing regulations governing payment under the LTCH PPS are
located in 42 CFR part 412, subpart O.
c. Inpatient Psychiatric Facilities (IPFs)
Under the authority of sections 124(a) and (c) of Pub. L. 106-113,
inpatient
[[Page 24686]]
psychiatric facilities (IPFs) (formerly psychiatric hospitals and
psychiatric units of acute care hospitals) are paid under the IPF PPS.
Under the IPF PPS, some IPFs are transitioning from being paid for
inpatient hospital services based on a blend of reasonable cost-based
payment and a Federal per diem payment rate, effective for cost
reporting periods beginning on or after January 1, 2005. For cost
reporting periods beginning on or after January 1, 2008, all IPFs will
be paid 100 percent of the Federal per diem payment amount. The
existing regulations governing payment under the IPF PPS are located in
42 CFR 412, subpart N.
3. Critical Access Hospitals (CAHs)
Under sections 1814, 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services based on 101 percent of reasonable cost. Reasonable
cost is determined under the provisions of section 1861(v)(1)(A) of the
Act and existing regulations under 42 CFR parts 413 and 415.
4. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
B. Provisions of the Deficit Reduction Act of 2005 (DRA)
The Deficit Reduction Act of 2005 (DRA), Pub. L. 109-171, made a
number of changes to the Act relating to prospective payments to
hospitals and other providers for inpatient services. This proposed
rule would implement amendments made by (1) section 5001(a), which,
effective for FY 2007 and subsequent years, expands the requirements
for hospital quality data reporting; and (2) section 5001(c), which
requires the Secretary to select, by October 1, 2007, at least two
hospital-acquired conditions that meet certain specified criteria that
will be subject to a quality adjustment in DRG payments during FY 2008.
In this proposed rule, we also discuss our development of a plan to
implement, beginning with FY 2009, a value-based purchasing plan for
section 1886(d) hospitals, in accordance with the requirements of
section 5001(b) of Pub. L. 109-171.
C. Provisions of the Medicare Improvements and Extension Act Under
Division B of the Tax Relief and Health Care Act of 2006
In this proposed rule, we discuss the provisions of section
106(b)(1) of the Medicare Improvements and Extensions Act under
Division B, Title I of the Tax Relief and Health Care Act of 2006
(MIEA-TRHCA), Pub. L. 109-432, which requires MedPAC to submit to
Congress, not later than June 30, 2007, a report on the Medicare wage
index classification system applied under the Medicare Prospective
Payment System. Section 106(b) of the MIEA-TRHCA requires the report to
include any alternatives that MedPAC recommends to the method to
compute the wage index under section 1886(d)(3)(E) of the Act.
In addition, we discuss the provisions of section 106(b)(2) of the
MIEA-TRHCA, which instructs the Secretary of Health and Human Services,
taking into account MedPAC's recommendations on the Medicare wage index
classification system, to include in the FY 2009 IPPS proposed rule one
or more proposals to revise the wage index adjustment applied under
section 1886(d)(3)(E) of the Act for purposes of the IPPS.
We note that we published a notice in the Federal Register on March
23, 2007 (72 FR 13799) that addressed the provisions of section 106(a)
of the MIEA-TRHCA relating to the extension of geographic
reclassifications of hospitals under section 508 of Pub. L. 108-173
(that expired on March 31, 2007) through September 30, 2007.
D. Provisions of the Pandemic and All-Hazards Preparedness Act
On December 19, 2006, Congress enacted the Pandemic and All-Hazards
Preparedness Act, Pub. L. 109-417. Section 302(b) of Pub. L. 109-417
makes two specific changes that affect EMTALA implementation in
emergency areas during an emergency period. Specifically section
302(b)(1)(A) of Pub. L. 109-417 amended section 1135(b)(3)(B) of the
Act to state that sanctions may be waived for the direction or
relocation of an individual for screening where, in the case of a
public health emergency that involves a pandemic infections disease,
that direction or relocation occurs pursuant to a State pandemic
preparedness plan. In addition, sections 302(b)(1)(B) and (b)(1)(C) of
Pub. L. 109-417 amended section 1135(b)(3)(B) of the Act to state that,
if a public health emergency involves a pandemic infectious disease
(such as pandemic influenza), the duration of a waiver or modification
under section 1135(b)(3) of the Act (relating to EMTALA) shall be
determined in accordance with section 1135(e) of the Act as that
subsection applies to public health emergencies.
In this proposed rule, we are proposing to make changes to the
EMTALA regulations to conform them to the sanction waiver provisions of
section 302(b) of Pub. L. 109-417.
E. Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare IPPS for operating costs and for capital-related costs in FY
2008. We also are setting forth proposed changes relating to payments
for IME costs and payments to certain hospitals and units that continue
to be excluded from the IPPS and paid on a reasonable cost basis. The
changes being proposed would be effective for discharges occurring on
or after October 1, 2007, unless otherwise noted.
The following is a summary of the major changes that we are
proposing to make:
1. Proposed DRG Reclassifications and Recalibrations of Relative
Weights
We are proposing to adopt a Medicare Severity DRG (MS-DRG)
classification system for the IPPS to better recognize severity of
illness. We present the methodology we used to establish the proposed
MS-DRGs and discuss our efforts to further analyze alternative
severity-adjusted DRG systems and to refine the relative weight
calculations for DRGs.
We present a proposed listing and discussion of hospital-acquired
conditions, including infections, which we have evaluated and are
considering for selection to be subject to the statutorily required
quality adjustment in DRG payments for FY 2008.
We are proposing limited annual revisions to the DRG classification
system in the following areas: intestinal transplants,
neurostimulators, intracranial stents, cochlear implants, knee and hip
replacements, spinal fusions and spinal disc devices, and endoscopic
procedures.
We are presenting our reevaluation of certain FY 2007 applicants
for add-on payments for high-cost new medical services and
technologies, and our analysis of the FY 2008 applicant
[[Page 24687]]
(including public input, as directed by Pub. L. 108-173, obtained in a
town hall meeting).
We are proposing the annual update of the long-term care diagnosis-
related group (LTC-DRG) classifications and relative weights for use
under the LTCH PPS for FY 2008. We are proposing that the LTC-DRGs
would be revised to mirror the proposed MS-DRGs for the IPPS.
2. Proposed Changes to the Hospital Wage Index
In section III. of the preamble to this proposed rule, we are
proposing revisions to the wage index and the annual update of the wage
data. Specific issues addressed include the following:
The FY 2008 wage index update, using wage data from cost
reporting periods that began during FY 2004.
Analysis and implementation of the proposed FY 2008
occupational mix adjustment to the wage index.
Proposed changes relating to expiration of the imputed
floor for the wage index and application of budget neutrality for the
rural floor.
Proposed changes in determining the wage index for
multicampus hospitals.
The proposed revisions to the wage index based on hospital
redesignations and reclassifications, including reclassifications for
multicampus hospitals.
The proposed adjustment to the wage index for FY 2008
based on commuting patterns of hospital employees who reside in a
county and work in a different area with a higher wage index.
The timetable for reviewing and verifying the wage data
that will be in effect for the proposed FY 2008 wage index.
The labor-related share for the FY 2008 wage index,
including the labor-related share for Puerto Rico.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
and GME Costs
In section IV. of the preamble to this proposed rule, we discuss a
number of provisions of the regulations in 42 CFR Parts 412, 413, and
489, including the following:
The reporting of hospital quality data as a condition for
receiving the full annual payment update increase.
Development of the Medicare value-based purchasing plan
and scheduled ``listening sessions.''
The proposed updated national and regional case-mix values
and discharges for purposes of determining RRC status and a proposed
policy change relating to the acquired rural status of RRCs.
The statutorily-required IME adjustment factor for FY 2008
and a proposed policy change relating to determining counts of
residents on vacation or sick leave and in orientation for IME and
direct GME purposes.
Proposed changes relating to waiver of sanctions for
requirements for emergency services for hospitals under EMTALA during
national emergency.
Proposed policy changes relating to disclosure to patients
of physician ownership of hospitals and patient safety measures.
Discussion of the fourth year of implementation of the
Rural Community Hospital Demonstration Program.
4. Proposed Changes to the IPPS for Capital-Related Costs
In section V. of the preamble to this proposed rule, we discuss the
payment policy requirements for capital-related costs and capital
payments to hospitals and propose changes relating to adjustments to
the Federal capital rate to address continuous large positive margins.
5. Proposed Changes to the Payment Rates for Excluded Hospitals and
Hospital Units: Rate-of-Increase Percentages
In section VI. of the preamble to this proposed rule, we discuss
payments to excluded hospitals and hospital units, and proposed changes
for determining LTCH CCRs under the LTCH PPS.
6. Services Furnished to Beneficiaries in Custody of Penal Authorities
In section VII. of the preamble to this proposed rule, we clarify
when individuals are considered to be in ``custody'' for purposes of
Medicare payment for services furnished to beneficiaries who are under
penal authorities.
7. Determining Proposed Prospective Payment Operating and Capital Rates
and Rate-of-Increase Limits
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the FY 2008
prospective payment rates for operating costs and capital-related
costs. We also establish the proposed threshold amounts for outlier
cases. In addition, we address the proposed update factors for
determining the rate-of-increase limits for cost reporting periods
beginning in FY 2008 for hospitals and hospital units excluded from the
PPS.
8. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected hospitals.
9. Recommendation of Update Factors for Operating Cost Rates of Payment
for Inpatient Hospital Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of
the appropriate percentage changes for FY 2008 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs
(and hospital-specific rates applicable to SCHs and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by hospitals and
hospital units excluded from the IPPS.
10. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 1 of each year, in which MedPAC
reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2007 recommendation concerning hospital inpatient
payment policies addressed the update factor for inpatient hospital
operating costs and capital-related costs under the IPPS and for
hospitals and distinct part hospital units excluded from the IPPS. This
recommendation is addressed in Appendix B of this proposed rule. For
further information relating specifically to the MedPAC March 2007
reports or to obtain a copy of the reports, contact MedPAC at (202)
220-3700 or visit MedPAC's Web site at: http://www.medpac.gov.
II. Proposed Changes to DRG Classifications and Relative Weights
(If you choose to comment on issues in this section, please include
the caption ``DRG Reclassifications'' at the beginning of your
comment.)
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as DRGs) for inpatient
discharges and adjust payments under the IPPS based on appropriate
weighting factors assigned to each DRG. Therefore, under the IPPS, we
pay for inpatient hospital services on a rate per discharge basis that
varies according to the DRG to
[[Page 24688]]
which a beneficiary's stay is assigned. The formula used to calculate
payment for a specific case multiplies an individual hospital's payment
rate per case by the weight of the DRG to which the case is assigned.
Each DRG weight represents the average resources required to care for
cases in that particular DRG, relative to the average resources used to
treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources.
B. DRG Reclassifications
1. General
As discussed in the preamble to the FY 2007 IPPS final rule (71 FR
47881 through 47971), we are focusing our efforts in FY 2008 on making
significant reforms to the IPPS consistent with the recommendations
made by MedPAC in its ``Report to the Congress, Physician-Owned
Specialty Hospitals'' in March 2005. MedPAC recommended that the
Secretary refine the entire DRG system by taking into account severity
of illness and applying hospital-specific relative value (HSRV) weights
to DRGs.\1\ We began this reform process by adopting cost-based weights
over a 3-year transition period beginning in FY 2007 and making interim
changes to the DRG system for FY 2007 by creating 20 new CMS DRGs and
modifying 32 others across 13 different clinical areas involving nearly
1.7 million cases. As described below in more detail, these refinements
are intermediate steps towards comprehensive reform of both the
relative weights and the DRG system that is occurring as we undertake
further study.
---------------------------------------------------------------------------
\1\ Medicare Payment Advisory Commission: Report to the
Congress, Physician-Owned Specialty Hospitals, March 2005, page
viii.
---------------------------------------------------------------------------
Currently, cases are classified into CMS DRGs for payment under the
IPPS based on the principal diagnosis, up to eight additional
diagnoses, and up to six procedures performed during the stay. In a
small number of DRGs, classification is also based on the age, sex, and
discharge status of the patient. The diagnosis and procedure
information is reported by the hospital using codes from the
International Classification of Diseases, Ninth Revision, Clinical
Modification (ICD-9-CM).
The process of forming the DRGs was begun by dividing all possible
principal diagnoses into mutually exclusive principal diagnosis areas,
referred to as Major Diagnostic Categories (MDCs). The MDCs were formed
by physician panels as the first step toward ensuring that the DRGs
would be clinically coherent. The diagnoses in each MDC correspond to a
single organ system or etiology and, in general, are associated with a
particular medical specialty. Thus, in order to maintain the
requirement of clinical coherence, no final DRG could contain patients
in different MDCs. Most MDCs are based on a particular organ system of
the body. For example, MDC 6 is Diseases and Disorders of the Digestive
System. This approach is used because clinical care is generally
organized in accordance with the organ system affected. However, some
MDCs are not constructed on this basis because they involve multiple
organ systems (for example, MDC 22 (Burns)). For FY 2007, cases are
assigned to one of 538 DRGs in 25 MDCs. The table below lists the 25
MDCs.
Major Diagnostic Categories (MDCs)
------------------------------------------------------------------------
------------------------------------------------------------------------
1................. Diseases and Disorders of the Nervous System.
2................. Diseases and Disorders of the Eye.
3................. Diseases and Disorders of the Ear, Nose, Mouth, and
Throat.
4................. Diseases and Disorders of the Respiratory System.
5................. Diseases and Disorders of the Circulatory System.
6................. Diseases and Disorders of the Digestive System.
7................. Diseases and Disorders of the Hepatobiliary System
and Pancreas.
8................. Diseases and Disorders of the Musculoskeletal System
and Connective Tissue.
9................. Diseases and Disorders of the Skin, Subcutaneous
Tissue and Breast.
10................ Endocrine, Nutritional and Metabolic Diseases and
Disorders.
11................ Diseases and Disorders of the Kidney and Urinary
Tract.
12................ Diseases and Disorders of the Male Reproductive
System.
13................ Diseases and Disorders of the Female Reproductive
System.
14................ Pregnancy, Childbirth, and the Puerperium.
15................ Newborns and Other Neonates with Conditions
Originating in the Perinatal Period.
16................ Diseases and Disorders of the Blood and Blood
Forming Organs and Immunological Disorders.
17................ Myeloproliferative Diseases and Disorders and Poorly
Differentiated Neoplasms.
18................ Infectious and Parasitic Diseases (Systemic or
Unspecified Sites).
19................ Mental Diseases and Disorders.
20................ Alcohol/Drug Use and Alcohol/Drug Induced Organic
Mental Disorders.
21................ Injuries, Poisonings, and Toxic Effects of Drugs.
22................ Burns.
23................ Factors Influencing Health Status and Other Contacts
with Health Services.
24................ Multiple Significant Trauma.
25................ Human Immunodeficiency Virus Infections.
------------------------------------------------------------------------
In general, cases are assigned to an MDC based on the patient's
principal diagnosis before assignment to a DRG. However, for FY 2007,
there are 9 DRGs to which cases are directly assigned on the basis of
ICD-9-CM procedure codes. These DRGs are for heart transplant or
implant of heart assist systems, liver and/or intestinal transplants,
bone marrow transplants, lung transplants, simultaneous pancreas/kidney
transplants, pancreas transplants, and
[[Page 24689]]
for tracheostomies. Cases are assigned to these DRGs before they are
classified to an MDC. The table below lists the nine current pre-MDCs.
Pre-Major Diagnostic Categories (Pre-MDCs)
------------------------------------------------------------------------
------------------------------------------------------------------------
DRG 103.............. Heart Transplant or Implant of Heart Assist
System.
DRG 480.............. Liver Transplant and/or Intestinal Transplant.
DRG 481.............. Bone Marrow Transplant.
DRG 482.............. Tracheostomy for Face, Mouth, and Neck Diagnoses.
DRG 495.............. Lung Transplant.
DRG 512.............. Simultaneous Pancreas/Kidney Transplant.
DRG 513.............. Pancreas Transplant.
DRG 541.............. ECMO or Tracheostomy with Mechanical Ventilation
96+ Hours or Principal Diagnosis Except for
Face, Mouth, and Neck Diagnosis with Major O.R.
DRG 542.............. Tracheostomy with Mechanical Ventilation 96+
Hours or Principal Diagnosis Except for Face,
Mouth, and Neck Diagnosis without Major O.R.
------------------------------------------------------------------------
Once the MDCs were defined, each MDC was evaluated to identify
those additional patient characteristics that would have a consistent
effect on the consumption of hospital resources. Because the presence
of a surgical procedure that required the use of the operating room
would have a significant effect on the type of hospital resources used
by a patient, most MDCs were initially divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age (0 to 17 years of age or greater than 17
years of age). Some surgical and medical DRGs are further
differentiated based on the presence or absence of a complication or
comorbidity (CC).
Generally, nonsurgical procedures and minor surgical procedures
that are not usually performed in an operating room are not treated as
O.R. procedures. However, there are a few non-O.R. procedures that do
affect DRG assignment for certain principal diagnoses. An example is
extracorporeal shock wave lithotripsy for patients with a principal
diagnosis of urinary stones.
Once the medical and surgical classes for an MDC were formed, each
diagnosis class was evaluated to determine if complications,
comorbidities, or the patient's age would consistently affect the
consumption of hospital resources. Physician panels classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial CC. A
substantial CC was defined as a condition which, because of its
presence with a specific principal diagnosis, would cause an increase
in the length of stay by at least one day in at least 75 percent of the
patients. Each medical and surgical class within an MDC was tested to
determine if the presence of any substantial CC would consistently
affect the consumption of hospital resources.
A patient's diagnosis, procedure, discharge status, and demographic
information is entered into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). The MCE screens are designed to identify cases that
require further review before classification into a DRG.
After patient information is screened through the MCE and any
further development of the claim is conducted, the cases are classified
into the appropriate DRG by the Medicare GROUPER software program. The
GROUPER program was developed as a means of classifying each case into
a DRG on the basis of the diagnosis and procedure codes and, for a
limited number of DRGs, demographic information (that is, sex, age, and
discharge status).
After cases are screened through the MCE and assigned to a DRG by
the GROUPER, the PRICER software calculates a base DRG payment. The
PRICER calculates the payment for each case covered by the IPPS based
on the DRG relative weight and additional factors associated with each
hospital, such as IME and DSH adjustments. These additional factors
increase the payment amount to hospitals above the base DRG payment.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights. However, in the FY 2000
IPPS final rule (64 FR 41500), we discussed a process for considering
non-MedPAR data in the recalibration process. In order for us to
consider using particular non-MedPAR data, we must have sufficient time
to evaluate and test the data. The time necessary to do so depends upon
the nature and quality of the non-MedPAR data submitted. Generally,
however, a significant sample of the non-MedPAR data should be
submitted by mid-October for consideration in conjunction with the next
year's proposed rule. This date allows us time to test the data and
make a preliminary assessment as to the feasibility of using the data.
Subsequently, a complete database should be submitted by early December
for consideration in conjunction with the next year's proposed rule.
In this IPPS proposed rule for FY 2008, we are proposing to adopt
significant changes to the current DRGs. As described in detail below,
we are proposing significant improvement in the DRG system to recognize
severity of illness and resource usage by proposing to adopt Medicare
Severity DRGs (MS-DRGs). The changes we are proposing in this proposed
rule would be reflected in the FY 2008 GROUPER, Version 25.0, and would
be effective for discharges occurring on or after October 1, 2007.
Unless otherwise noted in this proposed rule, our DRG analysis is based
on data from the December 2006 update of the FY 2006 MedPAR file, which
contains hospital bills received through December 31, 2006, for
discharges occurring in FY 2006.
2. Yearly Review for Making DRG Changes
Many of the changes to the DRG classifications we make annually are
the result of specific issues brought to our attention by interested
parties. We encourage individuals with concerns about DRG
classifications to bring those concerns to our attention in a timely
manner so they can be carefully considered for possible inclusion in
the annual proposed rule and, if included, may be subjected to public
review and comment. Therefore, similar to the timetable for interested
parties to submit non-MedPAR data for consideration in
[[Page 24690]]
the DRG recalibration process, concerns about DRG classification issues
should be brought to our attention no later than early December in
order to be considered and possibly included in the next annual
proposed rule updating the IPPS.
The actual process of forming the DRGs was, and will likely
continue to be, highly iterative, involving a combination of
statistical results from test data combined with clinical judgment. We
describe in detail below the process we used to develop the proposed
MS-DRGs. In addition, in deciding whether to make further modification
to the proposed MS-DRGs for particular circumstances brought to our
attention, we would consider whether the resource consumption and
clinical characteristics of the patients with a given set of conditions
are significantly different than the remaining patients in the proposed
MS-DRG. We would evaluate patient care costs using average charges and
lengths of stay as proxies for costs and rely on the judgment of our
medical officers to decide whether patients are clinically distinct or
similar to other patients in the MS-DRG. In evaluating resource costs,
we would consider both the absolute and percentage differences in
average charges between the cases we would select for review and the
remainder of cases in the MS-DRG. We also would consider variation in
charges within these groups; that is, whether observed average
differences were consistent across patients or attributable to cases
that were extreme in terms of charges or length of stay, or both.
Further, we also would consider the number of patients who will have a
given set of characteristics and generally would prefer not to create a
new DRG unless it would include a substantial number of cases.
C. MedPAC Recommendations for Revisions to the IPPS DRG System
In the FY 2006 and FY 2007 IPPS final rules, we discussed a number
of recommendations made by MedPAC regarding revisions to the DRG system
used under the IPPS (70 FR 47473 through 47482 and 71 FR 47881 through
47939).
In Recommendations 1-3 in the 2005 Report to Congress on Physician-
Owned Specialty Hospitals, MedPAC recommended that CMS:
Refine the current DRGs to more fully capture differences
in severity of illness among patients.
Base the DRG relative weights on the estimated cost of
providing care.
Base the weights on the national average of the hospital-
specific relative values (HSRVs) for each DRG (using hospital-specific
costs to derive the HSRVs).
Adjust the DRG relative weights to account for differences
in the prevalence of high-cost outlier cases.
Implement the case-mix measurement and outlier policies
over a transitional period.
As we noted in the FY 2006 IPPS final rule, we had insufficient
time to complete a thorough evaluation of these recommendations for
full implementation in FY 2006. However, we did adopt severity-weighted
cardiac DRGs in FY 2006 to address public comments on this issue and
the specific concerns of MedPAC regarding cardiac surgery DRGs. We also
indicated that we planned to further consider all of MedPAC's
recommendations and thoroughly analyze options and their impacts on the
various types of hospitals in the FY 2007 IPPS proposed rule.
For FY 2007, we began this process. In the FY 2007 IPPS proposed
rule, we proposed to adopt Consolidated Severity DRGs (CS DRGs) for FY
2008 (if not earlier). However, based on public comments received on
the FY 2007 IPPS proposed rule, we decided not to adopt the CS DRGs.
Rather, we decided to make interim changes to the existing DRGs for FY
2007 by creating 20 new DRGs involving 13 different clinical areas that
would significantly improve the CMS DRG system's recognition of
severity of illness. We also modified 32 DRGs to better capture
differences in severity. The new and revised DRGs were selected from 40
existing CMS DRGs that contain 1,666,476 cases and represent a number
of body systems. In creating these 20 new DRGs, we deleted 8 and
modified 32 existing DRGs. We indicated that these interim steps for FY
2007 were being taken as a prelude to more comprehensive changes to
better account for severity in the DRG system by FY 2008. In the FY
2007 IPPS final rule, we indicated our intent to pursue further DRG
reform through two initiatives. First, we announced that we were in the
process of engaging a contractor to assist us with evaluating
alternative DRG systems that were raised as potential alternatives to
the CS DRGs in the public comments. Second, we indicated our intent to
review over 13,000 ICD-9-CM diagnosis codes as part of making further
refinements to the current CMS DRGs to better recognize severity of
illness based on the work that CMS (then HCFA) did in the mid-1990's to
adopt severity DRGs. We describe in detail below the progress we have
made on these two initiatives, our proposed actions for FY 2008, and
our plans for continued analysis of reform of the DRG system for FY
2009. We note that revising the DRGs to better recognize severity of
illness has implications for the outlier threshold, the application of
the postacute care transfer policy, the measurement of real case-mix
versus apparent case-mix, and the IME and the DSH adjustments. We
discuss these implications in more detail in the following sections.
In the FY 2007 IPPS proposed rule, we discussed MedPAC's
recommendations to move to a cost-based HSRV weighting methodology
beginning with the FY 2007 IPPS proposed rule. Although we proposed to
adopt HSRV weights for FY 2007, we decided not to adopt the proposed
methodology in the final rule after considering the public comments.
Instead, in the FY 2007 IPPS final rule, we adopted a cost-based
weighting methodology without the hospital-specific portion of the
methodology. The cost weights are being adopted over a 3-year
transition period in 1/3 increments between FY 2007 and FY 2009. In
addition, in the FY 2007 IPPS final rule, we indicated our intent to
further study the hospital-specific methodology as well as other issues
brought to our attention with respect to the cost weights. There was
significant concern in the public comments that we account for charge
compression or the practice of applying a higher charge markup over
costs to lower cost than higher cost items and services, if we are to
develop relative weights based on cost. Further, public commenters
expressed concern about potential inconsistencies between how costs and
charges are reported on the Medicare cost reports and charges on the
Medicare claims. In the FY 2007 IPPS final rule, we used costs and
charges from the cost report to determine departmental level cost-to-
charge ratios (CCRs) to apply to charges on the Medicare claims to
determine the cost weights. The commenters were concerned about
potential distortions to the cost weights that would result from
inconsistent reporting between the cost reports and the Medicare
claims. After publication of the FY 2007 IPPS final rule, we entered
into a contract with RTI International to study both charge compression
and to what extent our methodology for calculating DRG relative weights
is affected by inconsistencies between how hospitals report costs and
charges on the cost report and how hospitals report charges on
individual claims. Further, as part of its study of alternative DRG
systems, the
[[Page 24691]]
RAND Corporation is analyzing the HSRV cost-weighting methodology.
As we present below, we believe that revisions to the DRG system to
better recognize severity of illness and changes to the relative
weights based on costs rather than charges are improving the accuracy
of the payment rates in the IPPS. We agree with MedPAC that these
refinements should be pursued. Although we continue to caution that any
system that groups cases will always present some opportunities for
providers to specialize in cases they believe to have higher margins,
we believe that the changes we have adopted and the continuing reforms
we are proposing to adopt for FY 2008 will improve payment accuracy and
reduce financial incentives to create specialty hospitals.
D. Refinement of DRGs Based on Severity of Illness
(If you choose to comment on issues in this section, please include
the caption ``DRG Reform and Proposed MS-DRGs'' at the beginning of
your comment.)
For purposes of the following discussions, the term ``CMS DRGs''
means the DRG system we currently use under the IPPS; the term
``Medicare-Severity DRGs (MS-DRGs)'' means the revisions that we are
proposing to make to the current CMS DRGs to better recognize severity
of illness and resource use based on case complexity. Although we have
found the terms ``CMS DRGs'' and ``MS-DRGs'' useful to distinguish the
current DRG system from the DRGs that we are proposing to adopt for FY
2008, we are interested in public comments on how to best refer to both
the current DRGs and the proposed DRGs to avoid confusion and improve
clarity.
1. Evaluation of Alternative Severity-Adjusted DRG Systems
In the FY 2007 IPPS final rule, we stated our intent to engage a
contractor to assist us with an evaluation of alternative DRG systems
that may better recognize severity than the current CMS DRGs. We noted
it was possible that some of the alternative systems would better
recognize severity of illness and are based on the current CMS DRGs. We
further stated that if we were to develop a clinical severity concept
using the current CMS DRGs as the starting point, it was possible that
several of the issues raised by commenters (in response to the CS DRGs,
which, in the FY 2007 IPPS proposed rule, we proposed to adopt for FY
2008 or earlier) would no longer be a concern. We noted that if we were
to propose adoption of severity DRGs for FY 2008, we would consider the
issues raised by commenters on last year's proposed rule as we
continued to make further refinements to account for complexity as well
as severity to better reflect relative resource use. We stated that we
believed it was likely that at least one of several alternative
severity-adjusted DRG systems suggested for review (or potentially a
system we would develop ourselves) would be suitable to achieve our
goal of improving payment accuracy beginning in FY 2008.
On September 1, 2006, we awarded a contract to the RAND Corporation
to perform an evaluation of alternative severity-adjusted DRG
classification systems. RAND is evaluating several alternative DRG
systems based on how well they are suited to classifying and making
payments for inpatient hospital services provided to Medicare patients.
Each system is being assessed on its ability to differentiate among
severity of illness. A final report is due on or before September 1,
2007.
RAND's draft interim report focused on the following criteria:
Severity-adjusted DRG classification systems: --How well
does each classification system explain variation in resource use? --
How would the classification system affect a hospital's patient mix? --
Are the groupings manageable, administratively feasible and
understandable?
Payment accuracy--What are the payment implications of
selected models?
In response to our request, several vendors of DRG systems
submitted their products for evaluation. The following products are
currently being evaluated by RAND:
3M/Health Information Systems (HIS)
CMS DRGs modified for AP-DRG Logic (CMS + AP-DRGs)
Consolidated Severity-Adjusted DRGs (CS DRGs)
Health Systems Consultants (HSC)
Refined DRGs (HSC-DRGs)
HSS/Ingenix
All-Payer Severity DRGs with Medicare modifications (MM-
APS-DRGs)
Solucient
Solucient Refined DRGs (Sol-DRGs)
Vendors submitted their commercial (off-the-shelf) software to RAND
in late September 2006. The five systems were compared to the CMS DRGs
that were in effect as of October 1, 2006 (FY 2007). RAND assigned FY
2004 and FY 2005 Medicare discharges from acute care hospitals to the
FY 2007 CMS DRGs and to each of the alternative severity-adjusted DRG
systems. RAND's initial analysis provided an overview of each
alternative DRG classification system, their comparative performance in
explaining variation in resource use, differences in DRG grouping
logic, and case-mix change.
A Technical Expert Panel comprised of individuals representing
academic institutions, hospital associations, and MedPAC was formed in
October 2006. The members received the preliminary draft report of
RAND's alternative severity-adjusted DRG systems evaluation in early
January 2007. The panel met with RAND and CMS on January 18, 2007, to
discuss the preliminary draft report and to provide additional
comments. RAND incorporated items raised by the panel into its
preliminary draft report and submitted a revised interim report to CMS
in mid-March 2007. CMS posted RAND's interim report on the CMS Web site
in late March 2007. Interested individuals can view RAND's interim
report on the CMS Web site at: http://www.cms.hhs.gov/Reports/downloads/Wynn0307.pdf
.
At this time, RAND has not completed its final evaluation. RAND's
interim report reflects its preliminary evaluation of the alternative
DRG systems using the criteria described above. In the project's second
phase, RAND will continue to evaluate alternative DRG systems as well
as to compare performance using HSRVs. As RAND has not completed its
evaluation of alternative DRG systems, we are not ready at this time to
propose use of one of the alternative DRG systems being evaluated for
Medicare in FY 2008. Further, even if RAND had completed its
evaluation, we would need to explore whether any transition issues
would need to be resolved before we are ready to propose adopting an
alternative DRG system. Among other issues, we would need to evaluate
the legal and contractual issues associated with adopting a proprietary
DRG product. Although vendors for four of the five systems have
indicated a willingness to make their products available in the public
domain, we believe it is likely there would need to be some discussion
as to whether there would be any limitations (such as the source code
as well as the DRG logic) on the availability of the DRG systems to
hospitals or competing vendors. Further, we would need to resolve
contractual issues for updates and maintenance of an alternative DRG
system and consider how they interact with our current ongoing contract
to maintain the CMS DRGs. There may be further system conversion issues
that we have not yet considered. The RAND
[[Page 24692]]
contract will be complete by September 1, 2007. Once RAND completes its
work, we believe we will be in a better position to evaluate whether it
would be appropriate to propose to adopt one of the five alternative
DRG systems for purposes of the IPPS.
As discussed later in this proposed rule, we are proposing to adopt
MS-DRGs beginning with FY 2008. The MS-DRGs are the result of
modifications to the CMS DRGs to better account for severity. While we
are proposing to implement the MS-DRGs on October 1, 2007, we believe
the MS-DRGs should be evaluated by RAND. We have instructed RAND to
evaluate the proposed MS-DRGs using the same criteria that it is
applying to the other DRG systems. As described below, we believe the
proposed MS-DRGs represent a substantial improvement in the recognition
of severity of illness and resource consumption. For this reason, we
are proposing to adopt MS-DRGs for FY 2008.
As stated earlier, a final report is expected from RAND by
September 1, 2007. This report will include further analysis of the
five alternative DRG systems and the additional evaluation of the MS-
DRGs. We look forward to reviewing RAND's final report that will
provide a comprehensive evaluation of each severity DRG system that has
been examined. We anticipate that after this process is completed, we
will have the necessary information to decide our next steps in the
reform of the IPPS. Meanwhile, we are proposing to adopt the MS-DRGs
for FY 2008 and are providing the following update on RAND's progress
in evaluating alternative DRG systems.
We invite public comment regarding RAND's preliminary analysis of
each vendor-supplied alternative severity-adjusted DRG system described
below.
a. Overview of Alternative DRG Classification Systems
Analysis of how each of the five severity-adjusted DRG systems
performs began by using the current CMS DRGs as a baseline. Two of the
five systems (CS DRGs and MM-APS-DRGs) are derivatives of all-patient
severity-adjusted DRG systems that have been modified by their
developers for the Medicare population and two of the systems (HSC-DRGs
and Sol-DRGs) are all-patient systems that incorporate severity levels
into the CMS DRGs. The CMS-AP-DRGs are a combination of CMS DRGs and a
modification for the Medicare population of the major CC severity
groupings used in the AP-DRG system. (The AP-DRG system was developed
by 3M/HIS specifically for the State of New York to capture the non-
Medicare population.)
Table A below shows how each of the five alternative severity-
adjusted systems classifies patients into base DRGs and their
corresponding severity levels.
Table A.--Logic of CMS and Alternative DRG Systems
--------------------------------------------------------------------------------------------------------------------------------------------------------
Classification element CMS DRG CMS+AP-DRG HSC-DRG Sol--DRG MM-APS-DRG Con-APR-DRG
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of MDCs.................. 25................ 25................ 25................ 25................ 25................ 25
Number of Pre-MDC base DRGs..... 9................. 9................. 9................. 9................. 9................. 7
Number of base DRGs............. 379............... 379............... 215 ADRGs......... 248 ADRGs......... 361............... 379
Total number of Pre-MDC DRGs.... 9................. 9................. 30................ 27................ 27................ 9
Total number of DRGs............ 538............... 602............... 1,274............. 1,261............. 915............... 859
Number of CC (severity) 2................. 3................. 3 (medical) or 4 3 (medical) or 4 3................. 4
subclasses. (surgical). (surgical).
CC subclasses................... With CC without CC Without CC With CC No CC, Class C CC, Minor/no Without CC, with Minor, moderate,
for selected base for selected base Class B CC, Class substantial CCs, CC with MCC with major, severe
DRGs. DRGs and With MCC A CC (surgical moderate CCs, some collapsing with some
across DRGs only). MCCs, at base DRG level. collapsing at DRG
within MDC. catastrophic CCs level.
(surgical only).
Multiple CCs recognized......... No................ No................ No................ No................ Yes (in Yes.
computation of
weights.
CC assignment specific to base Mostly no......... Mostly no......... Mostly no......... Mostly no......... No................ Yes.
DRG.
Logic of CC subdivision......... Presence/absence.. Presence/absence.. Presence/absence.. Presence/absence.. Presence/absence.. 18-step process.
Logic of MDC assignment......... Principal Principal Principal Principal Principal Principal
diagnosis. diagnosis. diagnosis. diagnosis. diagnosis. diagnosis with
rerouting.
Death used in DRG assignment.... Yes (in selected Yes (in selected Yes (includes Yes (includes Yes (in selected No.
DRGs). DRGs). ``early death'' ``early death'' DRGs).
DRGs). DRGs).
Complications of care are CCs... Yes............... Yes............... Yes............... Yes............... Yes, when Few.
recognized as a
CC No, when CC
represents ``poor
medical care''.
--------------------------------------------------------------------------------------------------------------------------------------------------------
RAND's preliminary evaluation of the logic for each system
demonstrated the following:
Four systems add severity levels to the base CMS DRGs; the
CS DRGs add severity levels to base APR-DRGs, which are comparable but
not identical to the base CMS DRGs. Both the CS DRGs and MM-APS-DRGs
collapse some base DRGs with low Medicare volume.
[[Page 24693]]
The HSC-DRGs and the Sol-DRGs use uniform severity levels
for each base DRG (three for medical and four for surgical). The
general structure of the MM-APS-DRG logic includes three severity
levels for each base DRG, but some severity levels for the same base
DRG are consolidated to address Medicare low-volume DRGs and
monotonicity issues. Monotonicity is when the average costs for a
severity group consistently rise as the severity level of the group
increases. For example, in a monotonic system, if within a base DRG
there are three severity groups and level 1 severity is less than level
2 severity and level 2 severity is less than level 3 severity, the
average costs for a level 3 case would be greater than the average
costs for a level 2 case, which would be greater than the average costs
for a level 1 case. The general structure of the CS DRGs includes four
severity levels for each base DRG. However, severity level
consolidations occur to address Medicare low-volume DRGs and
monotonicity. The CS DRGs consolidate both adjacent severity levels for
the same base DRG and the same severity level across multiple base DRGs
(especially for severity level 4).
Under the CMS+AP-DRGs and MM-APS-DRGs, each diagnosis is
assigned a uniform CC-severity level across all base DRGs (other than
CCs on the exclusion list for specific principal diagnoses). The
remaining systems assign diagnoses to CC-severity level classifications
by groups of DRGs.
Under the grouping logic used by all systems other than
the CS DRGs, each discharge is assigned to the highest severity level
of any secondary diagnosis. The CS DRGs adjust the initial severity
level assignment based on other factors, including the presence of
additional CCs. None of the other systems adjust the severity level
classification for additional factors or CCs. However, the MM-APS-DRG
system handles additional CCs through an enhanced relative weight.
The HSC-DRGs and the Sol-DRGs have a medical ``early
death'' DRG within each MDC.
The CS DRGs do not use death in the grouping logic. In
addition, most complications of care do not affect the DRG assignment.
b. Comparative Performance in Explaining Variation in Resource Use
In evaluating the comparative performance of each alternative DRG
system, RAND used MedPAR data from FY 2004 and FY 2005. RAND excluded
data from CAHs, Indian Health Service (IHS) hospitals, and hospitals
that have all-inclusive rate charging practices. Consistent with CMS
practice, RAND did not exclude data from Maryland hospitals, which
operate under an IPPS waiver. Records that failed edits for data
consistency or that had missing variables that were needed to determine
standardized costs were also excluded.
RAND reported that evaluation of each alternative severity-adjusted
DRG system is a complex process due to differences in how each of the
severity levels are applied, the number of severity-adjusted DRGs in
each system, and the average number of discharges assigned to each DRG.
In addition, the manner in which the DRGs for patients 0-17 years of
age are assigned in the severity-adjusted systems affects the number of
low-volume DRGs using Medicare discharges.
Low-volume, severity-adjusted DRGs can affect the relative
performance of a classification system. However, the percentage of
Medicare discharges assigned to these DRGs is small--approximately 0.7
percent in the HSC-DRG and Sol-DRG systems compared to 0.1 percent in
the CMS DRGs.
In determining how much within-DRG variation exists for each
alternative severity-adjusted DRG system, RAND calculated the mean
standardized cost, standard deviation, and coefficient of variation for
each DRG among the systems. The coefficient of variation (CV) is the
standard deviation divided by the mean. The CV allowed RAND to compare
the variation of populations that contain significantly different mean
values. Preliminary results of the comparison demonstrate that all five
severity-adjusted systems reduce the amount of variation within DRGs.
The HSC-DRGs and Sol-DRGs have a slightly higher proportion of patients
assigned to DRGs with a CV< 76 percent but also have a higher proportion
of patients assigned to DRGs with a CV>=100 percent. The CS DRGs had a
slightly lower percentage of patients assigned to DRGs with a CV< 76
percent than the other severity-adjusted systems. The MM-APS-DRGs, CS
DRGs, and CMS+AP-DRGs all have fewer than 2 percent of patients
assigned to DRGs with a CV>=100 percent.
RAND utilized a general linear regression model to evaluate how
well each severity-adjusted DRG system explains variation in costs per
case. The initial results demonstrate that all five severity-adjusted
DRG systems predict cost better than the CMS DRGs. The CS DRGs have
higher adjusted R\2\ values (explanatory power) than the other
severity-adjusted systems in nearly every MDC. In general, the adjusted
R\2\ value for the CS DRGs is 0.4458, a 13-percent improvement over the
adjusted R\2\ value for the CMS DRGs. The HSC-DRGs demonstrate an 11-
percent improvement, while the adjusted R\2\ values for the MM-APS-DRGs
and Sol-DRGs are 10.0 percent and 9.7 percent higher respectively, than
the CMS DRG R\2\ value. The CMS+AP-DRGs show the smallest improvement,
nearly 8 percent.
Another aspect of RAND's evaluation was to identify the validity of
each alternative DRG system as a measurement for resource costs. For a
base DRG, the severity levels should be monotonic; that is, the mean
cost per discharge should increase simultaneously with an increase in
the severity level. A distinction between patient groups and varying
treatment costs should be accomplished by the severity levels. RAND
studied the percentage differences and absolute differences in cost
between the severity levels within the base DRGs for each system under
evaluation. For the two systems (CMS+AP-DRGs and CS DRGs) that include
several base DRGs, RAND assigned those discharges to the lower severity
level base DRG. Following that methodology, RAND was able to calculate
how much more costly the discharges assigned to the consolidated or
lower severity levels were than the discharges in the base DRG assigned
to the next higher severity level. Preliminary results demonstrate
that, overall, monotonicity is not a factor across the alternative DRG
systems. There are only a small percentage of discharges that are
assigned to nonmonotonic DRGs. When a DRG is nonmonotonic, the mean
cost in the higher severity level is less than the mean cost in the
lower severity level.
Using the data from severity of illness levels 1 through 3 (except
for the MM-APS-DRGs, which do not have a severity of illness level 3),
RAND calculated the discharge-weighted mean cost difference between
severity levels and the mean ratio of the cost per discharge for the
higher severity level to the adjacent lower severity level. The
greatest cost discrimination was present in the higher severity levels
versus the lower severity levels across all the systems. The mean cost
difference between severity of illness level 1 and severity of illness
level 0 was reported to be less than $2,000 for all the severity-
adjusted systems. The CMS+AP DRGs have the least amount of cost
discrimination between severity levels ($2,117), while the MM-APS-DRG
system has the highest mean cost difference ($2,385). The remaining
systems demonstrated equivalent percentage cost differences between the
[[Page 24694]]
severity levels as shown in Table B below.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP03MY07.000
BILLING CODE 4120-01-C
In examining whether each of the alternative DRG systems provided
stability in the relative weights from year to year, RAND compared the
relative weights derived from the MedPAR data in FY 2004 to the
relative weights data from FY 2005. RAND's preliminary results
demonstrate that generally, across all the systems, only a small
percentage of DRGs had greater than a 5 percent change in relative
weights. The HSC-DRGs and Sol-DRGs had a higher proportion of DRGs with
a greater than 5 percent change in relative weights than the other
systems. Fewer than 10 percent of the DRGs in the remaining systems had
relative weight changes greater than 10 percent. In addition to
differences in the number of DRGs and the methodology of assigning the
severity levels, RAND noted additional factors that may affect the
comparative performance of each alternative severity-adjusted DRG
system. For further details and discussion, we encourage readers to
view RAND's full interim report on the CMS Web site at: http://www.cms.hhs.gov/Reports/downloads/Wynn0307.pdf
.
c. Payment Accuracy and Case-Mix Impact
Similar to how CMS established the relative weights in the FY 2007
IPPS final rule, RAND used standardized costs as determined by the
national CCR and the FY 2005 MedPAR data to construct relative weights
for each of the DRG systems being evaluated. RAND analyzed the effect
of variations in the
[[Page 24695]]
explanatory power on the distribution of Medicare payments for each
system under evaluation. The preliminary findings indicate payment
accuracy is improved by each severity-adjusted system by redistributing
payment from lower-cost discharges to higher-cost discharges. However,
the total payment redistribution across systems differs and reflects
the payment impact of improved explanatory power. Although these
findings are estimates, the percent of total payment redistributed was
the least under the CMS+AP-DRGs (7.1 percent) and the most under the CS
DRGs (11.9 percent).
Table C shows changes in case-mix index (CMI) by hospital category
across alternative severity-adjusted DRG systems. Preliminary results
demonstrate that under the severity-adjusted systems, urban hospitals
have a higher average CMI than under the CMS DRGs, and rural hospitals
have a lower CMI. The analysis suggests that any system adopted to
better recognize severity of illness with a budget neutrality
constraint will result in payment redistribution that can be expected
to benefit urban hospitals at the expense of rural hospitals. This
impact occurs because patients treated in urban hospitals are generally
more severely ill than patients in rural hospitals and the CMS DRGs are
not currently recognizing the full extent of these differences. For
purposes of the study, RAND assumed no behavioral changes in coding
practice or the types of patients treated.
The shift in case-mix (CMI) is greatest with the CS DRGs. The CMI
for rural hospitals is 2.4 percent lower than under the CMS DRGs. The
CMI for large urban (hospitals located in CBSAs with greater than 1
million population) and other urban hospitals is 0.6 percent and 0.1
percent higher, respectively, for the CS DRGs. The CMI generally
increases for larger hospitals and decreases for smaller hospitals.
Under the CMS+AP-DRG, HSC-DRG, and Sol-DRG systems, greater than 70
percent of hospitals would experience less than a 2.5 percent change in
their CMI. Under the MM-APS-DRG and Con-APR-DRG systems, 65 and 45
percent of hospitals, respectively, would experience less than a 2.5
percent change. The percentage of hospitals experiencing less than a 5
percent change is significant across all of the CMS-based DRG systems.
Teaching hospitals commonly treat a higher number of complex cases.
However, depending on the severity-adjusted DRG system being analyzed,
the impact will vary. In the CMS+AP-DRG, HSC-DRG, and MM-APS-DRG
systems, facilities with large teaching programs (100 or more
residents) demonstrated a larger increase than those facilities with
smaller teaching programs. Under the Sol-DRG system, facilities with
large teaching programs would experience a 0.1 percent increase, while
facilities with the smaller teaching programs would experience a 0.2
percent increase. The CS DRGs showed similar results for hospitals with
large teaching programs, but hospitals with the smaller teaching
programs would experience an increase of 0.7 percent, relative to the
CMS DRGs. RAND found that CMI would decline for nonteaching hospitals
from severity adjusted DRGs, from a 0.2 percent decrease under the HSC-
DRGs and Sol-DRGs compared to a 0.5 percent decrease under the CS DRGs.
Table C.--CMI Change in Alternative DRG Systems Relative to the CMS DRG CMI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percentage change from CMS-DRG-CMI
N N CMS DRG ---------------------------------------------------------
hospitals discharges CMI CMS + AP-
DRG HSC-DRG Sol-DRG MM-APS-DRG Con-APR-DRG
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL...................................................... 3,890 12,165,763 1.00 0.0 0.0 0.0 0.0 0.0
By Geographic Location:
Large urban areas (pop>1 million).................... 1,485 5,715,356 1.02 0.5 0.4 0.3 0.6 0.6
Other urban areas (pop< 1 million).................... 1,186 4,578,447 1.04 -0.2 -0.2 -0.1 -0.2 0.1
Rural hospitals...................................... 1,219 1,871,960 0.84 -1.3 -0.9 -1.0 -1.4 -2.4
Bed Size (Urban):
0-99 beds............................................ 685 611,139 0.91 -1.0 -1.1 -1.1 -1.3 -1.6
100-199 beds......................................... 875 2,346,922 0.93 0.0 0.1 0.0 0.1 0.0
200-299 beds......................................... 511 2,446,737 1.00 0.1 0.2 0.3 0.3 0.6
300-499 beds......................................... 433 2,965,216 1.08 0.3 0.3 0.3 0.4 0.8
500 or more beds..................................... 167 1,923,789 1.17 0.6 0.3 0.2 0.4 0.4
Bed Size (Rural):
0-49 beds............................................ 543 330,242 0.73 -2.5 -2.1 -2.2 -2.7 -5.0
50-99 beds........................................... 398 595,599 0.80 -1.4 -1.0 -1.1 -1.6 -2.7
100-149 beds......................................... 160 415,367 0.85 -1.1 -0.7 -0.8 -1.2 -2.0
150-199 beds......................................... 69 260,910 0.91 -0.8 -0.6 -0.7 -0.8 -1.5
200 or more beds..................................... 49 269,842 0.99 -0.6 -0.1 -0.1 -0.6 -0.5
Urban by Region:
New England.......................................... 129 541,471 0.99 0.1 -0.2 -0.5 -0.5 -0.6
Middle Atlantic...................................... 370 1,621,488 1.00 0.0 -0.4 -0.5 -0.3 -1.5
South Atlantic....................................... 432 2,208,336 1.04 0.5 0.7 0.7 0.7 1.4
East North Central................................... 410 1,856,164 1.03 0.6 0.7 0.6 0.8 1.5
East South Central................................... 168 696,943 1.06 -0.2 -0.2 -0.2 -0.2 -0.3
West North Central................................... 164 657,322 1.08 -0.3 -0.3 0.0 -0.3 0.3
West South Central................................... 369 1,115,411 1.05 0.1 0.0 0.1 0.3 0.5
Mountain............................................. 153 465,093 1.08 0.4 0.2 0.5 0.4 1.0
Pacific.............................................. 423 1,016,135 1.03 0.0 -0.2 -0.1 -0.1 0.2
Puerto Rico.......................................... 53 115,440 0.87 -1.1 -1.4 -0.1 -1.2 -5.1
Rural by Region:
New England.......................................... 34 49,842 0.90 -0.6 -0.6 -0.5 -1.1 -0.6
Middle Atlantic...................................... 68 139,639 0.85 -1.1 -0.7 -0.7 -1.3 -1.5
South Atlantic....................................... 191 409,116 0.82 -0.8 -0.4 -0.5 -0.9 -1.8
East North Central................................... 163 290,069 0.87 -1.1 -0.7 -0.9 -1.3 -1.8
East South Central................................... 201 328,326 0.82 -1.5 -0.9 -1.1 -1.4 -3.2
[[Page 24696]]
West North Central................................... 184 240,449 0.87 -1.6 -1.2 -1.1 -1.8 -2.5
West South Central................................... 227 266,419 0.80 -2.1 -1.8 -1.9 -2.0 -4.3
Mountain............................................. 91 80,219 0.85 -1.2 -1.0 -0.4 -1.3 -1.2
Pacific.............................................. 60 67,881 0.86 -0.9 -1.0 -1.1 -1.4 -1.6
Teaching Status:
Non-teaching......................................... 2,791 6,115,193 0.92 -0.4 -0.2 -0.2 -0.4 -0.5
Fewer than 100 Residents............................. 853 4,061,451 1.04 0.1 0.2 0.2 0.2 0.7
100 or more Residents................................ 246 1,989,119 1.16 0.8 0.3 0.1 0.5 0.0
Urban DSH:
Non-DSH.............................................. 778 2,574,640 1.02 -0.1 0.0 0.1 -0.2 0.5
100 or more beds..................................... 1,541 7,378,095 1.05 0.3 0.2 0.2 0.4 0.4
Less than 100 beds................................... 352 341,068 0.82 -0.9 -0.8 -1.0 -1.1 -2.0
Rural DSH:
Non-DSH.............................................. 238 300,747 0.87 -1.4 -1.0 -0.9 -1.7 -1.9
SCH.................................................. 402 599,823 0.83 -1.3 -1.0 -1.0 -1.4 -2.4
RRC.................................................. 132 466,395 0.92 -0.8 -0.3 -0.5 -0.7 -1.4
Other Rural:
100 or more beds..................................... 60 135,146 0.80 -0.9 -0.8 -1.2 -1.3 -2.0
Less than 100 beds................................... 387 369,849 0.74 -2.1 -1.6 -1.7 -2.2 -4.3
Urban teaching and DSH:
Both teaching and DSH................................ 829 4,705,476 1.09 0.5 0.3 0.3 0.5 0.5
Teaching and no DSH.................................. 204 1,108,092 1.06 0.0 0.1 0.0 -0.1 0.4
No teaching and DSH.................................. 1,064 3,013,687 0.95 -0.1 0.1 0.0 0.1 0.1
No teaching and no DSH............................... 574 1,466,548 1.00 -0.2 -0.1 0.1 -0.3 0.5
Rural Hospital Types:
RRC.................................................. 145 519,808 0.92 -0.8 -0.4 -0.5 -0.7 -1.4
SCH.................................................. 423 457,119 0.79 -1.6 -1.2 -1.2 -1.7 -3.0
MDH.................................................. 180 164,453 0.75 -2.1 -1.7 -1.7 -2.3 -4.1
SCH and RRC.......................................... 76 266,027 0.92 -0.9 -0.7 -0.7 -1.1 -1.3
MDH and RRC.......................................... 8 19,746 0.85 -1.4 -0.6 -0.8 -1.6 -1.9
Other Rural.......................................... 387 444,807 0.77 -1.6 -1.2 -1.4 -1.8 -3.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
RAND also noted that changes in coding patterns or behaviors could
improve payments with each severity adjusted DRG system. Increases in
CMI after adopting the system could be the result of improved coding
rather than increases in actual patient severity. Although the State of
Maryland's experience using the APR-DRG system is an indicator, coding
behaviors are expected to vary under alternative systems according to
RAND. Therefore, the risk of case-mix growth due to improved
documentation and coding exists with any system. However, RAND advises
that the amount of risk can be assessed based on the logic of the DRG
system and result in anticipated changes in coding behavior. RAND found
that the CMS+AP-DRG system may have the lowest risk of case-mix
increase, while the CS DRGs present the greatest risk. The remaining
systems under evaluation demonstrated equivalent risk, based on the DRG
logic and other features specific to each system.
In section II.D.2.c. of the preamble of this proposed rule, the CMI
impact under the proposed MS-DRGs using the State of Maryland's
experience and data is described in detail. RAND's final report will
include a comparison of the CMI impact under the proposed MS-DRG system
with the CMI impact of the other alternative severity-adjusted DRG
systems.
d. Other Issues for Consideration
RAND was asked to examine whether each of the alternative severity-
adjusted DRG systems under evaluation appear to contain logic that is
manageable, administratively feasible, and understandable. Although its
evaluation is not yet complete, RAND's preliminary results describe the
extent to which those features are present in the grouping logic of
each system. A brief summary of these findings and other discussion
points follow. For more complete details of the grouping logic for each
system evaluated, we encourage readers to review RAND's interim report
at the following Web site: http://www.cms.hhs.gov/Reports/downloads/Wynn0307.pdf
.
To increase and promote understanding of a DRG classification
system, the grouping logic should include a uniform structure. With the
exception of the CS DRGs, RAND found that there is uniformity in the
hierarchical structure for assigning discharges to MDCs, DRGs, and
severity levels for each system evaluated. The CS DRGs utilize a
complex rerouting logic and severity of illness level assignment.
However, the result is a higher explanatory power that accounts for
limitations in the current system. Therefore, due to the complexities
associated with that system, it may not easily be understood. However,
if the results yield clinically coherent groups of patients with
comparable costs, RAND concluded that the system may be worth exploring
further. The HSC-DRG and Sol-DRG grouping logic uses a standard number
of severity levels for each base DRG, although the result is an
increase in the number of low-volume DRGs. The standard severity level
structure provides increased understanding, although as mentioned
previously, low-volume, severity-adjusted DRGs can affect the relative
performance of a classification system. The MM-APS-DRGs and CS DRGs use
standard DRG severity levels. However, the method of collapsing DRGs
varies due to the modifications made for Medicare use. By only
collapsing DRGs to determine relative weights, RAND
[[Page 24697]]
notes it is possible to preserve the underlying DRG structure, which
perhaps would lead to a more understandable system.
As stated earlier, there are also several transition issues that
require attention when evaluating alternative severity-adjusted DRG
systems. In determining how manageable, administratively feasible, and
understandable the systems being evaluated are, consideration should be
given to how they crosswalk or map to the current CMS DRGs. Because
four of the systems under evaluation are based on the underlying CMS
DRG grouping logic to establish their base DRGs (CMS+AP-DRGs, HSC-DRGs,
Sol-DRGs, and MM-APS-DRGs), the CMS DRGs are able to crosswalk smoothly
to these severity-adjusted DRGs. Conversely, crosswalking in reverse or
backward mapping from the CMS+AP DRGs to the CMS DRGs is problematic
due to the discharges in one severity level of the CMS+AP-DRG system
compared to several base CMS DRGs. As expected, the CS DRGs do not
crosswalk easily to the CMS DRGs due to the complex grouping logic. The
MM-APS-DRGs pose unique complications as well due to the large number
(over 1,000) of DRGs.
System updates are another important factor that may have serious
implications. All of the DRG systems RAND evaluated were reported to
make annual updates to reflect ICD-9-CM coding changes. However, the CC
severity level assignments for each system have not routinely been
reviewed and revised. The review of the CC exclusion list and severity
level assignments should be reviewed where appropriate to reflect
current patterns of care, according to RAND.
Accessibility to each of the severity-adjusted DRG system's logic
and software is also a concern. Each system RAND analyzed is currently
maintained as a proprietary product. In general, all of the vendors
indicated a willingness to place their product in the public domain,
under certain terms. As such, we believe it is likely there would need
to be discussion as to whether there would be any limitations (such as
the source code as well as the DRG logic) on the availability of the
DRG systems to hospitals or competing vendors. The intent of each
vendor to provide public access to its grouper logic and software is
described in further detail in RAND's interim report.
The RAND contract will be complete by September 1, 2007. The final
report will include evaluation of the proposed MS-DRGs, with further
analysis of the five alternative severity-adjusted DRG classification
systems. RAND will also study various approaches to estimating costs
and developing relative weights, as well as the payment impacts of
alternative methodologies. Again, we invite public comment on RAND's
preliminary analysis of the alternative severity-adjusted DRG systems.
The interim report can be viewed on the CMS Web site at: http://www.cms.hhs.gov/Reports/downloads/Wynn0307.pdf
.
2. Development of Proposed Medicare Severity DRGs (MS-DRGs)
As discussed previously, we are committed to continuing our efforts
of making refinements to the current CMS DRGs to better recognize
severity of illness. In the FY 2007 final rule, we stated that we had
begun a comprehensive review of over 13,000 diagnosis codes to
determine which codes should be classified as CCs when present as a
secondary diagnosis. We stated that we would also build on the severity
DRG work we performed in the mid-1990's. We received a number of public
comments on last year's proposed rule that supported the refinement of
the current CMS DRGs so that they better capture severity.
We also committed to performing a more broad based analysis of the
entire DRG system to better recognize severity of illness. As a result
of this broad based analysis, we developed the proposed MS-DRGs. The
proposed MS-DRGs represent a comprehensive approach to applying a
severity of illness stratification for Medicare patients throughout the
DRGs. As discussed in section II.D.5. of the preamble of this proposed
rule, the proposed MS-DRGs maintain the significant advancements in
identifying medical technology made to the DRGs in past years. At the
same time, they greatly improve our ability to identify groups of
patients with varying levels of severity using secondary diagnoses.
Further, they improve our ability to assign patients to different DRG
severity levels based on resource use that is independent of the
patient's secondary diagnosis--referred to in this discussion as
``complexity.'' We are proposing to adopt the MS-DRGs for FY 2008 and
submit the system to RAND as part of its evaluation of alternative DRG
systems. We encourage comments on both our proposed methodology as well
as on the resulting proposed DRG structure.
a. Comprehensive Review of the CC List
Our efforts to better recognize severity of illness began with a
comprehensive review of the CC list. Currently, 115 DRGs are split
based on the presence or absence of a CC. For these DRGs, the presence
of a CC assigns the discharge to a higher weighted DRG. The list of
diagnoses designated as a CC was initially created at Yale University
in 1980-1981 as part of the project to develop an ICD-9-CM version of
the DRGs. The researchers at Yale University developed the ICD-9-CM
DRGs using national hospital data with diagnoses and procedures coded
in ICD-9-CM from the second half of 1979. Because hospitals only began
reporting ICD-9-CM codes in 1979, discharge abstracts at that time were
much less likely to fully report all secondary diagnoses. As a result,
the Yale University researchers developed a liberal definition of a CC
as any secondary diagnosis that ``would cause an increase in length of
stay by at least 1 day in at least 75 percent of the patients.''
Because of the likely underreporting of secondary diagnoses in the 1979
data, the Yale University researchers also used age as a surrogate for
identifying patients with a CC. The original version of the ICD-9-CM
DRGs assigned patients to a CC DRG if they had a secondary diagnosis on
the CC list or if the patient was 70 years or older.
With the implementation of the IPPS in FY 1984, the coding of
secondary diagnoses by hospitals dramatically improved. During the
first 4 years of the IPPS, the CC definition included the age 70
criterion. With the improved coding and reporting of diagnoses
associated with the implementation of the IPPS, the use of age as a
surrogate for CCs was no longer necessary. Thus, beginning in FY 1988,
the age 70 criterion was removed from the CC definition and a CC DRG
was defined exclusively by the presence of a secondary diagnosis on the
CC list.
Except for new diagnosis codes that were added to ICD-9-CM after FY
1984 (for example, HIV), the CC list of diagnoses currently used in the
CMS DRGs is virtually identical to the CC list created at Yale
University. However, there have been dramatic changes not only in the
accuracy and completeness of the coding of secondary diagnoses but also
in the characteristics of patients admitted to hospitals and the
practice patterns within hospitals as well.
Since the implementation of the IPPS, Medicare average length of
stay has dropped dramatically from 9.8 days in 1983 to 5.7 days in
2005. The economic incentives inherent in DRGs motivated a change in
practice patterns to discharge patients earlier from the hospital.
These changes were facilitated by the increased availability of
postacute care services, such as nursing homes and home health
services, which
[[Page 24698]]
allowed problems previously requiring continued hospitalization to be
effectively treated outside the acute care hospital. Furthermore, there
has also been a dramatic shift to outpatient surgery that avoids costly
inpatient stays. Many surgical procedures formerly performed in the
hospital are now routinely performed on an outpatient basis. As a
result, patients admitted to the hospital today are on average more
likely to have a CC than when the IPPS was implemented. The net effect
of better coding of secondary diagnoses, reductions in hospital length
of stay, increased availability of postacute care services, and the
shift to outpatient care is that most patients (nearly 80 percent)
admitted to a hospital now have a CC. As a result of the changes that
have occurred during the 22 years since the implementation of the IPPS,
the CC list as currently defined has lost much of its power to
discriminate hospital resource use.
Currently, 115 CMS DRGs have a CC subdivision. Up until FY 2002,
the number of DRGs with a CC subdivision remained essentially unchanged
from the original FY 1984 version of the DRGs. As a means of improving
the payment accuracy of the DRGs, beginning with the FY 2002 DRG
update, each base CMS DRG without a CC subdivision was evaluated to
determine if a CC subdivision was warranted. Over the past five DRG
updates, only seven base CMS DRGs have had a CC subdivision added. The
primary constraint preventing a significant increase in the number of
base CMS DRGs with a CC subdivision is the low number of patients that
would be assigned to the non-CC group. Thus, the expansion of the
number of CMS DRGs subdivided based on a CC is constrained because the
vast majority of patients would be assigned to the CC group and few
patients would be assigned to the non-CC group. To remedy these
problems, we reviewed each of the 13,549 secondary diagnosis codes to
evaluate their assignment as a CC or non-CC using statistical
information from the Medicare claims data and applying medical judgment
based on current clinical practice. We refer to this list in this
section as the ``revised CC list.''
The need for a revised CC list prompted a reexamination of the
secondary diagnoses that qualify as a CC. Our intent was to better
distinguish cases that are likely to result in increased hospital
resource use based on secondary diagnosis. Using a combination of
mathematical data and the judgment of our medical officers, we included
the condition on the CC list if it could demonstrate that its presence
would lead to substantially increased hospital resource use.
Diagnoses may require increased hospital resource use because of a
need for such services as:
Intensive monitoring (for example, an intensive care unit
(ICU) stay).
Expensive and technically complex services (for example,
heart transplant).
Extensive care requiring a greater number of caregivers
(for example, nursing care for a quadriplegic). There are 3,326
diagnosis codes on the current CC list. Our 2006 review of the CC list
reduced the number of diagnosis codes on the CC list to 2,583. Based on
the current CC list, 77.6 percent of patients have at least one CC
present. Based on the revised CC list from our 2007 review, the percent
of patients having at least one CC present would be reduced to 41.24
percent.
b. Chronic Diagnosis Codes
The 1979 data used in the original formation of the CC list often
did not have the manifestations of a chronic disease fully coded. As a
result, the CC list included many chronic diseases with a broad range
of manifestations. Such chronic illness diagnoses usually do not cause
a significant increase in hospital resource use unless there is an
acute exacerbation present or there is a significant deterioration in
the underlying chronic condition. Therefore, in the revised CC list, we
removed chronic diseases without a significant acute manifestation.
Recognition of the impact of the chronic disease is accomplished by
separately coding the acute manifestation. For example, the mitral
valve disease codes (codes 396.0 through 396.9) are assigned to the
current CC list. However, unless the mitral valve abnormalities are
associated with other diagnoses indicating acute deterioration, such as
acute congestive heart failure, acute pulmonary edema, or respiratory
failure, they would not be expected to significantly increase hospital
resource use. Therefore, the revised CC list did not include the mitral
valve codes. Recognition of the contribution of mitral valve disease to
the complexity of hospital care would be accomplished by separately
coding those diseases on the CC list that are associated with an acute
exacerbation or deterioration of the mitral valve disease.
The revised CC list applied the criterion that chronic diagnoses
having a broad range of manifestations are not assigned to the CC list
as long as there are codes available that allow the acute
manifestations of the disease to be coded separately. For some
diseases, there are ICD-9-CM codes that explicitly include a
specification of the acute exacerbation of the underlying disease. For
example, for congestive heart failure, the following codes specify an
acute exacerbation of the congestive heart failure:
428.21, Acute systolic heart failure
428.41, Acute systolic and diastolic heart failure
428.43, Acute on chronic systolic heart failure
428.31, Acute diastolic heart failure
428.33, Acute on chronic diastolic heart failure
These congestive heart failure codes are included on the revised CC
List. However, the following congestive heart failure codes do not
indicate an acute exacerbation and are not included in the revised CC
list:
428.0, Congestive heart failure not otherwise specified
428.1, Left heart failure
428.20, Systolic heart failure not otherwise specified
428.22, Chronic systolic heart failure
428.32, Chronic diastolic heart failure
428.40, Systolic and diastolic heart failure
428.9, Heart failure not otherwise specified
As a result of this approach, most chronic diseases were not
assigned to the revised CC list. In general, a significant acute
manifestation of the chronic disease must be present and coded for the
patient to be assigned a CC. We made exceptions for diagnosis codes
that indicate a chronic disease in which the underlying illness has
reached an advanced stage or is associated with systemic physiologic
decompensation and debility. The presence of such advanced chronic
diseases, even in the absence of a separately coded acute
manifestation, significantly adds to the treatment complexity of the
patient. Thus, the presence of the advanced chronic disease inherently
makes the reason for admission more difficult to treat. For example,
under the revised CC list, stage IV, V, or end-stage chronic renal
failure (codes 585.4 through 585.6) are designated as a CC, but stage I
through III chronic renal failure (codes 585.1 through 585.3) are not.
For obesity, a body mass index over 35 (codes V85.35 through V85.4) is
a CC, but a body mass index between 19 and 35 is not. End-stage renal
failure and extreme obesity are examples of chronic diseases for which
the advanced stage of the disease is clearly specified.
However, for most major chronic diseases, the stage of the disease
is not clearly specified in the code. These
[[Page 24699]]
codes were evaluated based on the consistency and intensity of the
physiologic decompensation and debility associated with the chronic
disease. For example, quadriplegia (codes 344.00 through 344.09)
requires extensive care with a substantial increase in nursing services
and more intensive monitoring. Therefore, quadriplegia is considered a
CC in the revised CC list.
c. Acute Diagnosis Codes
Examples of acute diseases included on the revised CC list included
acute myocardial infarction (AMI), cerebrovascular accident (CVA) or
stroke, acute respiratory failure, acute renal failure, pneumonia and
septicemia. These six diseases are representative of the types of
illnesses we included on the revised CC list. Other acute diseases were
designated as a CC if their impact on hospital resource use would be
expected to be comparable to these representative acute diseases. For
example, acute endocarditis was included on the CC list but urinary
tract infection was not.
The revised CC list is essentially comprised of significant acute
disease, acute exacerbations of significant chronic diseases, advanced
or end stage chronic diseases and chronic diseases associated with
extensive debility. Compared to the existing CC list, the revised CC
list requires a secondary diagnosis to have a consistently greater
impact on hospital resource.
The following Table D compares the current CC list and the revised
CC list. There are 3,326 diagnosis codes on the current CC list. The CC
revisions reduce the number of diagnosis codes on the CC list to 2,583.
Based on the current CC list, 77.6 percent of patients have at least
one CC present, using FY 2006 MedPAR data. Based on the revised CC
list, the percent of patients having at least one CC present is reduced
to 40.34 percent. The revised CC list increases the difference in
average charges between patients with and without a CC by 56 percent
($15,236 versus $9,743).
Table D.--Comparison of Current CC List and Revised CC List
------------------------------------------------------------------------
Current CC Revised CC
list list
------------------------------------------------------------------------
Codes designated as a CC................ 3,326 2,583
Percent of patients with one or more CCs 77.66 40.34
Percent of patients with no CC.......... 22.34 59.66
Average charge of patients with one or $24,538 $31,451
more CCs...............................
Average charge of patients with no CCs.. $14,795 $16,215
------------------------------------------------------------------------
The analysis above suggests that merely reviewing and updating the
CC list can lead to significant improvements in the ability of the CMS
DRGs to recognize severity of illness. Although we could potentially
adopt this one change to better recognize severity of illness in the
CMS DRGs, we have undertaken additional analyses that further refine
secondary diagnoses into MCCs, CCs and non-CCs as described below.
d. Prior Research on Subdivision of CCs into Multiple Categories
(1) Refined DRGs
During the mid-1980s, CMS (then HCFA) funded a project at Yale
University to revise the use of CCs in the CMS DRGs. The Yale
University project mapped all secondary diagnoses that were considered
a CC in the CMS DRGs into 136 secondary diagnosis groups, each of which
was assigned a CC complexity level. For surgical patients, each of the
136 secondary diagnosis groups was assigned to 1 of 4 CC complexity
levels (non-CC, moderate CC, MCC, and catastrophic CC). For medical
patients, each of the 136 secondary diagnosis groups was assigned to 1
of 3 CC complexity levels (non-CC, moderate/MCC, and catastrophic CC).
All age subdivisions and CC subdivisions in the DRGs were eliminated
and replaced by the four CC subgroups for surgical patients, or the
three CC subgroups for medical patients. The Yale University project
did not reevaluate the categorization of secondary diagnosis as a CC
versus a non-CC. Only the diagnoses on the standard CC list were used
to create the moderate, major, and catastrophic subgroups. All
secondary diagnoses in a secondary diagnosis group were assigned the
same level, and a patient was assigned to the subgroup corresponding to
the highest level secondary diagnosis. The number of secondary
diagnoses had no effect on the subgroup assigned to the patient (that
is, multiple secondary diagnoses at one level did not cause a patient
to be assigned to a higher subgroup). The DRG system developed by the
Yale University project demonstrated that a subdivision of the CCs into
multiple subclasses would improve the predictability of hospital costs.
(2) 1994 Severity DRGs
We also examined the work we performed in the mid-1990's to revise
the CMS DRGs to better capture severity. In 1993, we reevaluated the
use of CCs within the CMS DRGs. The reevaluation excluded the CMS DRGs
associated with pregnancy, newborn, and pediatric patients (MDCs 14 and
15 and DRGs defined based on age 0-17). The major CC list from the AP-
DRGs that are used for Medicaid payment by New York and other States
was used to identify an initial list of MCCs. Using Medicare data, we
reevaluated the categorization of each secondary diagnosis as a non-CC,
CC, or an MCC. The end result was that 111 diagnoses that were non-CCs
in the standard CMS DRGs were made a CC, 220 diagnoses that were a CC
were made a non-CC, and 395 CCs were considered an MCC.
All CC splits in the CMS DRGs were eliminated, and an additional 24
DRGs were merged together. The resulting base CMS DRGs were then
subdivided into three, two, or no subgroups based on an analysis of
Medicare data. The result was 84 DRGs with no subgroups, 124 DRGs with
two subgroups, and 85 DRGs with three subgroups. An additional 63
pregnancy, newborn, and pediatric DRGs not evaluated resulted in a
total of 652 DRGs.
A patient was assigned to the CC subgroup corresponding to the
highest level secondary diagnosis. Multiple secondary diagnoses at one
level did not cause a patient to be assigned to a higher subgroup. The
categorization of a diagnosis as non-CC, CC, or MCC was uniform across
the CMS DRGs, and there were no modifications for specific DRGs. As
part of the FY 1995 IPPS proposed rule, we made a complete file of the
revised DRG descriptions available to the public. However, we never
adopted the revised DRGs (55 FR 27756).
e. Proposed Medicare Severity DRGs (MS-DRGs)
We had several options in developing a refinement to the current
CMS DRGs to better recognize increased resource use due to severity of
illness. One
[[Page 24700]]
option would involve simply taking the work performed in 1994 and then
updating it with all the code changes that have taken place since then.
We were reluctant to do this because of changes in medical practices as
well as the substantial change in ICD-9-CM codes since that time.
Another option would be to build on current CMS DRGs which include a
number of advancements that better identify medical practices and
technologies. Many commenters on the FY 2007 IPPS proposed rule urged
us to take the latter approach because they believed the current base
CMS DRGs clearly differentiate between the complexities of varying
surgical procedures and medical devices. Therefore, we chose the option
of developing a new severity DRG system based on the current CMS DRGs.
The development of the 1994 Severity DRGs involved three steps:
Consolidation of existing DRGs into base DRGs.
Categorization of each diagnosis as an MCC, CC, or non-CC.
Subdivision of each base DRG into subclasses based on CCs.
We reviewed and revised each of the three steps and applied them to
our current CMS DRGs to develop DRGs that better identify severity of
illness among Medicare patients. We refer to this proposed system as
the Medicare Severity DRGs (MS-DRGs). The purpose of the proposed MS-
DRGs is to more accurately stratify groups of Medicare patients with
varying levels of severity.
(1) Consolidation of Existing CMS DRGs Into Proposed Base MS-DRGs
The first step in our process was the consolidation of existing CMS
DRGs into new proposed base MS-DRGs. We combined together the 115 pairs
of CMS DRGs that are subdivided based on the presence of a CC. We
further consolidated the CMS DRGs that are split on the basis of a
major cardiovascular condition, AMI with and without major complication
(CMS DRGs 121 and 122), and cardiac catheterization with and without
complex diagnoses (CMS DRGs 124 and 125). We also consolidated the
three pairs of burn CMS DRGs that were defined based on the presence of
a CC or a significant trauma (CMS DRGs 506 and 507; 508 and 509; and
510 and 511). Next, we consolidated the 43 pediatric CMS DRGs that are
defined based on age less than or equal to 17. These pediatric CMS DRGs
contain a very low volume of Medicare patients. As shown in Table 10 of
the FY 2007 IPPS final rule (71 FR 48318), only two of these pediatric
CMS DRGs contained more than 100 patients (CMS DRGs 298 and 333).
Seventeen of these pediatric DRGs had no patients (CMS DRGs 30, 33, 41,
48, 54, 58, 137, 252, 255, 282, 330, 340, 343, 393, 405, 446, and 448).
As we have stated frequently, our primary focus in maintaining the CMS
DRGs is to serve the Medicare population. We do not have the data or
the expertise to maintain the DRGs in clinical areas that are not
relevant to the Medicare population. We continue to encourage users of
the CMS DRGs (or MS-DRGs if adopted) to make relevant adaptations if
they are being used for a non-Medicare patient population.
In addition to the pediatric CMS DRGs defined by the age of the
patient, there are a number of CMS DRGs that relate primarily to the
pediatric or adult population that have very low volume in the Medicare
population, such as male sterilization, tubal interruptions,
circumcisions, tonsillectomies, and myringotomies. These CMS DRGs were
consolidated into the most clinically similar proposed MS-DRG.
Over the past two decades, the site of service for some elective
procedures such as carpal tunnel release, cataract extraction, and
laparoscopy has shifted from the inpatient to the outpatient setting,
resulting in the CMS DRGs associated with these procedures having very
low volume. These CMS DRGs were also consolidated into the most
clinically similar proposed MS-DRG. In addition, there were some
clinically related CMS DRGs that had significant Medicare patient
volume but had no significant difference in resource use. For example,
thyroid (CMS DRG 290) and parathyroid (CMS DRG 289) procedures were
virtually identical in terms of hospital resource use and were,
therefore, consolidated. In total, 34 of these CMS DRGs were
consolidated. The DRG consolidations are summarized in Table E below.
Four pairs of proposed MS-DRGs (223 and 224; 228 and 229; 323 and
324; and 551 and 552) were defined based on the presence of a CC or
some other condition. For example, proposed MS-DRG 323 is defined based
on the presence of a CC or the performance of extracorporeal shock wave
lithotripsy. For these proposed MS-DRGs, the CC condition was removed
and the pair of DRGs remains separate but defined based only on the
other condition (that is, proposed MS-DRG 323 became urinary stones
with extracorporeal shock wave lithotripsy). As was done in the 1994
severity DRG work, we did not consolidate any of the CMS DRGs for
maternity or newborn cases.
Before proceeding further, we made one additional change to a base
DRG assignment after completing these consolidations. We assigned
cranial-facial bone procedures to a proposed new base DRG (Cranial/
Facial Bone Procedures). These cases were previously assigned to DRGs
52 and 55 through 63.
Table E below shows how DRGs in the CMS DRGs (Version 24.0) were
consolidated into proposed new base MS-DRGs. We refer readers to
section II.D.2. of the preamble of this proposed rule for a detailed
discussion of CCs and MCCs under the proposed MS-DRGs.
Table E.--DRG Consolidation
----------------------------------------------------------------------------------------------------------------
Proposed
CMS-DRG Version 24.0 DRG description 2008 MS- Proposed new base MS-DRGs
DRG description
----------------------------------------------------------------------------------------------------------------
6..................................... Carpal Tunnel Release......... 40 Peripheral & Cranial Nerve &
7,8................................... Peripheral & Cranial Nerve & 41 Other Nervous System
Other Nervous System 42 Procedure with MCC, with CC,
Procedure. and without CC/MCC.
----------------------------------------------------------------------------------------------------------------
36.................................... Retinal Procedures............ 116 Intraocular Procedures with
38.................................... Primary Iris Procedures....... 117 and without CC/MCC.
39.................................... Lens Procedures with or
42.................................... without Vitrectomy.
Intraocular Procedures Except
Retina, Iris & Lens.
----------------------------------------------------------------------------------------------------------------
43.................................... Hyphema....................... 124 Other Disorders of the Eye
46,47,48.............................. Other Disorders of the Eye.... 125 with and without MCC.
----------------------------------------------------------------------------------------------------------------
[[Page 24701]]
50.................................... Sialoadenectomy............... 139 Salivary Gland Procedures.
51.................................... Salivary Gland Procedures
Except Sialoadenectomy.
----------------------------------------------------------------------------------------------------------------
52.................................... Cleft Lip & Palate Repair..... 133 Other Ear, Nose, Mouth &
55.................................... Miscellaneous Ear, Nose, Mouth 134 Throat O.R. Procedures with
& Throat Procedures. and without CC/MCC.
----------------------------------------------------------------------------------------------------------------
56.................................... Rhinoplasty................... 131 New DRG--Cranial/Facial Bone
57,58................................. Tonsillectomy & Adenoidectomy 132 Procedures with and without
59,60................................. Procedure, Except CC/MCC.
61,62................................. Tonsillectomy &/or
63.................................... Adenoidectomy Only.
Tonsillectomy &/or
Adenoidectomy Only.
Myringotomy with Tube
Insertion.
Other Ear, Nose, Mouth &
Throat O.R. Procedures.
67.................................... Epiglottitis.................. 152 Otitis Media & Upper
68,69,70.............................. Otitis Media & Upper 153 Respiratory Infection with
71.................................... Respiratory Infection. and without MCC.
Laryngotracheitis.............
----------------------------------------------------------------------------------------------------------------
72.................................... Nasal, Trauma & Deformity..... 154 Other Ear, Nose, Mouth &
73,74................................. Other Ear, Nose, Mouth & 155 Throat Diagnoses with MCC,
Throat Diagnoses. 156 with CC, without CC/MCC.
----------------------------------------------------------------------------------------------------------------
185,186............................... Dental & Oral Diseases Except 157 Dental & Oral Diseases with
187................................... Extractions & Restorations. 158 MCC, with CC, without CC/
Dental Extractions & 159 MCC.
Restorations.
----------------------------------------------------------------------------------------------------------------
199................................... Hepatobiliary Diagnostic 420 Hepatobiliary Diagnostic
200................................... Procedure for Malignancy. 421 Procedures with MCC, with
Hepatobiliary Diagnostic 422 CC, without CC/MCC.
Procedure for Non-Malignancy.
----------------------------------------------------------------------------------------------------------------
244,245............................... Bone diseases & Specific 553 Bone Diseases & Arthropathies
246................................... Arthropathies. 554 with and without MCC.
Non-Specific Arthropathies....
----------------------------------------------------------------------------------------------------------------
259,260............................... Subtotal Mastectomy for 584 Breast Biopsy, Local Excision
261................................... Malignancy *. 585 & Other Breast Procedures
262................................... Breast Procedures for Non- with and without CC/MCC.
Malignancy Except Biopsy &
Local Excision.
Breast Biopsy & Local Excision
for Non-Malignancy.
----------------------------------------------------------------------------------------------------------------
267................................... Perianal & Pilonidal 579 Other Skin, Subcutaneous
268................................... Procedures. 580 Tissue & Breast Procedures
269,270............................... Skin, Subcutaneous Tissue & 581 with MCC, with CC, without
Breast Plastic Procedures. CC/MCC.
Other Skin, Subcutaneous
Tissue & Breast Procedure.
----------------------------------------------------------------------------------------------------------------
289................................... Parathyroid Procedures........ 625 Thyroid, Parathyroid &
290................................... Thyroid Procedures............ 626 Thyroglossal Procedures with
291................................... Thyroglossal Procedures....... 627 MCC, with CC, without CC/
MCC.
294................................... Diabetes > 35................. 637 Diabetes with MCC, with CC,
295................................... Diabetes < 35................. 638 without CC/MCC.
639
----------------------------------------------------------------------------------------------------------------
338................................... Testes Procedures for 711 Testes Procedures with and
339,340............................... Malignancy. 712 without CC/MCC.
Testes Procedures, Non-
Malignancy.
----------------------------------------------------------------------------------------------------------------
342,343............................... Circumcision.................. ......... Procedure 64.0 changed to non-
O.R. Cases with only this
procedure will go to medical
DRGs.
----------------------------------------------------------------------------------------------------------------
351................................... Sterilization, Male........... 729 Other Male Reproductive
352................................... Other Male Reproductive System 730 System Diagnoses with and
Diagnoses. without CC/MCC.
----------------------------------------------------------------------------------------------------------------
361................................... Laparoscopy & Incisional Tubal 744 D&C, Conization, Laparascopy
362................................... Interruption. 745 & Tubal Interruption with
363................................... Endoscopic Tubal Interruption. and without CC/MCC.
364................................... D&C, Conization & Radio-
Implant, for Malignancy.
D&C, Conization Except for
Malignancy.
History of Malignancy with
Endoscopy.
----------------------------------------------------------------------------------------------------------------
411................................... History of Malignancy without 843 Other Myeloproliferative
412................................... Endoscopy. 844 Disease or Poorly
413,414............................... Other Myeloproliferative 845 Differentiated Neoplasm
Disease or Poorly Diagnosis with MCC, with CC,
Differentiated Neoplasm without CC/MCC.
Diagnosis.
----------------------------------------------------------------------------------------------------------------
[[Page 24702]]
465................................... Aftercare with History of 949 Aftercare with and without CC/
466................................... Malignancy as Secondary 950 MCC.
Diagnosis.
Aftercare without History of
Malignancy as Secondary
Diagnosis.
----------------------------------------------------------------------------------------------------------------
*Codes 85.22 and 85.23 in CMS DRGs 259 and 260 were moved to proposed MS-DRG 582 and 583.
As summarized in the Table F, the consolidation resulted in the
formation of 335 proposed base MS-DRGs.
Table F.--Consolidation of Current CMS DRGs Into Proposed MS-DRGs
------------------------------------------------------------------------
Number
------------------------------------------------------------------------
Current CMS DRGs............................................. 538
Elimination of CC subgroups.................................. -114
Elimination of MCC subgroups................................. -7
Elimination of CC complexity subgroups....................... -5
Elimination of age 0-17 subgroups............................ -43
Consolidation due to volume or resource similarity........... -34
New DRG...................................................... +1
Revised Base DRGs............................................ 311
Newborn, maternity and error DRGs............................ +24
Base DRGs for severity subdivision........................... 335
------------------------------------------------------------------------
The end result of the consolidation of the CMS DRGs in the proposed
MS-DRGs was similar to the consolidation performed in the 1994 severity
DRGs. The 1994 DRG consolidations resulted in 356 base DRGs plus 2
error DRGs. The number of the 1994 base DRGs is different because new
CMS DRGs have been added since 1994, the 43 age 0-17 pediatric CMS DRGs
were not consolidated, and some of the volume shifts to outpatient care
had not yet occurred in 1994. In the 1994 severity DRGs, 24 DRGs were
consolidated due to volume or resource similarity. Sixteen of these
1994 DRG consolidations are included in the 34 consolidations done in
the 2007 consolidations. However, due to concerns expressed by our
physician consultants, 8 of the DRG consolidations from 1994 were not
done. For example, interstitial lung disease (DRGs 92 and 93) was not
consolidated with simple pneumonia and pleurisy (DRGs 89, 90, 91) as
was done in the 1994 consolidations.
(2) Categorization of Diagnoses
We decided to establish three different levels of CC severity into
which we would subdivide the diagnosis codes. The proposed three levels
are MCC, CC, and non-CC. Diagnosis codes classified as MCCs reflect the
highest level of severity. The next level of severity includes
diagnosis codes classified as CCs. The lowest level is for non-CCs.
Non-CCs are diagnosis codes that do not significantly affect severity
of illness and resource use. Therefore, secondary diagnoses that are
non-CCs do not affect the DRG assignment under either the current CMS
DRGs or the proposed MS-DRGs.
The categorization of diagnoses as an MCC, CC, or non-CC was
accomplished using an iterative approach in which each diagnosis was
evaluated to determine the extent to which its presence as a secondary
diagnosis resulted in increased hospital resource use. In order to
begin this iterative process, we started with an initial categorization
of each diagnosis as an MCC, CC, or non-CC. As noted previously the
1994 CC revision began by separating CCs into MCC and CC based on the
AP-DRG major CCs. One way to begin this iterative process would have
been to use the 1994 CC categorization. However, the 1994 CC
categorization was based on FY 1992 data and ICD-9-CM diagnosis codes,
which now are 15 years old. Since 1992, 1,897 new diagnoses codes have
been added, and 346 diagnoses codes have been deleted. Because the
revised CC list (explained in section II.C.2.a. of this preamble) was
based on current ICD-9-CM codes and used recent data, we decided to
utilize the revised CC list rather than the 1994 categorization as our
starting point for determining whether each secondary diagnosis should
be an MCC, a CC, or a non-CC.
The revised CC list categorizes each diagnosis as a CC or a non-CC.
We decided to use this list in combination with the categorization
under the AP-DRGs and the APR DRGs. The AP-DRGs and the APR-DRGs are
updated annually with current codes and provide a good comparison
source to use with the revised CC list. We designated as an MCC any
diagnosis that was a CC in the revised CC list and was an AP-DRG major
CC and was an APR DRG default severity level 3 (major) or 4
(extensive). We designated as a non-CC any diagnosis that was a non-CC
in the revised CC list and was an AP-DRG non-CC and was an APR DRG
default severity level of 1 (minor). Any diagnoses that did not meet
either of the above two criteria was designated as a CC.
The only exception to our approach was for diagnoses related to
newborns, maternity, and congenital anomalies. These diagnoses are very
low volume in the Medicare population and were not reviewed for
purposes of creating the revised CC list. We used the APR DRGs to
categorize these diagnoses. For newborn, obstetric, and congenital
anomaly diagnoses, we designated the APR DRG default severity level 3
(major) and 4 (extreme) diagnoses as an MCC, the APR-DRG default
severity level 2 (moderate) diagnoses as a CC, and the APR DRG default
severity 1 (minor) diagnoses as a non-CC. Table G summarizes the number
of codes in each CC category.
Table G.--Initial Categorization of CC Codes
------------------------------------------------------------------------
Number of
codes
------------------------------------------------------------------------
MCC.......................................................... 1,096
CC........................................................... 4,221
Non-CC....................................................... 8,232
----------
Total.................................................... 13,549
------------------------------------------------------------------------
This initial CC categorization of diagnosis codes was used to begin
the iterative process of determining the proposed final CC
categorization for each diagnosis code.
(3) Additional CC Exclusions
For some CMS DRGs, the presence of specific secondary diagnoses
affects the base DRG assignment. For example, in MDC 5 (Diseases and
Disorders of the Circulatory System), the presence of an AMI code as
the principal diagnosis or as a secondary diagnosis will cause the
patient to be assigned to the AMI DRGs (CMS DRGs 121 through 123).
Therefore, if the AMI code is present as
[[Page 24703]]
a secondary diagnosis, it should not be used to assign the CC category
for a patient because it is redundant within the definition of the base
DRG. Similarly, for MDC 24 (Multiple Significant Trauma), specific
combinations of significant trauma as principal or secondary diagnosis
cause the assignment to the multiple trauma DRGs (CMS DRGs 484 through
487). Therefore, any secondary diagnosis of trauma is redundant with
the definition of the multiple trauma DRGs and should not be used to
determine the CC category for a patient. Any secondary diagnoses that
are used to assign a specific proposed base MS-DRG were excluded from
the determination of the CC category for patients assigned to that
proposed base MS-DRG.
(4) Analysis of Secondary Diagnoses
The 311 proposed base MS-DRGs (335 total base DRGs minus the MDC
14, MDC 5, and error DRGs) were subdivided into three CC subgroups.
Patients were assigned to the subgroup corresponding to the most
extreme CC present). All but four of the proposed base MS-DRGs had
strictly monotonically increasing average charges across the three CC
subgroups (that is, average charges progressively increased from the
non-CC to the CC to the MCC subgroups). The four proposed MS-DRGs that
failed to have monotonically increasing charges all had at least one CC
subgroup with very low volume. For example, the non-CC subgroup for the
pancreas transplant DRG (CMS DRG 513) had only 2 cases. The overall
statistics by CC subgroup for the 311 proposed base MS-DRG is contained
in Table H. Patients in the MCC subgroup have average charges that are
nearly double the average charge for patients in the CC subgroup. The
CC subgroup with the largest number of patients is the non-CC subgroup
with 41.1 percent of the patients.
Table H.--Overall Statistics for Proposed MS-DRGs Excluding Those in MDCs 14 and 15
----------------------------------------------------------------------------------------------------------------
Number of Average
CC subgroup cases Percent charges
----------------------------------------------------------------------------------------------------------------
Major........................................................... 2,604,696 22.2 $44,246
CC.............................................................. 4,293,744 36.6 24,131
Non-CC.......................................................... 4,818,411 41.1 18,435
----------------------------------------------------------------------------------------------------------------
In order to evaluate the initial assignment of secondary diagnoses
to the three CC subclasses, we devised a system that determined the
impact on resource use of each secondary diagnosis. For each secondary
diagnosis, we measured the impact in resource use for the following
three subsets of patients:
(a) Patients with no other secondary diagnosis or with all other
secondary diagnoses that are non-CCs.
(b) Patients with at least one other secondary diagnosis that is a
CC but none that is an MCC.
(c) Patients with at least one other secondary diagnosis that is an
MCC.
Numerical resource impact values were assigned for each diagnosis
as follows:
------------------------------------------------------------------------
Value Meaning
------------------------------------------------------------------------
0............................. Significantly below expected value for
the non-CC subgroup.
1............................. Approximately equal to expected value
for the non-CC subgroup.
2............................. Approximately equal to expected value
for the CC subgroup.
3............................. Approximately equal to expected value
for the MCC subgroup.
4............................. Significantly above the expected value
for the MCC subgroup.
------------------------------------------------------------------------
Each diagnosis for which Medicare data were available was evaluated
to determine its impact on resource use and to determine the most
appropriate CC subclass (non-CC, CC, or MCC) assignment. In order to
make this determination, the average charge for each subset of cases
was compared to the expected charge for cases in that subset. The
following format was used to evaluate each diagnosis:
----------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
----------------------------------------------------------------------------------------------------------------
Count (Cnt) is the number of patients in each subset and C1, C2, and C3
are a measure of the impact on resource use of patients in each of the
subsets. The C1, C2, and C3 values are a measure of the ratio of
average charges for patients with these conditions to the expected
average charge across all cases. The C1 value reflects a patient with
no other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is a major CC. The C3
value reflects a patient with at least one other secondary diagnosis
that is a major CC. A value close to 1.0 in the C1 field would suggest
that the code produces the same expected value as a non-CC diagnosis.
That is, average charges for the case are similar to the expected
average charges for that subset and the diagnosis is not expected to
increase resource usage. A higher value in the C1 (or C2 and C3) field
suggests more resource usage is associated with the diagnosis and an
increased likelihood that it is more like a CC or major CC than a non-
CC. Thus, a value close to 2.0 suggests the condition is more like a CC
than a non-CC but not as significant in resource usage as an MCC. A
value close to 3.0 suggests the condition is expected to consume
resources more similar to an MCC than a CC or non-CC. For example, a C1
value of 1.8 for a secondary diagnosis means that for the subset of
patients who have the secondary diagnosis and have either no other
secondary diagnosis present, or all the other secondary diagnoses
present are non-CCs, the impact on resource use of the secondary
diagnoses is greater than the expected value for a non-CC by an amount
equal to 80 percent of the difference between the expected value of a
CC and a non-CC (that is, the impact on resource use of the secondary
diagnosis is closer to a CC than a non-CC).
Table I below shows examples of the results.
[[Page 24704]]
Table I.--Examples of Impact on Resource Use of Secondary Diagnoses
----------------------------------------------------------------------------------------------------------------
Code Cnt1 C1 CntC2 C2 Cnt3 C3 CC subclass
----------------------------------------------------------------------------------------------------------------
401.1, Benign essential 12,308 0.955 40,113 1.715 5,297 2.384 Non-CC.
hypertension.
530.81, Esophageal reflux.... 294,673 0.986 917,058 1.639 122,076 2.302 Non-CC
560.1, Paralytic Ileus....... 10,651 1.466 87,788 2.320 51,303 3.226 CC
491.20, Obstructive chronic 7,003 1.416 32,276 2.193 13,355 3.035 CC
bronchitis.
410.71, Subendocardial 1,657 2.245 30,226 2.778 42,862 3.232 MCC
infarction initial episode.
518.81, Acute respiratory 5,332 2.096 118,937 2.936 223,054 3.337 MCC
failure.
----------------------------------------------------------------------------------------------------------------
The resource use impact reports were produced for all diagnoses
except obstetric, newborn, and congenital anomalies (10,690 diagnoses).
These mathematical constructs were used as guides in conjunction with
the judgment of our clinical staff to classify each secondary diagnosis
reviewed as an MCC, CC or non-CC. Our clinical panel reviewed the
resource use impact reports and modified 14.9 percent of the initial CC
subclass assignments as summarized in Table J below. The rows in the
table are the initial CC subclass categories and the columns are the
final CC subclass categories.
Table J.--CC Subclass Modifications
----------------------------------------------------------------------------------------------------------------
Final CC subclass
Initial CC subclass --------------------------------------------------- Total Percent
MCC CC Non-CC
----------------------------------------------------------------------------------------------------------------
MCC.......................... 847 62 0 909 8.5
CC........................... 542 2,579 737 3,858 36.1
Non-CC....................... 0 272 5,651 5,923 55.4
----------------------------------------------------------------------------------
Total.................... 1,389 2,913 6,388 10,690 ..............
Percent...................... 13.0 27.2 59.8 .............. ..............
----------------------------------------------------------------------------------------------------------------
Of the diagnoses initially designated as an MCC, 6.8 percent were
made a CC (62/909), and of the diagnoses initially designated as non-
CC, 4.6 percent were made a CC (272/5,923). The major shift occurred in
the diagnoses initially assigned to the CC subclass. Fourteen percent
of the diagnoses initially designated as a CC were made an MCC (542/
3858), and 19.1 percent of the diagnoses initially designated a CC were
made a non-CC (737/3,858). In determining the CC subclass assigned to a
diagnosis, imprecise codes were, in general, not assigned to the MCC or
CC subclass. For example, the congestive heart failure codes have the
following CC subclass assignments:
------------------------------------------------------------------------
Code CC subclass assignment
------------------------------------------------------------------------
428.21, Acute systolic heart failure...... MCC
428.41, Acute systolic & diastolic heart MCC
failure.
428.43, Acute on chronic systolic heart MCC
failure.
428.31, Acute diastolic heart failure..... MCC
428.33, Acute on chronic diastolic heart MCC
failure.
428.1, Left heart failure................. CC
428.20, Systolic heart failure NOS........ CC
428.22, Chronic systolic heart failure.... CC
428.32, Chronic diastolic heart failure... CC
428.40, Systolic & diastolic heart failure CC
428.0, Congestive heart failure NOS....... NonCC
428.9, Heart failure NOS.................. Non-CC
------------------------------------------------------------------------
The acute heart failure codes are MCCs, and the chronic heart
failure codes are CCs. However, Not Otherwise Specified (NOS) heart
failure codes are non-CCs. Thus, the precise type of heart failure must
be specified in order for an MCC or CC to be assigned.
There are currently 13,549 ICD-9-CM diagnosis codes. The External
Cause of Injury and Poisoning codes (E800--E999) and congenital codes
were not included in our current CC review for the proposed MS-DRGs. We
excluded the External Cause of Injury and Poisoning codes (E codes)
from consideration as an MCC or a CC because they describe how an
injury occurred, and not the exact nature of the injury. For instance,
if a patient fell on the deck of a boat and fractured his or her skull,
one would assign an E code to describe the fall on the boat. A separate
diagnosis code would be assigned to describe the exact nature of any
resulting injury such as a contusion, fractured bone, or skull fracture
and concussion. A patient would be assigned to a severity level based
on the exact nature of the injury and not the manner in which the
injury occurred. Therefore, we decided not to classify any of the E
codes as either an MCC or a CC. The congenital codes describe
abnormalities when a baby is born. At times, a beneficiary may live
with these congenital abnormalities for years without a problem. The
congenital abnormalities may later lead to complications that require
hospital admissions. Should these congenital abnormalities lead to
medical problems that result in a hospital admission for a Medicare
beneficiary, the exact nature of the condition being treated would also
be assigned a code. This more precise code would be evaluated to
determine whether or not it was an MCC or a CC. Therefore, we decided
not to classify congenital abnormality codes as an MCC or a CC, but to
instead use the other reported diagnosis codes that better describe the
reason for the admission. Excluding the external cause of injury codes,
we reviewed 10,690 diagnosis codes.
As was done in our 1994 severity proposal, diagnoses that were
closely associated with patient mortality were assigned different CC
subclasses, depending on whether the patient lived or died. These
diagnoses are:
427.41, Ventricular fibrillation
[[Page 24705]]
427.5, Cardiac arrest
785.51, Cardiogenic shock
785.59, Other shock without mention of trauma
799.1, Respiratory arrest
Resource use for patients with these diagnoses who were discharged
alive was consistent with an MCC. Resource use for patients with these
diagnoses who died was consistent with a non-CC. Further, most patients
who died could legitimately have one of these diagnoses coded. As a
result, these diagnoses are assigned an MCC subclass for patients who
lived and a non-CC subclass for patients who died.
For some secondary diagnoses assigned to the CC subclass, our
medical consultants identified specific clinical situations in which
the diagnosis should not be considered a CC. In such clinical
situations, the CC exclusion list was used to exclude the secondary
diagnosis from consideration in determining the CC subgroup essentially
making the secondary diagnosis a non-CC. For example, primary
cardiomyopathy (code 425.4) is designated as a CC. However, for
patients admitted for congestive heart failure, our medical consultants
believed that primary cardiomyopathy should be treated as a non-CC. In
order to accomplish that, the congestive heart failure principal
diagnoses were added to the CC exclusion list for primary
cardiomyopathy as a secondary diagnosis.
The list of diagnosis codes that we are proposing to classify as an
MCC is included in Table 6J in the Addendum of this proposed rule. The
diagnosis codes that we are proposing to classify as a CC are included
in Table 6K in the Addendum of this proposed rule. The proposed E-
codes, which are diagnosis codes used to classify external causes of
injury and poisoning, are not included in this list. All proposed E-
codes are designated as non-CCs under the current CMS DRG system and
our evaluation supports this non-CC designation as appropriate.
3. Dividing Proposed MS-DRGs on the Basis of the CCs and MCCs
In developing the proposed MS-DRGs, two of our major goals were to
create DRGs that would more accurately reflect the severity of the
cases assigned to them and to create groups that would have sufficient
volume so that meaningful and stable payment weights could be
developed. As noted above, we excluded the CMS DRGs in MDCs 14 and 15
from consideration because these DRGs are low volume. As stated
previously, we do not have the expertise or data to maintain the CMS
DRGs for newborns, pediatric, and maternity patients. We continue to
maintain MDCs 14 and 15 without modification in order to have MS-DRGs
available for these patients in the rare instance where there is a
Medicare beneficiary admitted for maternity or newborn care.
In designating a proposed MS-DRG as one that will be subdivided
into subgroups based on the presence of a CC or MCC, we developed a set
of criteria to facilitate our decision-making process. In order to
warrant creation of a CC or major CC subgroup within a base MS-DRG, the
subgroup had to meet all of the following five criteria:
A reduction in variance of charges of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup.
At least 500 cases are in the CC or MCC subgroup.
There is at least a 20-percent difference in average
charges between subgroups.
There is a $4,000 difference in average charge between
subgroups.
Our objective in developing these criteria was to create
homogeneous subgroups that are significantly different from one another
in terms of resource use, that have enough volume to be meaningful, and
that improve our ability to explain variance in resource use. These
criteria are essentially the same criteria we used in our 1994 severity
analysis.
To begin our analysis, we subdivided each of the base MS-DRGs into
three subgroups: non-CC, CC, and MCC. Each subgroup was then analyzed
in relation to the other two subgroups using the volume, charge, and
reduction in variance criteria. The criteria were applied in the
following hierarchical manner:
If a three-way subdivision met the criteria, we subdivided
the base MS-DRG into three CC subgroups.
If only one type of two-way subdivisions met the criteria,
we subdivided the base MS-DRG into two CC subgroups based on the type
of two-way subdivision that met the criteria.
If both types of two-way subdivisions met the criteria, we
subdivided the base MS-DRG into two CC subgroups based on the type of
two-way subdivision with the highest R\2\ (most explanatory power to
explain the difference in average charges).
Otherwise, we did not subdivide the base MS-DRG into CC
subgroups.
For any given base MS-DRG, our evaluation in some cases showed that
a subdivision between a non-CC and a combined CC/MCC subgroup was all
that was warranted (that is, there was not a great enough difference
between the CC and MCC subgroups to justify separate CC and MCC
subgroups). Conversely, in some cases, even though an MCC subgroup was
warranted, there was not a sufficient difference between the non-CC and
CC subgroups to justify separate non-CC and CC subgroups.
Based on this methodology, a base MS-DRG may be subdivided
according to the following three alternatives, rather than the current
``with CC'' and ``without CC'' division.
DRGs with three subgroups (MCC, CC, and non-CC).
DRGs with two subgroups consisting of an MCC subgroup but
with the CC and non-CC subgroups combined. We refer to these groups as
``with MCC'' and ``without MCC.''
DRGs with two subgroups consisting of a non-CC subgroup
but with the CC and MCC subgroups combined. We refer to these two
groups as ``with CC/MCC'' and ``without CC/MCC.''
As a result of the application of these criteria, 745 proposed MS-
DRGs were created as shown in the following table.
Table K.--Number of CC Subgroups
------------------------------------------------------------------------
Number of Number of
Subgroups proposed base proposed MS-
MS-DRGs DRGs
------------------------------------------------------------------------
No Subgroups............................ 53 53
Three subgroups......................... 152 456
Two subgroups: major CC and CC; non-CC.. 63 126
Two subgroups: non-CC and CC; major CC.. 43 86
Subtotal................................ 311 721
MDC 14.................................. 22 22
[[Page 24706]]
Error DRGs.............................. 2 2
-------------------------------
Total............................... 335 745
------------------------------------------------------------------------
The 745 proposed MS-DRGs represent an increase over the 652 DRGs
created in our 1994 CC revision analysis. The increase in the number of
DRGs is primarily the result of an increase in the number of proposed
base MS-DRGs that are subdivided into three CC subgroups. The
distribution of patients across the different types of CC subdivisions
is contained in Table L below. The table shows that 51.7 percent of the
patients are assigned to base MS-DRGs with three CC subgroups, and only
11.8 percent of the patients are assigned to base MS-DRGs with no CC
subgroups.
Table L.--Distribution of Patients by Type of CC Subdivision
------------------------------------------------------------------------
CC subdivision Count Percent
------------------------------------------------------------------------
None.......................................... 1,382,810 11.8
(MCC and CC), Non-CC.......................... 629,639 5.4
MCC, (CC and Non-CC).......................... 3,650,321 31.2
MCC, CC, and Non-CC........................... 6,054,081 51.7
------------------------------------------------------------------------
Using Medicare charge data (without applying any criteria to remove
statistical outlier cases), the reduction in variance (R\2\) was
computed for current CMS DRGs, the MS-DRGs with all 311 base MS-DRGs
subdivided into 3 CC subgroups, and the MS-DRGs collapsed into 745
DRGs. Table L below shows that the R\2\ for the proposed MS-DRGs with
all 311 base MS-DRGs subdivided into 3 CC subgroups (957 DRGs composed
of 311 base MS-DRGs subdivided into 3 CC subgroups plus an additional
22 MDC 14 and MDC 15 DRGs as well as 2 error DRGs) is 10.62 percent
higher than the current CMS DRGs. Collapsing the 957 proposed MS-DRGs
down to 745 proposed MS-DRGs lowers this increase in R\2\ slightly to
9.41 percent. Although adopting a 3-way split for each base MS-DRG
would produce a DRG system with higher explanatory power, the 957 MS-
DRGs would not meet the criteria we specified above for subdividing
each base DRG. The criteria we specified above would create a monotonic
DRG system. We believe that the value of having a monotonic DRG system
outweighs the slight decrease in explanatory power. For this reason, we
are proposing to adopt the 745 MS-DRGs.
Table M.--Explanatory Power (R\2\) for Proposed MS-DRGs
------------------------------------------------------------------------
Percent
R\2\ change
------------------------------------------------------------------------
Current CMS DRG................................... 36.19 .........
2007 CMS Severity DRGs with 3 CC Subgroups........ 40.03 10.62
2007 CMS Severity DRGs Collapsed to 714 DRGs...... 39.59 9.41
------------------------------------------------------------------------
4. Conclusion
We believe the proposed MS-DRGs represent a substantial improvement
over the current CMS DRGs in their ability to differentiate cases based
on severity of illness and resource consumption. As developed, the
proposed MS-DRGs increase the number of DRGs by 207, while maintaining
the reasonable patient volume in each DRG. The proposed MS-DRGs
increase the explanation of variance in hospital resource use relative
to the current CMS DRGs by 9.41 percent. Further, the data shown below
in Table N and Table O illustrate how assignment of cases to different
severity of illness subclasses improves in the proposed MS-DRGs
relative to the CMS DRGs.
Table N.--Overall Statistics for CMS DRGs
------------------------------------------------------------------------
Average
CC subclass--Current CMS DRG Percent charges
------------------------------------------------------------------------
One or more CCs................................... 77.66 $24,538
Non-CC............................................ 22.34 14,795
------------------------------------------------------------------------
Table O.--Overall Statistics for Proposed MS-DRGs
------------------------------------------------------------------------
Number of Average
CC subgroup cases Percent charges
------------------------------------------------------------------------
MCC.................................. 2,607,351 22.2 $44,219
CC................................... 4,298,362 36.6 24,115
Non-CC............................... 4,826,980 41.1 18,416
------------------------------------------------------------------------
Under the current CMS DRGs, 78 percent of cases are assigned to the
highest severity levels (CC) and the remaining 22 percent are assigned
to the lowest severity level (non-CC). Applying the three severity
subclasses to FY 2006 data would result in approximately 22 percent of
patients being assigned to the severity subgroup with the highest level
of severity (MCC), 41 percent being assigned to the lowest severity
subclass (non-CC), and the remaining 37 percent being assigned to the
middle severity subclass (CC). Adding the new MCC subgroup greatly
enhances our ability to identify and reimburse hospitals for treating
patients with high levels of severity. As Table N above shows, the
[[Page 24707]]
new subgroups also have significantly different resource requirements.
The MCC subgroup contains patients with average charges almost twice as
large as for those in the CC group ($44,219 compared to $24,115).
In addition to resulting in improvements in the DRG system's
recognition of severity of illness, we believe the proposed MS-DRGs are
responsive to the public comments that were made on last year's IPPS
proposed rule with respect to how we should undertake further DRG
reform. In the FY 2007 IPPS final rule, we identified three major
concerns in the public comments about our proposed adoption of CS DRGs:
We received comments after the FY 2007 IPPS final rule suggesting
that further adjustments are needed to the proposed DRG system. The
commenters believed that the CS DRGs did not incorporate many of the
changes to the DRG assignments that have been made over the year to the
CMS DRGs. There was significant interest in the public comments in
either revising the CS DRGs to reflect these changes or using the CMS
DRGs at the starting point to better recognize severity.
We believe that the proposed MS-DRGs discussed in this proposed
rule are responsive to these suggestions. The proposed MS-DRGs use the
CMS DRGs as the starting point for revising the DRGs to better
recognize resource complexity and severity of illness. We are generally
retaining all of the refinements and improvements that have been made
to the base DRGs over the years that recognize the significant
advancements in medical technology and changes to medical practice. At
the same time, the proposed MS-DRGs greatly improve our ability to
identify groups of patients with varying levels of severity. They
retain all of the improvements made to the DRGs over the years, while
providing a more equitable basis for hospital payment.
We received many comments about the potential use of a proprietary
DRG system. The comments about the CS DRGs raised compelling issues
about the potential government use of a proprietary system including
concerns about the availability, price, and transparency of the source
code, logic and documentation of the DRG system. The commenters noted
that CMS makes available these resources in the public domain for
purchase through the National Technical Information Service at nominal
fees to cover costs. The commenters urged CMS not to adopt a
proprietary DRG system that would not be available on the same terms as
the current CMS DRGs.
There are no proprietary issues associated with the proposed MS-
DRGs in this proposed rule. The proposed MS-DRGs would be available on
the same terms as the current CMS DRGs through the National Technical
Information Service.
We also received other comments concerning the use of CS DRGs. The
commenters stated that no alternatives to CS DRGs had been evaluated.
The commenters suggested that alternative DRG systems can better
recognize severity than the CS DRGs and should be evaluated before CMS
decides which system to adopt.
We currently have a contract with the RAND Corporation to evaluate
several alternative DRG systems. We believe it is premature to propose
adopting one of the systems as RAND has not yet completed its
evaluation. However, we believe the proposed MS-DRGs should be part of
this process and have asked RAND to evaluate the proposed MS-DRGs with
other DRG products that have been submitted for review. Although we are
proposing to adopt the MS-DRGs for FY 2008, this decision would not
preclude us from adopting any of the systems being evaluated by RAND
for FY 2009.
As indicated above, we believe the proposed MS-DRGs offer
significant improvements to the DRG system without many of the
liabilities the public commenters identified with the CS DRGs. Thus, we
believe the proposed MS-DRGs offer significant improvements in
recognition of severity of illness and complexity of resources and are
proposing to adopt them for FY 2008. However, we are continuing our
evaluation of alternative DRG systems that can better recognize
severity of illness and resource consumption and have submitted the
proposed MS-DRGs to RAND for further evaluation.
5. Impact of the Proposed MS-DRGs
Unlike the CS DRGs we proposed last year for FY 2008, the payment
impacts from the MS-DRGs we are proposing to adopt this year would
largely be redistributive within each base MS-DRG. Such a result occurs
because we collapse the current CC/non-CC, age and other distinctions
that exist in the CMS DRGs and redivide them based on MCCs, CCs, and
non-CCs. Thus, within each proposed base MS-DRG, some cases will be
paid more and some less, but the base MS-DRGs are retained so there is
no redistribution between types of cases as would have occurred under
the proposed CS DRGs. We encourage readers to review Table 5 in the
Addendum to this proposed rule for a list of the proposed MS-DRGs and
the proposed respective relative weight from the revisions we are
proposing to better recognize severity of illness to better understand
how payment for cases within each base MS-DRG will be affected.
As indicated above, all of the severity DRG systems being evaluated
by RAND can be expected to result in similar redistributions in case-
mix among hospitals. The payment models used by RAND and CMS (and RTI
as well) all assume static utilization. That is, payment impact models
simulate the effects of a change in policy, assuming no change to
Medicare utilization. Any system adopted to better recognize severity
of illness with a budget neutrality constraint will result in case-mix
changes that can be expected to benefit urban hospitals at the expense
of rural hospitals. This impact occurs because patients treated in
urban hospitals are generally more severely ill than patients in rural
hospitals and the CMS DRGs are not currently recognizing the full
extent of these differences. Similarly, there will be differential
impacts among other categories of hospitals (for example, teaching,
disproportionate share, large urban, and other urban hospitals)
depending on the mix of cases that each hospital treats. The impact of
the proposed MS-DRGs can be expected to have similar effects on case-
mix as the DRG systems being analyzed by RAND. In addition, we believe
that it is important to note that the MS-DRGs are proposed to be
adopted for FY 2008 at the same time that we are phasing in cost
weights. In the FY 2007 IPPS final rule, we adopted cost weights over a
3-year transition period in \1/3\ increments. Thus, the full impact of
adopting cost weights will not be incorporated into IPPS payments until
FY 2009. Nevertheless, we believe it is important to consider together
the effect on case-mix of the fully phased-in cost weights and proposed
MS-DRGs to get a complete understanding of how IPPS payment reforms
would affect case-mix for different categories of hospitals from FY
2007 through FY 2009. For instance, using cost weights are estimated to
increase payments to rural hospitals (see 71 FR 47917). In FY 2007, we
are paying hospitals using a blend of \1/3\ cost and \2/3\ charge
relative weights. In FY 2008, we will pay hospitals using a blend of
\2/3\ cost and \1/3\ charge relative weights. In FY 2009, we will pay
hospitals using 100 percent cost relative weights. Therefore, there
will likely be some additional increases in payments to rural hospitals
from the final year of the transition to fully implemented cost weights
that are not
[[Page 24708]]
illustrated in the table in the impact section of this proposed rule.
6. Changes to Case-Mix Index (CMI) From the Proposed MS-DRGs
After the 1983 implementation of the IPPS DRG classification
system, CMS observed unanticipated growth in inpatient hospital case-
mix (the average relative weight of all inpatient hospital cases),
which we use as a proxy measurement for severity of illness. We had
projected the rate of growth in case-mix for the period 1981 to 1984 to
be 3.4 percent. The realized rate of growth during this period, which
included the introduction of the IPPS, was 8.4 percent, a variance in
excess of 1.6 percent per year. The unexpected growth in payments was
due to increases in the hospital case-mix index (CMI) beyond the
previously projected trend. Hospitals' CMI values measure the expected
treatment cost of the mix of patients treated by a particular hospital.
There are three factors that determine changes in a hospital's CMI:
(a) Admitting and treating a more resource intensive patient-mix
(due, for example, to technical changes that allow treatment of
previously untreatable conditions and/or an aging population);
(b) Providing services (such as higher cost surgical treatments,
medical devices, and imaging services) on an inpatient basis that
previously were more commonly furnished in an outpatient setting; and
(c) Changes in documentation (more complete medical records) and
coding practice (more accurate and complete coding of the information
contained in the medical record).
We note that changes in patient-mix and medical practice signal
real changes in underlying resource utilization and cost of treatment.
While these changes may have occurred in response to incentives from
IPPS policies, they represent real changes in resource needs. In
contrast, changes in CMI as a result of improved documentation and
coding do not represent real increases in underlying resource demands.
For the implementation of the IPPS in 1983, improved documentation and
coding were found to be the primary cause in the underprojection of CMI
increases, accounting for as much as 2 percent in the annual rate of
CMI growth observed post-PPS.\2\
---------------------------------------------------------------------------
\2\ Carter, Grace M. and Ginsburg, Paul: The Medicare Case Mix
Index Increase, Medical Practice Changes, Aging and DRG Creep, Rand,
1985.
---------------------------------------------------------------------------
The Medicare Trustees Technical Review Panel \3\ has previously
determined the annual measured change in CMI for inpatient hospital
services to oscillate around an underlying real trend of 1 percent
annual growth. In 1991 the Medicare specific trend in real CMI growth
was found in a then-HCFA funded study \4\ to be within a range of 1 to
1.4 percent. In the annual study conducted by CMS, there has been no
evidence to support a real case-mix increase in excess of the annually
projected 1 percent upper bound in the period. MedPAC findings have
echoed this with its recent study of real case-mix change finding
growth rates for years 2002, 2003, and 2004 of 1 percent, 0.6 percent,
and 0.4 percent, respectively.\5\
---------------------------------------------------------------------------
\3\ Review of Assumptions and Methods of the Medicare Trustees'
Financial Projections; Technical Review Panel on the Medicare
Trustees Reports, December 2000.
\4\ ``Has DRG Creep Crept Up? Decomposing the Case Mix Index
Change Between 1987 and 1988''; Carter, Newhouse, Relles ; R-4098-
HCFA/ProPAC (1991).
\5\ Medicare Payment Advisory Commission: Report to the
Congress, March 2006 (p. 52).
---------------------------------------------------------------------------
We believe that adoption of the MS-RGs proposed in this proposed
rule would create a risk of increased aggregate levels of payment as a
result of increased documentation and coding. MedPAC notes that
``refinements in DRG definitions have sometimes led to substantial
unwarranted increase in payments to hospitals, reflecting more complete
reporting of patients' diagnoses and procedures.'' MedPAC further notes
that ``refinements to the DRG definitions and weights would
substantially strengthen providers' incentives to accurately report
patients' comorbidities and complications.'' To address this issue,
MedPAC recommended that the Secretary ``project the likely effect of
reporting improvements on total payments and make an offsetting
adjustment to the national average base payment amounts.'' \6\
---------------------------------------------------------------------------
\6\ Medicare Payment Advisory Commission: Report to Congress on
Physician-Owned Specialty Hospitals, March 2005, p. 42.
---------------------------------------------------------------------------
The Secretary has broad discretion under section 1886(d)(3)(A)(vi)
of the Act to adjust the standardized amount so as to eliminate the
effect of changes in coding or classification of discharges that do not
reflect real changes in case-mix. While we modeled the changes to the
DRG system and relative weights to ensure budget neutrality, we are
concerned that the large increase in the number of DRGs will provide
opportunities for hospitals to do more accurate documentation and
coding of information contained in the medical record. Coding that has
no effect on payment under the current CMS DRGs may result in a case
being assigned to a higher paid DRG under the proposed MS-DRGs. Thus,
more accurate and complete documentation and coding may occur because
it will result in higher payments under the proposed MS-DRGs. We
believe the potential for more accuate and complete documentation and
coding will apply equally under the acute IPPS as well as under the
LTCH PPS because the same DRGs are used for both payment systems. Thus,
the analysis below will apply to both the IPPS and the LTCH PPS.
CMS in the past has adjusted standardized amounts under the IRF PPS
to account for case-mix increases due to improvements in documentation
and coding. In 2004, RAND \7\ published a technical report as part of
the followup to the implementation of the IRF PPS. The initial weights
used within the IRF PPS were based on a mix of CY 1999 and CY 1998
data. The study reviewed the changes between this base data set and the
IRF PPS implementation year of 2002. The report found that the weight
per discharge for IRFs had grown by 3.4 percent between the CY 1999
data set and the CY 2002 data set. In a detailed analysis of both
statistical patterns in acute stay records and directly measured coding
behaviors, RAND found that the level of case-mix increase associated
with documentation and coding-induced changes in the transition year
ranged between 1.9 and 5.8 percent, with the upper end of the estimate
associated with real declines in resource use. (We note that RAND
revised its report in late 2005 to reflect an upper bound of 5.9
percent, instead of the 5.8 percent that we reported in the FY 2006 IRF
PPS proposed and final rules.)
---------------------------------------------------------------------------
\7\ Carter, Paddock: Preliminary Analyses of Changes in Coding
and Case Mix Under the Inpatient Rehabilitation Facility Prospective
Payment System, RAND, 2004.
---------------------------------------------------------------------------
We used the results of this analysis to justify a 1.9 percent
adjustment to payment rates for IRFs in FY 2006 (70 FR 47904) and a 2.6
percent adjustment to payment rates for IRFs in FY 2007 (71 FR 48370),
for a combined total adjustment of 4.5 percent. The implementation year
was marked by the transitioning of hospitals to the IRF PPS payment
based on cost reports beginning January 1, 2002, and staggered to
October 1, 2002. A combination of increased familiarity with the system
by providers and the staggered transition could mean that documentation
and coding-induced case-mix change continued as hospitals experienced
ongoing changes in the early years of the IRF PPS and as the
[[Page 24709]]
incentives within the system were more widely recognized. We also
recognize that significant changes in IRF patient populations may be
occurring as a result of recent regulatory changes, such as the phase-
in of the 75 percent rule compliance percentage. We intend to continue
analyzing changes in coding and case-mix closely, using the most
current available data, as part of our ongoing monitoring of the IRF
PPS and, based on this analysis, we intend to propose additional
payment refinements for IRFs in the future as the analysis indicates
such adjustments are warranted.
Furthermore, as part of our analysis of this issue, we considered
the recent experience of the State of Maryland with adopting the APR
DRG system. Maryland introduced APR DRGs for payment for three teaching
hospitals in 2000. Between State fiscal years (SFYs) 2001 and 2005,\8\
the remaining hospitals continued to be paid using modified CMS DRGs.
In June 2004, the remaining hospitals were notified that Maryland would
expand the use of APR DRGs throughout its all payer charge-per-case
system beginning in July 2005. Hospitals in Maryland improved coding
and documentation in response to the adoption of APR DRGs. As a result
of this improved documentation and coding, reported CMI increased at a
greater rate than real CMI. Given the similarity between coding
incentives using the APR DRGs in Maryland and the MS-DRGs that are
being proposed for Medicare, we analyzed Maryland data to develop an
adjustment for improved documentation and coding.
---------------------------------------------------------------------------
\8\ Maryland uses a July 1 to June 30 State fiscal year. Prior
to FY 2003, Maryland had a 6-month lag in the data used to calculate
the hospital base case-mix index and case-mix change. Maryland used
12 months data ending December even though the hospitals' rate year
was July 1 to June 30. In FY 2003, Maryland moved to what it called
``Real Time Case-Mix'' and started using 12 months data ending June
30 to calculate case-mix index and case-mix change for a rate year
beginning July 1.
---------------------------------------------------------------------------
For the Maryland analysis, we assume that, in SFY 2005, those
hospitals not already being paid under the APR DRG system began acting
as if the transition to the new DRG logic had already taken place. This
assumption is supported by the following facts: (a) Maryland hospitals
were reporting to the Health Services and Cost Review Commission
(HSCRC), Maryland's governing body of its all-payer ratesetting system)
using the APR DRG GROUPER in 2005; (b) hospitals were provided training
in coding under the APR DRG GROUPER; (c) hospitals had access to
reports based on APR DRG logic; and (d) hospitals were given large
amounts of feedback as to their performance under the GROUPER by the
HSCRC relative to peer hospitals.
The incentives for Maryland hospitals are to code as completely and
accurately as possible because, beginning in July 2005, all Maryland
hospitals were paid using APR DRGs. SFY 2005 was an important year in
Maryland, as it marked the beginning of the 2-year period of transition
after which a hospital's revenues were reduced if coding was not as
complete as a peer hospital. Under the current CMS DRGs, each secondary
diagnosis code is recognized as either a CC or non-CC. Hospitals in
Maryland and nationally for Medicare only needed to code one secondary
diagnosis as a CC when paid using CMS DRGs for the patient to be
assigned to a higher weighted DRG split based on the presence or
absence of a CC. Under the APR DRGs, each secondary diagnosis is
designated as minor, moderate, major, or extreme. Under the proposed
MS-DRGs, each secondary diagnosis is designated as a non-CC, CC, or
MCC. Hospitals in Maryland have incentives under the APR DRGs to code
until a case is assigned to the highest of the four severity levels
within a base DRG. Under the proposed MS-DRGs, hospitals will have
incentives to code until a case is assigned to one of up to three
severity levels within a base DRG. Although the APR DRGs and the
proposed MS-DRGs may be different, we believe that hospitals have the
same incentive under both systems to code as completely as possible.
For this reason, we believe that the Maryland experience is a
reasonable basis for projecting behavioral changes in the wider
national hospital population for the first 2 years of the MS-DRGs.
We believe the analysis presented below provides a reasonable
analysis of the potential growth in CMI due to improved documentation
and coding. In addition to the similarity between coding incentives
under the proposed MS-DRGs and the APR DRGs, we note that Maryland is
an all-payer State; therefore, hospitals are paid by all third party
payers--not just the State's Medicaid program--using the APR DRGs.
Coding has been very important for each hospital's overall revenue for
many years, and the incentives are uniform across all third party
payers. The transition to APR DRGs was known well in advance of the
actual date and, as stated above, hospitals were provided training in
coding under the APR DRGs. It is reasonable to expect that hospitals'
experience with improved documentation and coding will occur over a
period of at least 2 years. Thus, the experience in Maryland may be
similar to expectations for case-mix growth for the nation as a whole.
Finally, in reviewing the results from Maryland, we note that three
large teaching hospitals began using APR DRGs prior to SFY 2005. These
facilities generally treat a wider variety of patients with higher
acuity that gives them a greater potential for increasing coding under
the APR DRG system than other hospitals throughout Maryland. Because
these hospitals were paid using the APR DRGs earlier than other
Maryland hospitals, we believe data for them need to be analyzed from
an earlier time period. However, based on the consultations with the
HSCRC, we believe there were special issues with one of these hospitals
that may have made its case-mix growth during the early years of the
transition to the APR DRGs atypical of the other teaching hospitals.\9\
Therefore, we did not separately analyze the data for this hospital
from the earlier time period and, as stated below, included its data
with the rest of Maryland hospitals.
---------------------------------------------------------------------------
\9\ The HSCRC informed us that it began using APR DRGs for this
hospital to calculate the CMI and case-mix change to set the
hospital's charge per case target (CPC) that is used in Maryland's
all-payer ratesetting system for payment. However the HSCRC also
compared the reasonableness of hospital rates and costs for this
hospital relative to peer institutions using modified CMS DRGs to
calculate CMI and case-mix change. This use of dual systems to
calculate CMI and case-mix change made it difficult for the hospital
to code aggressively in the first few years of using APR DRGs.
---------------------------------------------------------------------------
As part of its contract with CMS, 3M Health Information Systems
reviewed the Maryland data in the context of our proposed changes to
adopt MS-DRGs. 3M grouped Medicare cases in Maryland through both the
CMS DRGs Version 24.0 and the MS-DRGs that we are proposing to adopt
for FY 2008. At our request, 3M deleted two of the three early
transition hospitals from the data. It compared the results of the
observed growth in case-mix from these data to the same process applied
to Medicare data, excluding Maryland hospitals.
The MedPAR data file for Federal fiscal year (FFY) 2006 (October
2005 through September 2006) was used to create relative weights for
both CMS DRG Version 24.0 and the proposed MS-DRGs. The MedPAR data
file contained 12,794,280 records. In constructing the weights, the
following edits were used:
Cases with zero covered charges or length of stay were
excluded.
Cases with length of stay greater than 2 years were
excluded.
Only hospitals contained in the impact file for the FY
2007 IPPS final rule were included.
[[Page 24710]]
The latter criterion excluded providers reimbursed outside of the
IPPS, including Maryland hospitals, from the weight calculation. 3M
employed standardized charge-based relative weights developed in
accordance with the CMS methodology. Cost-based weights were not used
and no adjustment to the charge weights was made for application of CMS
transfer and postacute care transfer payment policy.
3M further grouped 2 years of MedPAR data from FY 2004 and FY 2005,
using CMS DRG Version 24.0 and the proposed MS-DRGs for hospitals
nationally. Using 2 years of MedPAR data with one version of each DRG
system further required 3M to make adjustments to the data to reflect
revisions to ICD-9-CM codes that are made each year. MedPAR data for
Maryland IPPS acute care providers within the IPPS data set were
similarly assigned to the proposed MS-DRGs and CMS DRGs for FYs 2004
through 2006.
Each Maryland record, exclusive of the two early transition
teaching hospitals for the 3 observed years (SFY 2004 to SFY 2006), was
assigned to a proposed MS-DRG based on the ICD-9-CM codes the hospital
submitted. The same results were obtained from data at the national
level using the proposed MS-DRGs. Further, we obtained data from the
HSCRC showing the weighted average increase in case-mix for calendar
years 2001 to 2003 for the two large academic medical centers that
began an early transition to the APR DRGs. In addition, we also
obtained case-mix increases under the CMS DRGs for FYs 2004 through
2006. The Medicare Actuary examined the data below:
Table Q.--Maryland and National Data Used for Case-Mix Adjustment
Analysis
------------------------------------------------------------------------
FY 2004 to FY 2005 to FY 2004 to
2005 2006 2006
------------------------------------------------------------------------
Rest of Maryland MS-DRG CMI [Delta] 2.30% 2.57% 4.93%
.......... .......... CY 2000 to
FY 2003
Early Transition Hospitals......... 4.4 6.7 11.4
National MS-DRG CMI [Delta]........ 0.47 2.65 3.13
National CMS DRG CMI [Delta]....... -0.04 1.20 1.16
Blend of MS-DRG & CMS DRG [Delta] .......... .......... 1.68
using 0.47 Percent for 2005 and
1.2 Percent for 2006..............
Difference between Maryland Early .......... .......... 9.58
Transition Hospitals and National
Data..............................
Difference between Rest of Maryland .......... .......... 3.20
and National Data.................
Medicare Actuary Estimate (75%/25%) .......... .......... 4.8
between Early Transition and Rest
of Maryland.......................
------------------------------------------------------------------------
The data above show that case-mix for hospitals increased by 4.93
percent from SFYs 2004 to 2006, during which Maryland adopted the APR
DRGs for most hospitals. Case-mix for the two large teaching hospitals
that were paid using the APR DRGs earlier than other hospitals in the
State increased by 11.4 percent from SFYs 2001 to 2003. The weighted
average increase in Maryland from these two categories of hospitals is
5.58 percent. Case-mix using the proposed MS-DRGs would have increased
0.47 percent in FY 2005 and 2.65 percent in FY 2006. Nationally,
Medicare case-mix using the CMS DRGs decreased by 0.04 percent in FY
2005 and increased by 1.2 percent in FY 2006. The Actuary calculated a
Medicare case-mix increase nationally over 2 years using a blend of
these data from proposed MS-DRGs for FY 2005 and national Medicare data
for FY 2006 from the CMS DRGs. The Actuary did not use either the -0.04
percent for the CMS DRGs or the 2.65 percent for the proposed MS-DRGs
to create this blended case-mix because these figures appeared atypical
to national trends. Therefore, the Actuary dropped one atypically high
and low number from each of the 2 years of data and calculated an
average increase of 1.68 percent from FY 2004 to FY 2006. These data
demonstrate that the measure of average CMI for Medicare cases is
growing more rapidly within Maryland than nationally. Case-mix for the
Maryland teaching hospitals and the rest of Maryland increased 9.58
percent and 3.20 percent more, respectively, than the national average
over 2 years, suggesting that improved documentation and coding lead to
perceived, but not real, changes in case-mix.
The Actuary noted that the case-mix increase in Maryland for two
large teaching hospitals over a 2-year period was much higher in the
early years of the APR DRGs than other Maryland hospitals (11.4 percent
compared to 4.93 percent for the rest of Maryland). Further, teaching
hospitals generally treat cases with higher acuity than other hospitals
and have more opportunity to improve coding and documentation to
increase case-mix than other hospitals. Teaching hospitals also
represent a higher proportion of national Medicare data than they do of
the data in Maryland. The two early transition teaching hospitals in
Maryland account for approximately 10 percent of the Medicare
discharges in Maryland. Nationally, teaching hospitals account for
approximately 50 percent of Medicare discharges. Therefore, the Actuary
believes that the teaching hospitals should be given a higher weight in
the national data than they represent in Maryland. However, like other
hospitals, teaching hospitals vary in size and patient-mix and not all
have the same opportunity to improve documentation and coding.
Therefore, we believe the weight given to teaching hospitals should be
higher than the 10 percent for the two early transition hospitals in
Maryland but lower than the 50 percent of discharges that they account
for in Maryland. The Actuary gave a weight of 25 percent for teaching
hospitals and 75 percent for the rest of Maryland to the excess growth
in case-mix over the national average and estimates that an adjustment
of 4.8 percent will be necessary to maintain budget neutrality for the
transition to the MS-DRGs. This analyis reflects our current estimate
of the necessary adjustment needed to maintain budget neutrality for
improvements in documentation and coding that lead to increases in
case-mix. Consistent with the statute, we will compare the actual
increase in case-mix due to documentation and coding to our projection
once we have actual data to revise the Actuary's estimate and the
adjustment we make to the standardized amounts.
Based on the Actuary's analysis, using the Secretary's authority
under section 1886(d)(3)(A)(vi) of the Act to adjust the standardized
amount to eliminate the effect of changes in coding or classification
of discharges that do not reflect real changes in case-mix, we are
proposing to reduce the IPPS
[[Page 24711]]
standardized amounts by 2.4 percent each year for FY 2008 and FY 2009.
We are considering proposing a 4.8 percent adjustment for FY 2008.
However, we believe it would be appropriate to provide a transition
because we would be making a significant adjustment to the standardized
amounts. We are interested in public comments on whether we should
apply the proposed adjustment in a single year, over 2 years, or in
different increments than \1/2\ of the adjustment each year. Section
1886(d)(3)(A)(vi) of the Act further gives the Secretary authority to
revisit adjustments to the standardized amounts for changes in coding
or classification of discharges that were based on estimates in a
future year. Consistent with the statute, we will compare the actual
increase in case-mix due to documentation and coding to our projection
once we have actual data for FY 2008 and FY 2009 for the FY 2010 and FY
2011 IPPS rules. At that time, if necessary, we may make a further
adjustment to the standardized amounts to account for the difference
between our projection and actual data.
Under section 123(a)(1) of Pub. L. 105-33, as amended by section
307(b) of Pub. L. 106-554, we are also proposing to adjust the DRG
relative weights that are used for the LTCH PPS by -2.4 percent (0.976)
in FYs 2008 and 2009 to account for the anticipated increase in case
mix from improved documentation and coding. This proposed budget
neutrality adjustment is necessary to ensure that estimated aggregate
LTCH PPS payments would be neither greater than nor less than the
estimated aggregate LTCH PPS payments that would have been made without
the proposed LTC-DRG reclassification and update of the relative
weights. As discussed earlier with regards to the IPPS, we have
estimated that a 2.4 percent adjustment is needed to maintain budget
neutrality. We believe an adjustment of at least 2.4 percent for both
FYs 2008 and 2009 is appropriate under the LTCH PPS because LTCHs have
an average inpatient length of stay greater than 25 days and due to the
comorbidities of these patients, LTCHs will have a significantly
increased opportunity to better code for these paitents under the
proposed MS-LTC-DRG system. In the LTCH proposed rule (72 FR 4793) for
rate year (RY) 2008, we proposed to update the LTCH standardized
amounts by 0.71 percent. The proposed changes to the LTCH standardized
amounts will be effective on July 1. However, the proposed changes to
adopt MS-LTC-DRGs for LTCHs would not be effective until October 1 if
finalized. Because changes to the LTCH standardized amounts for RY 2008
are already being set through a separate rulemaking process and are
effective on July 1 instead of October 1, we decided that the
adjustment for increases in case mix due to improvements and
documentation and coding should be applied to the LTCH relative weights
rather than the standardized amounts.
7. Effect of the Proposed MS-DRGs on the Outlier Threshold
To qualify for outlier payments, a case must have costs greater
than Medicare's payment rate for the case plus a ``fixed loss'' or cost
threshold. The statute requires that the Secretary set the cost
threshold so that outlier payments for any year are projected to be not
less than 5 percent or more than 6 percent of total operating DRG
payments plus outlier payments. The Secretary is required by statute to
reduce the average standardized amount by a factor to account for the
estimated proportion of total DRG payments made to outlier cases.
Historically, the Secretary has set the cost threshold so that 5.1
percent of estimated IPPS payments are paid as outliers. The FY 2007
cost outlier threshold is $24,485. Therefore, for any given case, a
hospital's charge adjusted to cost by its hospital-specific CCR must
exceed Medicare's DRG payment by $24,485 for the case to receive cost
outlier payments.
Adoption of the proposed MS-DRGs will have an effect on calculation
of the outlier threshold. For this proposed rule, we analyzed how the
outlier threshold would be affected by adopting the proposed MS-DRGs.
Using FY 2005 MedPAR data, we have simulated the effect of the proposed
MS-DRGs on the outlier threshold. By increasing the number of DRGs from
538 to 745 to better recognize severity of illness, the proposed MS-
DRGs would be providing increased payment that better recognizes
complexity and severity of illness for cases that are currently paid as
outliers. That is, many cases that are high-cost outlier cases under
the current CMS DRG system would be paid using an MCC DRG under the
proposed MS-DRGs and could potentially be paid as nonoutlier cases. For
this reason, we expected the proposed FY 2008 outlier threshold to
decline from its FY 2007 level of $24,485. We are proposing an FY 2008
outlier threshold of $23,015. In section II.A.4. of the Addendum to
this proposed rule, we provide a more detailed explanation of how we
determined the proposed FY 2008 cost outlier threshold.
8. Effect of the Proposed MS-DRGs on the Postacute Care Transfer Policy
Existing regulations at Sec. 412.4(a) define discharges under the
IPPS as situations in which a patient is formally released from an
acute care hospital or dies in the hospital. Section 412.4(b) defines
transfers from one acute care hospital to another. Section 412.4(c)
establishes the conditions under which we consider a discharge to be a
transfer for purposes of our postacute care transfer policy. In
transfer situations, each transferring hospital is paid a per diem rate
for each day of the stay, not to exceed the full DRG payment that would
have been made if the patient had been discharged without being
transferred.
The per diem rate paid to a transferring hospital is calculated by
dividing the full DRG payment by the geometric mean length of stay for
the DRG. Based on an analysis that showed that the first day of
hospitalization is the most expensive (60 FR 45804), our policy
provides for payment that is double the per diem amount for the first
day (Sec. 412.4(f)(1)). Transfer cases are also eligible for outlier
payments. The outlier threshold for transfer cases is equal to the
fixed-loss outlier threshold for nontransfer cases, divided by the
geometric mean length of stay for the DRG, multiplied by the length of
stay for the case, plus one day. The purpose of the IPPS postacute care
transfer payment policy is to avoid providing an incentive for a
hospital to transfer patients to another hospital early in the
patients' stay in order to minimize costs while still receiving the
full DRG payment. The transfer policy adjusts the payments to
approximate the reduced costs of transfer cases.
Beginning with FY 2006 IPPS, the regulations at Sec. 412.4
specified that, effective October 1, 2005, we make a DRG subject to the
postacute care transfer policy if, based on Version 23.0 of the DRG
Definitions Manual (FY 2006), using data from the March 2005 update of
FY 2004 MedPAR file, the DRG meets the following criteria:
The DRG had a geometric mean length of stay of at least 3
days;
The DRG had at least 2,050 postacute care transfer cases;
and
At least 5.5 percent of the cases in the DRG were
discharged to postacute care prior to the geometric mean length of stay
for the DRG.
In addition, if the DRG was one of a paired set of DRGs based on
the presence or absence of a CC or major cardiovascular condition
(MCV), both paired DRGs would be included if either one met the three
criteria above.
[[Page 24712]]
If a DRG met the above criteria based on the Version 23.0 DRG
Definitions Manual and FY 2004 MedPAR data, we made the DRG subject to
the postacute care transfer policy. We noted in the FY 2006 final rule
that we would not revise the list of DRGs subject to the postacute care
transfer policy annually unless we make a change to a specific CMS DRG.
We established this policy to promote certainty and stability in the
postacute care transfer payment policy. Annual reviews of the list of
CMS DRGs subject to the policy would likely lead to great volatility in
the payment methodology with certain DRGs qualifying for the policy in
one year, deleted the next year, only to be reinstated the following
year. However, we noted that, over time, as treatment practices change,
it was possible that some CMS DRGs that qualified for the policy will
no longer be discharged with great frequency to postacute care.
Similarly, we explained that there may be other CMS DRGs that at that
time had a low rate of discharges to postacute care, but which might
have very high rates in the future.
The regulations at Sec. 412.4 further specify that if a DRG did
not exist in Version 23.0 of the DRG Definitions Manual or a DRG
included in Version 23.0 of the DRG Definitions Manual is revised, the
DRG will be a qualifying DRG if it meets the following criteria based
on the version of the DRG Definitions Manual in use when the new or
revised DRG first became effective, using the most recent complete year
of MedPAR data:
The total number of discharges to postacute care in the
DRG must equal or exceed the 55th percentile for all DRGs; and
The proportion of short-stay discharges to postacute care
to total discharges in the DRG exceeds the 55th percentile for all
DRGs. A short-stay discharge is a discharge before the geometric mean
length of stay for the DRG.
A DRG also is a qualifying DRG if it is paired with another DRG
based on the presence or absence of a CC or MCV that meets either of
the above two criteria.
The MS-DRGs that we are proposing to adopt for FY 2008 are a
significant revision to the current CMS DRG system. Because the
proposed new MS-DRGs are not reflected in Version 23.0 of the DRG
Definitions Manual, consistent with Sec. 412.4, we will need to
recalculate the 55th percentile thresholds in order to determine which
proposed MS-DRGs, if adopted, would be subject to the postacute care
transfer policy. Further, under the proposed MS-DRGs, the subdivisions
within the base DRGs will be different than those under the current CMS
DRGs. Unlike the current CMS DRGs, the proposed MS-DRGs are not divided
based on the presence or absence of a CC or MCV. Rather, the proposed
MS-DRGs have up to three subdivisions based on: (1) The presence of a
MCC; (2) the presence a CC; or (3) the absence of either an MCC or CC.
Consistent with our existing policy under which both DRGs in a CC/non-
CC pair are qualifying DRGs if one of the pair qualifies, we are
proposing that each MS-DRG that shares a base MS-DRG would be a
qualifying DRG if one of the MS-DRGs that shares the base DRG
qualifies. We are proposing to revise Sec. 412.4(d)(3)(ii) to codify
this proposed policy.
Similarly, we believe that the proposed changes to adopt MS-DRGs
also necessitate a revision to one of the criteria used in Sec.
412.4(f)(5) of the regulations to determine whether a DRG meets the
criteria for payment under the ``special payment methodology.'' Under
the special payment methodology, a case subject to the special payment
methodology that is transferred early to a postacute care setting will
be paid 50 percent of the total IPPS payment plus the average per diem
for the first day of the stay. Fifty percent of the per diem amount
will be paid for each subsequent day of the stay, up to the full MS-DRG
payment amount. A CMS DRG is currently subject to the special payment
methodology if it meets the criteria of Sec. 412.4(f)(5). Section
412.4(f)(5)(iv) specifies that if a DRG meets the criteria specified
under Sec. 412.4(f)(5)(i) through (f)(5)(iii), any DRG that is paired
with it based on the presence or absence of a CC or MCV is also subject
to the special payment methodology. Given that this criterion would no
longer be applicable under the proposed MS-DRGs, we are proposing to
add a new Sec. 412.4(f)(6) that includes a DRG in the special payment
methodology if it is part of a CC/non-CC MCV/non-MCV pair. We are
proposing to update this criterion so that it conforms to the proposed
changes to adopt MS-DRGs for FY 2008. The proposed revision would make
an MS-DRG subject to the special payment methodology if it shares a
base MS-DRG with an MS-DRG that meets the criteria for receiving the
special payment methodology.
Section 412.4(f)(3) states that the postacute care transfer policy
does not apply to CMS DRG 385 for newborns who die or are transferred.
We are proposing to make a conforming change to this paragraph to
reflect that this CMS DRG would become MS-DRG 789 (Neonates, Died or
Transferred to Another Acute Care Facility) under our proposed DRG
changes for FY 2008.
These revisions do not constitute a change to the application of
the postacute care transfer policy. Therefore, any savings attributed
to the postacute care transfer policy would be unchanged as a result of
adopting the MS-DRGs. Consistent with section 1886(d)(4)(C)(iii) of the
Act, aggregate payments from adoption of the proposed MS-DRGs cannot be
greater or less than those that would have been made had we not
proposed to make any DRG changes.
We are also proposing technical changes to Sec. Sec.
412.4(f)(5)(i) and (f)(5)(iv) to correct a cross-reference and a
typographical error, respectively.
E. Refinement of the Relative Weight Calculation
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Relative Weight Calculations'' at the beginning of
your comment.)
In the FY 2007 IPPS final rule (71 FR 47882), effective for FY
2007, we began to implement significant revisions to Medicare's
inpatient hospital rates by basing the relative weights on hospitals'
estimated costs rather than on charges. This reform was one of several
measured steps to improve the accuracy of Medicare's payment for
inpatient stays that include using costs rather than charges to set the
relative weights and making refinements to the current DRGs so they
better account for the severity of the patient's condition. Prior to FY
2007, we used hospital charges as a proxy for hospital resource use in
setting the relative weights. Both MedPAC and CMS have found that the
limitations of charges as a measure of resource use include the fact
that hospitals cross-subsidize departmental services in many different
ways that bear little relation to cost, frequently applying a lower
charge markup to routine and special care services than to ancillary
services. In MedPAC's 2005 Report to the Congress on Physician-Owned
Specialty Hospitals, MedPAC found that hospitals charge much more than
their costs for some types of services (such as operating room time,
imaging services and supplies) than others (such as room and board and
routine nursing care).\10\ Our analysis of the MedPAC report in the FY
2007 IPPS proposed rule (71 FR 24006) produced consistent findings.
---------------------------------------------------------------------------
\10\ Medicare Payment Advisory Commission: Report to the
Congress: Physician-Owned Specialty Hospitals, March 2005, p. 26.
---------------------------------------------------------------------------
In the FY 2007 IPPS proposed rule, we proposed to implement cost-
based weights incorporating aspects of a
[[Page 24713]]
methodology recommended by MedPAC, which we called the hospital-
specific relative value cost center (HSRVcc) methodology. MedPAC
indicated that an HSRVcc methodology would reduce the effect of cost
differences among hospitals that may be present in the national
relative weights due to differences in case-mix adjusted costs. After
studying Medicare cost report data, we proposed to establish 10
national cost center categories from which to compute 10 national CCRs
based upon broad hospital accounting definitions. We made several
important changes to the HSRVcc methodology that MedPAC recommended
using in its March 2005 Report to the Congress on Physician-Owned
Specialty Hospitals. We refer readers to the FY 2007 IPPS proposed rule
(71 FR 24007 through 24011) for an explanation and our reasons for the
modification to MedPAC's methodology. In its public comments on the FY
2007 IPPS proposed rule, MedPAC generally agreed with the adaptations
we made to its methodology, with the exception of expanding the number
of distinct hospital department CCRs being used from 10 to 13 and
basing the CCRs on Medicare-specific costs and charges.\11\
---------------------------------------------------------------------------
\11\ Hackbarth, Glenn: MedPAC Comments on the IPPS Rule, June
12, 2006, page 2.
---------------------------------------------------------------------------
We did not finalize the HSRVcc methodology for FY 2007 because of
concerns raised in the public comments on the FY 2007 IPPS proposed
rule (71 FR 47882 through 47898). Rather, we adopted a cost-weighting
methodology without the hospital-specific relative weight feature. We
also expanded the number of distinct hospital departments with CCRs
from 10 to 13. We indicated our intent to study whether to adopt the
HSRVcc methodology after we had the opportunity to further consider
some of the issues raised in the public comments. In the interim, we
adopted a cost-weighting methodology over a 3-year transition period,
substantially mitigating the redistributive payment impacts illustrated
in the proposed rule, while we engaged a contractor to assist us with
evaluating the HSRVcc methodology.
Some public commenters raised concerns about potential bias in cost
weights due to ``charge compression,'' which is the practice of
applying a lower percentage markup to higher cost services and a higher
percentage markup to lower cost services. These commenters were
concerned that our proposed weighting methodology may undervalue high
cost items and overvalue low cost items if a single CCR is applied to
items of widely varying costs in the same cost center. The commenters
suggested that the HSRVcc methodology would exacerbate the effect of
charge compression on the final relative weights. One of the commenters
suggested an analytic technique of using regression analysis to
identify adjustments that could be made to the CCRs to better account
for charge compression. We indicated our interest in researching
whether a rigorous model should allow an adjustment for charge
compression to the extent that it exists. We engaged a contractor, RTI
International (RTI), to study several issues with respect to the cost
weights, including charge compression, and to review the statistical
model provided to us by the commenter for adjusting the weights to
account for it. We discuss RTI's findings in detail below.
Commenters also suggested that the cost report data used in the
cost methodology are outdated, not consistent across hospitals, and do
not account for the costs of newer technologies such as medical
devices. However, the relationship between costs and charges (not costs
alone) is the important variable in setting the relative weights under
this new system. Older cost reports also do not include the hospital's
higher charges for these same medical devices. Therefore, it cannot be
known whether the CCR for the more recent technologies will differ from
those we are using to set the relative weights. The use of national
average cost center CCRs rather than hospital-specific CCRs may
mitigate potential inconsistencies in hospital cost reporting.
Nevertheless, we agree that it is important to review how hospitals
report costs and charges on the cost reports and on the Medicare claims
and asked RTI to further study this issue as well.
In summary, we proposed to adopt HSRVcc relative weights for FY
2007 using national average CCRs for 10 hospital departments. Based on
public comments concerned about charge compression and the accuracy of
cost reporting, we decided not to finalize the HSRVcc methodology, but
adopted costs weights without the hospital-specific feature. In
response to comments from MedPAC, we expanded the number of hospital
cost centers used in calculating the national CCRs from 10 to 13.
Finally, we decided to implement the cost-based weighting methodology
gradually, by blending the cost and charge weights over a 3-year
transition period beginning with FY 2007, while we further studied many
of the issues raised in the public comments. We refer readers to the FY
2007 IPPS final rule (71 FR 47882) for more details on our final policy
for calculating the cost-based DRG relative weights.
1. Summary of RTI's Report on Charge Compression
In August 2006, we awarded a contract to RTI to study the effects
of charge compression in calculating DRG relative weights. The purpose
of the study was to develop more accurate estimates of the costs of
Medicare inpatient hospital stays that can be used in calculating the
relative weights per DRG. RTI was asked to assess the potential for
bias in relative weights due to CCR differences within the 13 CCR
groups used in calculating the cost-based DRG relative weights and to
develop an analysis plan that explored alternative methods of
estimating costs, with the objective of better aligning the charges and
costs used in those calculations. RTI was asked to consider methods of
reducing the variation in CCRs across services within cost centers by:
Modifying existing cost centers and/or creating new costs
centers.
Using statistical methods, such as the regression
adjustment for charge compression. Some commenters on the FY 2007 IPPS
proposed rule suggested that we use a regression adjustment to account
for charge compression.
As part of its contract, RTI convened a Technical Expert Panel
composed of individuals representing academic institutions, hospital
associations, medical device manufacturers, and MedPAC. The members of
the panel met on October 27, 2006, to evaluate RTI's analytic plan, to
identify other areas that are likely to be affected by compression or
aggregation problems, and to propose suggestions for adjustments for
charge compression. We posted RTI's draft interim report on the CMS Web
site in March 2007. For more information, interested individuals can
view RTI's report at the following Web site: http://cms.hhs.gov/reports/downloads/Dalton.pdf
.
As the first step in its analysis, RTI compared the reported
Medicare program charge amounts from the cost reports to the total
Medicare charges summed across all claims filed by providers. Using
cost and charge data from the most recent available Medicare cost
reports and inpatient claims from IPPS hospitals, RTI was charged with
performing an analysis to determine how well the MedPAR charges matched
the cost report charges used to compute CCRs. The accuracy of the DRG
cost estimates is directly affected by this match because MedPAR
charges are multiplied by CCRs to estimate cost. RTI found consistent
matching of charges
[[Page 24714]]
from the Medicare cost report to charges grouped in the MedPAR claims
for some cost centers but there appeared to be problems with others.
For example, RTI found that the data between the cost report and the
claims matched well for total discharges, days, covered charges,
nursing unit charges, pharmacy, and laboratory. However, there appeared
to be inconsistent reporting between the cost reports and the claims
data for charges in several ancillary departments (medical supplies,
operating room, cardiology, and radiology). For example, the data
suggested that hospitals often include costs and charges for devices
and other medical supplies within the Medicare cost report cost centers
for Operating Room, Radiology or Cardiology instead of the Medical
Supplies cost center.
RTI found that some charge mismatching results from the way in
which charges are grouped in the MedPAR file. Examples include the
intermediate care nursing charges being grouped with intensive care
nursing charges, and electroencephalography (EEG) charges being grouped
with laboratory charges. RTI suggested that reclassifying intermediate
care charges from the intensive care unit to the routine cost center
could address the former problem.
As the second step in its analysis, RTI reviewed the existing cost
centers that are combined into the 13 groups used in calculating the
national average CCRs. RTI identified CCRs with potential aggregation
problems and considered whether separating the charge groups could
result in more accurate cost conversion at the DRG level. The analysis
led RTI to calculate separate CCRs for Emergency Room and Blood and
Blood Administration, both of which had been included in ``Other
Services'' in FY 2007.
During this second step, RTI noted that a variation of charge
compression is also present in inpatient nursing services because most
patients are charged a single type of accommodation rate per day that
is linked to the type of nursing unit (routine, intermediate, or
intensive), but not to the hours of nursing services given to
individual patients. Unlike the situation with charge compression in
ancillary service areas, there are virtually no detailed charge codes
that can distinguish patient nursing care use. Therefore, any potential
bias cannot be empirically evaluated or adjustments made without
additional data.
Next, RTI examined individual revenue codes within the cost centers
and used regression analysis to determine whether certain revenue codes
in the same cost center had significantly different markup rates. Those
revenue codes include devices, prosthetics, implants within the Medical
Supplies cost center, IV Solutions within the Drugs cost center, CT
scanning and MRI within the Radiology cost center, Cardiac
Catheterization within the Cardiology cost center, and Intermediate
Care Units within the Routine Nursing Care cost center. Devices,
prosthetics, and implants within the Medical Supplies cost center have
a lower markup and, as a result, a higher CCR than the remainder of the
medical supplies group according to RTI's analysis. Within the Drugs
CCR, IV Solutions have a much higher markup and much lower CCR than the
other drugs included in the category. Within the Radiology CCR, CT
scanning and MRI have higher markups and lower CCRs than the remaining
radiology services. RTI's results for Cardiac Catheterization and
Intermediate Care Units were ambiguous due to data problems.
RTI's analysis also determined the impact of the disaggregated CCRs
on the relative weights. Differences in CCRs alone do not necessarily
alter the DRG relative weights. The impact on the relative weights is
the result of the interaction of CCR differences and DRG differences in
the proportions of the services with different CCRs. In FY 2007, we
calculated relative weights using CCRs for 13 hospital departments. The
RTI analysis suggests expanding the number of distinct hospital
department CCRs from 13 to 19. Of the additional six CCRs, two would
result from separating the Emergency Department and Blood (Products and
Administration) from the residual ``Other Services'' category. Four
additional CCRs would result from applying a regression method similar
to a method suggested in last year's public comments to three existing
categories: supplies, radiology, and drugs. This method, as adapted by
RTI, used detailed coding of charges to disaggregate hospital cost
centers and derive separate, predicted alternative CCRs for the
disaggregated services. RTI's analysis suggests splitting Medical
Supplies into one CCR for devices, implants, and prosthetics and one
CCR for Other Supplies; splitting Radiology into one CCR for MRIs, one
CCR for CT scans, and one CCR for Other Radiology; and splitting Drugs
into one CCR for IV Solutions and one CCR for Other Drugs.
RTI's draft report provides the potential impacts of adopting these
changes to the CCRs. We note that RTI's analysis was based on Version
24.0 of the CMS DRGs. Because the proposed MS-DRGs were under
development for the FY 2008 IPPS proposed rule, they were unavailable
to RTI for their analysis. The results of RTI's analysis may be
different if applied to the proposed MS-DRGs. However, it seems
reasonable to believe that the impact of RTI's suggestions will be
consistent using Version 24.0 of the CMS DRGs and the proposed MS-DRGs,
as both systems generally use the same base DRGs while applying
different subdivisions to recognize severity of illness. Of all the
adjusted CCRs, the largest impact on weights came from accounting for
charge compression in medical supplies for devices and implants. The
impact on weights from accounting for CCR differences among drugs was
modest. The impact of splitting MRI and CT scanning from the radiology
CCR was greater than the impact of modifying the Drugs CCRs, but less
than the impact of splitting the medical supplies group. Separating
Emergency Department and Blood Products and Administration from the
``Other Services'' category would raise the CCR for other services in
the group.
RTI found that disaggregating cost centers may have a mitigating
effect on the impact of transitioning from charge-based weights to
cost-based weights. That is, the changes being suggested by RTI will
generally offset (fully or more than fully in some cases or in part in
other cases) the impacts of fully implemented cost weights that we are
adopting over the FY 2007-FY 2009 transition period. Thus, RTI's
analysis suggests that expanding the number of distinct hospital
department CCRs used to calculate cost weights from 13 to 19 will
generally increase the relative weights for surgical DRGs and decrease
them for the medical DRGs compared to the fully implemented cost-based
weights to which we began transitioning in FY 2007.
2. RTI Recommendations
In its report, RTI provides recommendations for the short term,
medium term, and long term, to mitigate aggregation bias in the
calculation of relative weights. We summarize RTI's recommendations
below and respond to each of them.
a. Short-Term Recommendations
Most of RTI's short-term recommendations have already been
described above. The most immediate changes that RTI recommends
implementing include expanding from 13 distinct hospital department
CCRs to 19 by:
[[Page 24715]]
Disaggregating ``Emergency Room'' and ``Blood and Blood
Products'' from the ``Other Services'' cost center;
Establishing regression-based estimates as a temporary or
permanent method for disaggregating the Medical Supplies, Drugs, and
Radiology cost centers; and
Reclassifying intermediate care charges from the intensive
care unit cost center to the routine cost center.
We believe these recommendations have significant potential to
address issues of charge compression and potential mismatches between
how costs and charges are reported in the cost reports and on the
Medicare claims.
RTI's recommendations show significant promise in the short term
for addressing issues raised in the public comments on the cost weights
in the FY 2007 IPPS proposed rule. However, in the time available for
the development of this proposed rule, we have been unable to
investigate how RTI's recommended changes may interact with other
potential changes to the DRGs and to the method of calculating the DRG
relative weights. As we noted above, RTI's analysis was done on the
Version 24.0 of the CMS DRGs and not the MS-DRGs we are proposing for
FY 2008. For this proposed rule, we were not able to examine the
combined impacts of the proposed MS-DRGs and RTI's recommendations. In
addition, we believe it is also important to consider that, in the FY
2007 IPPS final rule (71 FR 47897), we anticipated undertaking further
analysis of the HSRVcc methodology over the next year in conjunction
with the research we were to do on charge compression. Analysis of the
HSRVcc methodology will be part of the second phase of the RAND study
of alternative DRG systems to be completed by September 1, 2007, that
has not been completed in time for this proposed rule. As a result, we
have also been unable to consider the effects of the HSRVcc methodology
together with the proposed MS-DRGs and RTI's recommendations. Finally,
we note that in order to complete the analysis in time for this
proposed rule, RTI's study used only inpatient hospital claims.
However, hospital ancillary departments typically include both
inpatient and outpatient services within the same department and only a
single CCR covering both inpatient and outpatient services can be
calculated from Medicare cost reports. Although we believe that
applying the regression method used by RTI to only inpatient services
is unlikely to have had much impact for the adjustments recommended by
RTI, the preferred approach would be to apply the regression method to
the combined inpatient and outpatient services. The latter approach
would ensure that any potential CCR adjustments in the IPPS would be
consistent with potential CCR adjustments in the OPPS. We hope to
expand their analysis to incorporate outpatient services during the
coming year. For all of these reasons, we are not proposing to adopt
RTI's recommendations for FY 2008.
Although we are not proposing to adopt RTI's recommendations for FY
2008, we are interested in public comments on expanding from 13 CCRs to
19 CCRs. Again, we note that RTI's analysis suggests significant
improvements that could result in the cost weights from adopting its
recommendations to adjust for charge compression. Therefore, we are
also interested in public comments on whether we should proceed to
adopt the RTI recommended changes for FY 2008 in the absence of a
detailed analysis of how the relative weights would change if we were
to address charge compression while simultaneously adopting an HSRVcc
methodology together with the proposed MS-DRGs. Given the change in the
impacts that were illustrated in last year's FY 2007 IPPS final rule
(71 FR 47915-47916), going from a hospital-specific to a nonhospital-
specific cost-weighting methodology, we believe that sequentially
adjusting for charge compression and later adopting an HSRVcc
methodology could create the potential for instability in IPPS payments
over the next 2 years (that is, payments for surgical DRGs would
increase and payment for medical DRGs would decrease if we were adopt
the RTI recommended changes for FY 2008, but could potentially reverse
direction if we were to adopt an HSRVcc methodology for FY 2009).
Again, we are interested in public comments on all of these issues
before we make a final decision as to whether to proceed with the RTI's
short-term recommendations in the final rule for FY 2008.
Among its other short-term recommendations, RTI also suggested that
we incorporate edits to reject or require more intensive review of cost
reports from hospitals with extreme CCRs. This action would reduce the
number of hospitals with excluded data in the national CCR
computations, and would also improve the accuracy of all departmental
CCRs within problem cost reports by forcing hospitals to review and
correct the assignment of costs and charges before the cost report is
filed. Although we do not have a substantive disagreement with the
recommendation, we generally focus our audit resources on areas in
which cost report information directly affects payments to individual
providers.
RTI further suggested revising cost report instructions to reduce
cost and charge mismatching and program charge misalignment in its
short-term recommendations. Although RTI suggests such an action could
be immediately effective for correcting the reporting of costs and
charges for medical supply items that are now distributed across
multiple cost centers, we note that changes to improve cost reporting
now will not become part of the relative weights for several years
because of lags between the submission of hospital reports and our
ability to use them in setting the relative weights. Currently, we
expect there will continue to be a 3-year lag between a hospital's cost
report fiscal year and the year it is used to set the relative weights.
Thus, even if it were possible to issue instructions immediately
beginning for FY 2008, revised reporting would not affect the relative
weights until at least FY 2011. Nevertheless, we agree with this
recommendation, and we welcome public input on potential changes to
cost reporting instructions to improve consistency between how charges
are reported on cost reports and in the Medicare claims. We will
consider these changes to the cost reporting instructions as we
consider further changes to the cost report described below.
b. Medium-Term Recommendations
RTI recommended that we expand the MedPAR file to include separate
fields that disaggregate several existing charge departments. For
compatibility with prior years' data, the new fields should partition
the existing ones rather than recombine charges. RTI recommended
including additional fields in the MedPAR file for the hospital
departments that it statistically disaggregated in its report, as well
as intermediate care, observation beds, other special nursing codes,
therapeutic radiation and EEG, and possibly others. As with some of
RTI's earlier recommendations with respect to cost reports, we will
examine this suggestion in conjunction with other competing priorities
CMS has been given for our information systems. We have limited
information systems resources, and we will need to consider whether the
time constraints we have to develop the IPPS final rule, in conjunction
with the inconvenience of using the SAF and accounting for charge
compression through regression, will justify the infrastructure cost to
our information
[[Page 24716]]
systems of incorporating these variables into the MedPAR.
Finally, RTI's medium-term recommendations include encouraging
providers to use existing standard cost centers, particularly those for
Blood and Blood Administration and for Therapeutic Radiology, in the
current Medicare cost report. We believe this recommendation is closely
related to the one for improved cost reporting instructions. Therefore,
we will consider this recommendation as part of any further effort we
may undertake to revise cost reporting instructions or change the cost
report.
c. Long-Term Recommendations
RTI's long-term recommendations include adding new cost centers to
the Medicare cost report and/or undertaking the following activities:
Add ``Devices, Implants and Prosthetics'' under the line
for ``Medical Supplies Charged to Patients.'' Consider also adding a
similar line for IV Solutions as a subscripted line under the line for
``Drugs Charged to Patients.''
Add CT Scanning and MRI as subscripted lines under the
line for ``Radiology-Diagnostic.'' About one-third of hospitals that
offer CT Scanning and/or MRI services are already reporting these
services on nonstandard line numbers. More consistent reporting for
both cost centers would eliminate the need for statistical estimation
on the radiology CCRs.
In consultation with hospital industry representatives,
determine the best way to separate cardiology cost centers and add a
new standard cost center for cardiac catheterization and/or for all
other cardiac diagnostic laboratory services. About 20 percent of
hospitals already include a nonstandard line on their cost reports for
catheterization. Creating a new standard cost center could improve
consistency in reporting and substantially improve the program charge
mismatching that now occurs.
In consultation with hospital industry representatives,
consider establishing a new cost center to capture intermediate care
units as distinct from routine or intensive care.
Establish expert study groups or other research vehicles
to study options for improving patient-level charging within nursing
units. Nursing accounts for one-fourth of IPPS charges and 41 percent
of the computed costs from our claims analysis file. Historically,
nursing charges and costs have been assigned to patients without
relying on individual measures of service use. Consideration should be
given to finding ways to improve precision in nursing cost-finding that
will improve relative resource weights without adding substantial
administrative costs to either the Medicare program or to hospitals.
We agree with RTI that attention should be paid to these issues as
we consider changes to the Medicare cost report. The cost report has
not been revised in nearly 10 years. During this time, there have been
significant changes to the Medicare statute and regulations that have
affected the Medicare payment policies. Necessary incremental changes
have been made to the Medicare cost report over the years to
accommodate the Medicare wage index, disproportionate share payments,
indirect and direct graduate medical education payments, reporting of
uncompensated care costs, among others. The adoption of cost-based
weights for the IPPS beginning in FY 2007 has brought further attention
to the importance of the Medicare cost report and how hospitals report
costs and charges. We recently began doing a comprehensive review of
the Medicare cost report and plan to make updates that will consider
its many uses. As we update the cost report, we will give strong
consideration to RTI's recommendations and potential long-term
improvements that could be made to the IPPS cost-based relative
weighting methodology.
F. Hospital-Acquired Conditions, Including Infections
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Hospital-Acquired Conditions'' at the beginning of
your comment.)
1. General
Medicare's IPPS encourages hospitals to treat patients efficiently.
Hospitals receive the same DRG payment for stays that vary in length.
In many cases, complications acquired in the hospital do not generate
higher payments than the hospital would otherwise receive for other
cases in the same DRG. To this extent, the IPPS does encourage
hospitals to manage their patients well and to avoid complications,
when possible. However, complications, such as infections, acquired in
the hospital can trigger higher payments in two ways. First, the
treatment of complications can increase the cost of hospital stays
enough to generate outlier payments. However, the outlier payment
methodology requires that hospitals experience large losses on outlier
cases (for example, in FY 2007, the fixed-loss amount was $24,485
before a case qualified for outlier payments, and the hospital then
only received 80 percent of its costs above the fixed-loss cost
threshold). Second, there are about 121 sets of DRGs that split based
on the presence or absence of a complication or comorbidity (CC). The
CC DRG in each pair would generate a higher Medicare payment. If a
condition acquired during the beneficiary's hospital stay is one of the
conditions on the CC list, the result may be a higher payment to the
hospital under a CC DRG. Under the proposed MS-DRGs, there will be 258
sets of DRGs that are split into 2 or 3 subgroups based on the presence
or absence of a major CC (MCC) or CC. If a condition acquired during
the beneficiary's hospital stay is one of the conditions on the MCC or
CC list, the result may be a higher payment to the hospital under the
MS-DRGs. (See section II.C. of the FY 2007 IPPS final rule (71 FR
47881) for a detailed discussion of proposed DRG reforms.)
2. Legislative Requirement
Section 5001(c) of Pub. L. 109-171 requires the Secretary to
select, by October 1, 2007, at least two conditions that are (a) high
cost or high volume or both, (b) result in the assignment of a case to
a DRG that has a higher payment when present as a secondary diagnosis,
and (c) could reasonably have been prevented through the application of
evidence-based guidelines. For discharges occurring on or after October
1, 2008, hospitals will not receive additional payment for cases in
which one of the selected conditions was not present on admission. That
is, the case will be paid as though the secondary diagnosis was not
present. Section 5001(c) provides that we can revise the list of
conditions from time to time, as long as the list contains at least two
conditions. Section 5001(c) also requires hospitals to submit the
secondary diagnoses that are present at admission when reporting
payment information for discharges on or after October 1, 2007.
3. Public Input
In the FY 2007 IPPS proposed rule (71 FR 24100), we sought input
from the public about which conditions and which evidence-based
guidelines should be selected in order to implement section 5001(c) of
Public Law 109-171. The comments that we received were summarized in
the FY 2007 IPPS final rule (71 FR 48051 through 48053). In that final
rule, we indicated that the next opportunity for formal public comment
would be this FY 2008 proposed rule and encouraged the public to
comment on our proposal at that time.
[[Page 24717]]
In summary, the majority of the comments that we received in
response to the FY 2007 IPPS proposed rule addressed conceptual issues
concerning the selection, measurement, and prevention of hospital-
acquired infections. Many commenters encouraged CMS to engage in a
collaborative discussion with relevant experts in designing,
evaluating, and implementing this section. The commenters urged CMS to
include individuals with expertise in infection control and prevention,
as well as representatives from the provider community, in the
discussions.
Many commenters supported the statutory requirement for hospitals
to submit information regarding secondary diagnoses present on
admission beginning in FY 2008, and suggested that it would better
enable CMS and health care providers to more accurately differentiate
between comorbidities and hospital-acquired complications. MedPAC, in
particular, noted that this requirement was recommended in its March
2005 Report to Congress and indicated that this information is
important to Medicare's value-based purchasing efforts. Other
commenters cautioned us about potential problems with relying on
secondary diagnosis codes to identify hospital-acquired complications,
and indicated that secondary diagnosis codes may be an inaccurate
method for identifying true hospital-acquired complications.
A number of commenters expressed concerns about the data coding
requirement for this payment change and asked for detailed guidance
from CMS to help them identify and document hospital-acquired
complications. Other commenters expressed concern that not all
hospital-acquired infections are preventable and noted that sicker and
more complex patients are at greater risk for hospital-acquired
infections and complications. Commenters suggested that CMS include
standardized infection-prevention process measures, in addition to
outcome measures of hospital-acquired infections.
Some commenters proposed that CMS expand the scope of the payment
changes beyond the statutory minimum of two conditions. They noted that
the death, injury, and cost of hospital-acquired infections are too
high to limit this provision to only two conditions. Commenters also
recommended that CMS annually select additional hospital-acquired
complications for the payment change. Conversely, a number of
commenters proposed that CMS initially begin with limited
demonstrations to test CMS' methodology before nationwide
implementation. One commenter recommended that CMS include appropriate
consumer protections to prevent providers from billing patients for the
nonreimbursed costs of the hospital-acquired complications and to
prevent hospitals from selectively avoiding patients perceived at risk
of complications.
In addition to the broad conceptual suggestions, some commenters
recommended specific conditions for possible inclusion in the payment
changes, which we discuss in detail in section II.D.4. of this
preamble. We also discuss throughout section II.D. of this preamble
other comments that we have considered in developing hospital-acquired
conditions that would be subject to reporting.
4. Collaborative Effort
CMS worked with public health and infectious disease experts from
the Centers for Disease Control and Prevention (CDC) to identify a list
of hospital-acquired conditions, including infections, as required by
section 5001(c) of Public Law 109-171. As previously stated, the
selected conditions must meet the following three criteria: (a) High
cost or high volume or both; (b) result in the assignment of the case
to a DRG that has a higher payment when present as a secondary
diagnosis; and (c) could reasonably have been prevented through the
application of evidence-based guidelines. CMS and CDC staff also
collaborated on developing a process for hospitals to submit a Present
on Admission (POA) indicator with each secondary condition. The statute
requires the Secretary to begin collecting this information as of
October 1, 2007. The POA indicator is required in order for us to
determine which of the selected conditions developed during a hospital
stay. The current electronic format used by hospitals to obtain this
information (ASC X12N 837, Version 4010) does not provide a field to
obtain the POA information. We are in the process of issuing
instructions to require acute care IPPS hospitals to submit the POA
indicator for all diagnosis codes effective October 1, 2007. The
instructions will specify how hospitals under the IPPS will submit this
information in segment K3 in the 2300 loop, data element K301 on the
ASC X12N 837, Version 4010 claim. Specific instructions on how to
select the correct POA indicator for a diagnosis code are included in
the ICD-9-CM Official Guidelines for Coding and Reporting. These
guidelines can be found at the following Web site: http://www.cdc.gov/nchs/datawh/ftpserv/ftpicd9/ftpicd9.htm
CMS and CDC staff also received input from a number of groups and
organizations on hospital-acquired conditions, including infections.
Many of these groups and organizations recommended the selection of
conditions mentioned in the FY 2007 IPPS final rule, including the
following because of the high cost or high volume (frequency) of the
condition, or both, and because in some cases preventable guidelines
already exist:
Surgical site infections. The groups and organizations
stated that there were evidence-based measures to prevent the
occurrence of these infections which are currently measured and
reported as part of the Surgical Care Improvement Program (SCIP).
Ventilator-associated pneumonias. The groups and
organizations pointed out that these conditions are currently measured
and reported through SCIP. However, other organizations counseled
against selecting these conditions because they believed it was
difficult to obtain good definitions and that it was not always clear
which ones are hospital-acquired.
Catheter associated bloodstream infections.
Pressure ulcers, as an alternative to hospital-acquired
infections. The groups and organizations pointed out that the specific
language in section 5001(c) of Public Law 109-171 mentions hospital-
acquired conditions; therefore, the language does not restrict the
Secretary to the selection of infections.
Hospital falls, as an alternative to hospital-acquired
infections. The injury prevention groups included this condition among
a group referred to as ``serious preventable events,'' also commonly
referred to as ``never events'' or ``serious reportable events.'' A
serious preventable event is defined as a condition which should not
occur during an inpatient stay.
In addition to the aforementioned conditions, we received other
recommendations for the selection of hospital-acquired conditions.
These recommendations were also based on the high cost and the high
volume of the condition, or both, or the fact that preventable
guidelines exist. The recommendations include--
Bloodstream infections/septicemia. Some commenters
suggested that we focus on one specific organism, such as staph aureus
septicemia.
Pneumonia. Some commenters recommended the inclusion of a
broader group of pneumonia patients, instead of restricting cases to
ventilator-associated pneumonias. Some commenters
[[Page 24718]]
mentioned that while prevention guidelines exist for pneumonia, it is
not clear how effective these guidelines may be in preventing
pneumonia.
Vascular catheter associated infections. Commenters
pointed out that there are CDC guidelines for these infections. Other
commenters pointed out that while this condition certainly deserves
focused attention by health care providers, there is not a clear one
unique ICD-9-CM code that identifies vascular catheter-associated
infections. Therefore, these commenters suggested that there would be
difficulty separately identifying these conditions.
Clostridium difficile-associated disease (CDAD). Several
commenters identified this condition as a significant public health
issue. Other commenters pointed out that while prevalence of this
condition is emerging as a public health problem, there is not
currently a strategy for reasonably preventing these infections.
Methicillin-resistant staphylococcus aureus (MRSA).
Several commenters pointed out that MRSA has become a very common
bacteria occurring both in and outside the hospital environment.
However, other organizations pointed out that the code for MRSA (V09.0,
Infection with microorganism resistant to penicillins Methicillin-
resistant staphylococcus aureus) is not currently classified as a CC.
Therefore, the commenters stated that MRSA does not lead to a higher
reimbursement when the code is reported.
Serious preventable events. As stated earlier, some
commenters representing injury prevention groups suggested including a
broader group of conditions than hospital falls which should not be
expected to occur during a hospital admission. Hey notes that these
conditions are referred to as ``serious preventable events,'' and
include events such as the following: (a) Leaving an object in during
surgery; (b) operating on the wrong body part or patient, or performing
the wrong surgery; (c) air embolism as a result of surgery; and (d)
providing incompatible blood or blood products. Other commenters
indicated that serious preventable events are so rare that they should
not be selected as a hospital condition that cannot result in a case
being assigned to a higher paying DRG.
5. Criteria for Selection of the Hospital-Acquired Conditions
CMS and CDC staff greatly appreciate the many comments and
suggestions offered by organizations and groups that were interested in
providing input into the selection of the initial hospital-acquired
conditions.
CMS and CDC staff evaluated each recommended condition under the
three criteria established by section 1886(d)(4)(D)(iv) of the Act. In
order to meet the higher payment criterion, the condition selected must
have an ICD-9-CM diagnosis code that clearly identifies the condition
and is classified as a CC, or as an MCC as proposed for the MS-DRGs in
this proposed rule. Some conditions recommended for inclusion among the
initial hospital-acquired conditions did not have codes that clearly
identified the conditions. Because there has not been national
reporting of a POA indicator for each diagnosis, there is no Medicare
data to determine the incidence of the reported secondary diagnoses
occurring after admission. To the extent possible, we used information
from the CDC on the incidence of these conditions. CDC's data reflect
the incidence of hospital-acquired conditions in 2002. We also examined
FY 2006 Medicare data on the frequency that these conditions were
reported as secondary diagnoses. We developed the following criteria to
assist in our analysis of the conditions. The conditions described were
those recommended for inclusion in the initial hospital-acquired
infection provision.
Coding--Under section 1886(d)(4)(D)(ii)(I) of the Act, a
discharge is subject to the payment adjustment if ``the discharge
includes a condition identified by a diagnosis code'' selected by the
Secretary under section 1886(d)(4)(D)(iv) of the Act. We only selected
conditions that have (or could have) a unique ICD-9-CM code that
clearly describes the condition. Some conditions recommended by the
commenters would require the use of two or more ICD-9-CM codes to
clearly identify the conditions. Although we did not exclude these
conditions from further consideration, the need to utilize multiple
ICD-9-CM codes to identify them may present operational issues. For
instance, below we describe in detail the complexities associated with
selecting septicemia as a hospital-acquired condition that would be
subject to section 5001(c) of the DRA. In some cases, septicemia may be
a reasonably preventable condition with proper hospital care. However,
in other cases, clinicians may argue that the condition arose from
further development of another infection the patient did have upon
admission and the septicemia was not preventable. As we indicate in
detail below, there could be a significant variety of clinical
scenarios and potential coding vignettes to describe situations where
septicemia occurs. Although we could select septicemia, we would also
have to identify many exclusions for situations where the septicemia is
not preventable. The vast number of clinical scenarios that we would
have to account for could complicate implementation of the provision.
Burden (High Cost/High Volume)--Under section
1886(d)(4)(D)(iv)(I) of the act, we must select cases that have
conditions that are high cost or high volume, or both.
Prevention guidelines--Under section 1886(d)(4)(D)(iv)(II)
of the Act, we must select codes that describe conditions that could
reasonably have been prevented through application of evidence-based
guidelines. We evaluated whether there is information available for
hospitals to follow to prevent the condition from occurring.
CC--Under section 1886(d)(4)(D)(iv)(III) of the Act, we
must select codes that result in assignment of the case to a DRG that
has a higher payment when the code it present as a secondary diagnosis.
The condition must be an MCC or a CC that would, in the absence of this
provision, result in assignment to a higher paying DRG.
Considerations--We evaluate each condition above according
to how it meets the statutory criteria in light of the potential
difficulties that we would face if the condition were selected.
6. Proposed Selection of Hospital-Acquired Conditions
We discuss below our analysis of each of the conditions that were
raised as possible candidates for selection under section 5001(c) of
Pub. L. 109-171 according to the criteria described above in section
II.D.5. of this preamble. We also discuss any considerations, which
would include any administrative issues surrounding the selection of a
proposed condition. For example, the condition may only be able to be
identified by multiple codes, thereby requiring the development of
special GROUPER logic to also exclude similar or related ICD-9-CM codes
from being classified as a CC. Similarly, a condition acquired during a
hospital stay may arise from another condition that the patient had
prior to admission, making it difficult to determine whether the
condition was reasonably preventable. Following a discussion of each
condition, we provide a summary table that describes the extent to
which each condition meets each of the above criteria. We present 13
conditions in rank order. In our view, the conditions listed at the top
of the table best meet the statutory selection criteria, while the
conditions
[[Page 24719]]
listed lower may meet the selection criteria but could present a
particular challenge (that is, they may be preventable only in some
circumstances but not in others). Therefore, we would submit that the
first conditions listed should receive the highest consideration of
selection among our initial group of hospital-acquired conditions. We
encourage comments on whether or not we have ranked these conditions
appropriately. We also encourage additional comments on clinical,
coding, and prevention issues that may affect the conditions selected.
While we have ranked these conditions, there may be compelling public
health reasons for including conditions that are not at the top of our
list. We ask commenters to recommend how many and which conditions
should be selected for implementation on October 1, 2008, along with
justifications for these selections.
(a) Catheter-Associated Urinary Tract Infections
Coding--ICD-9-CM code 996.64 (Infection and inflammatory
reaction due to indwelling urinary catheter) clearly identifies this
condition. The hospital would also report the code for the specific
type of urinary infection. For instance, when a patient develops a
catheter associated urinary tract infection during the inpatient stay,
the hospital would report code 996.64 and 599.0 (Urinary tract
infection, site not specified) to clearly identify the condition. There
are also a number of other more specific urinary tract infection codes
that could also be coded with code 996.64. These codes are classified
as CCs. If we were to select catheter-associated urinary tract
infections, we would implement the decision by not counting code 996.64
and any of the urinary tract infection codes listed below when both
codes are present and the condition was acquired after admission. If
only code 996.64 were coded on the claim as a secondary diagnosis, we
would not count it as a CC.
Burden (High Cost/High Volume)--CDC reports that there are 561,667
catheter-associated urinary tract infections per year. For FY 2006,
there were 11,780 reported cases of Medicare patients who had a
catheter associated urinary tract infection as a secondary diagnosis.
The cases had average charges of $40,347 for the entire hospital stay.
According to a study in the American Journal of Medicine, catheter-
associated urinary tract infection is the most common nosocomial
infection, accounting for more than 1 million cases in hospitals and
nursing homes nationwide.\12\ Approximately 11.3 million women in the
United States had at least one presumed acute community-acquired
urinary tract infection resulting in antimicrobial therapy in 1995,
with direct costs estimated at $659 million and indirect costs totaling
$936 million. Nosocomial urinary tract infection necessitates one extra
hospital day per patient, or nearly 1 million extra hospital days per
year. It is estimated that each episode of symptomatic urinary tract
infection adds $676 to a hospital bill. In total, according to the
study, the estimated annual cost of nosocomial urinary tract infection
in the United States ranges between $424 and $451 million.
---------------------------------------------------------------------------
\12\ Foxman, B.: ``Epidemiology of urinary tract infections:
incidence, morbidity, and economic costs,'' The American Journal of
Medicine, 113 Suppl. 1A, pp. 5s-13s, 2002.
---------------------------------------------------------------------------
Prevention guidelines--There are widely recognized guidelines for
the prevention of catheter-associated urinary tract infections.
Guidelines can be found at the following Web site: http://www.cdc.gov/ncidod/dhqp/gl_catheter_assoc.html
.
CC--Codes 996.64 and 599.0 are classified as CCs in the current CMS
DRGs as well as in the proposed MS-DRGs.
Considerations--The primary prevention intervention would be not
using catheters or removing catheters as soon as possible, both of
which are worthy goals because once catheters are in place for 3 to 4
days, most clinicians and infectious disease/infection control experts
do not believe urinary tract infections are preventable. While there
may be some concern about the selection of catheter associated urinary
tract infections, it is an important public health goal to encourage
practices that will reduce urinary tract infections. Approximately 40
percent of Medicare beneficiaries have a urinary catheter during
hospitalization based on Medicare Patient Safety Monitoring System
(MPSMS) data.
As stated above in the Coding section, this condition is clearly
identified through ICD-9-CM code 996.64. Code 996.64 is classified as a
CC. The hospital would also report the code for the specific type of
urinary infection. For instance, when a patient develops a catheter
associated urinary tract infection during the inpatient stay, the
hospital would report codes 996.64 and 599.0 or another more specific
code that clearly identifies the condition. These codes are classified
as CCs under the current CMS DRGs as well as the proposed MS-DRGs. To
select catheter-associated urinary tract infections as one of the
hospital-acquired conditions that would not be counted as a CC, we
would not classify code 996.64 as a CC if the condition occurred after
admission. Furthermore, we would also not classify any of the codes
listed below as CCs if present on the claim with code 996.64 because
these additional codes identify the same condition. The following codes
represent specific types of urinary infections. We did not include
codes for conditions that could be considered chronic urinary
infections, such as code 590.00 (Chronic pyelonephritis, without lesion
or renal medullary necrosis). Chronic conditions may indicate that the
condition was not acquired during the current stay. We would not count
code 996.64 or any of the following codes representing acute urinary
infections if they developed after admission and were coded together on
the same claim.
112.2 (Candidiasis of other urogenital sites)
590.10 (Acute pyelonephritis, without lesion of renal
medullary necrosis)
590.11 (Acute pyelonephritis, with lesion of renal
medullary necrosis)
590.2 (Renal and perinephric abscess)
590.3 (Pyeloureteritis cystica)
590.80 (Pyelonephritis, unspecified)
590.81 (Pyelitis or pyelonephritis in diseases classified
elsewhere)
590.9 (Infection of kidney, unspecified)
595.0 (Acute cystitis)
595.3 (Trigonitis)
595.4 (Cystitis in diseases classified elsewhere)
595.81 (Cystitis cystica)
595.89 (Other specified type of cystitis, other)
595.9 (Cystitis, unspecified)
597.0 (Urethral abscess)
597.80 (Urethritis, unspecified)
599.0 (Urinary tract infection, site not specified)
We believe the condition of catheter-associated urinary tract
infection meets all of our criteria for selection as one of the initial
hospital-acquired conditions. We can easily identify the cases with
ICD-9-CM codes. The condition is a CC under both the current CMS DRGs
and the proposed MS-DRGs that are discussed earlier in this proposed
rule. The condition meets our burden criterion with its high cost and
high frequency. There are prevention guidelines on which the medical
community agrees. Of all 13 conditions discussed in this proposed rule,
we believe this condition best meets the
[[Page 24720]]
criteria discussed. Therefore, we are proposing the selection of
catheter-associated urinary tract infections as one of the initial
hospital-acquired conditions.
We encourage comments on both the selection of this condition and
the related conditions that we are proposing to exclude from being
counted as CCs.
(b) Pressure Ulcers
Coding--Pressure ulcers are also referred to as decubitus ulcers.
The following codes clearly identify pressure ulcers.
707.00 (Decubitus ulcer, unspecified site)
707.01 (Decubitus ulcer, elbow)
707.02 (Decubitus ulcer, upper back)
707.03 (Decubitus ulcer, lower back)
707.04 (Decubitus ulcer, hip)
707.05 (Decubitus ulcer, buttock)
707.06 (Decubitus ulcer, ankle)
707.07 (Decubitus ulcer, heel)
707.09 (Decubitus ulcer, other site)
Burden (High Cost/High Volume)--This is both a high-cost and high-
volume condition. For FY 2006, there were 322,946 reported cases of
Medicare patients who had a pressure ulcer as a secondary diagnosis.
These cases had average charges for the hospital stay of $40,381.
Prevention guidelines--Prevention guidelines can be found at the
following Web sites: http://www.npuap.org/positn1.html http://www.ncbi.nlm.nih.gov/books/bv.fcgi?rid=hstat2.chapter.4409.
CC--Decubitus ulcer codes are classified as CCs under the current
stat2.chapter.4409.
CC--Decubitus ulcer codes are classified as CCs under the current
MS-DRGs. Codes 707.02 through 707.07 are considered MCCs under the
proposed MS-DRGs. As discussed earlier, MCCs result in even larger
payments than CCs.
Considerations--Pressure ulcers are an important hospital-acquired
complication. Prevention guidelines exist (non-CDC) and can be
implemented by hospitals. Clinicians may state that some pressure
ulcers present on admission cannot be identified (skin is not yet
broken (Stage I) but damage to tissue is already done and skin will
eventually break down. However, by selecting this condition, we would
provide hospitals the incentive to perform careful examination of the
skin of patients on admission to identify decubitus ulcers. If the
condition is present on admission, the provision will not apply. We are
proposing to include pressure ulcers as one of our initial hospital-
acquired conditions. This condition can be clearly identified through
ICD-9-CM codes. These codes are classified as a CC under the current
CMS DRGs and as a CC or MCC under the proposed MS-DRGs. Pressure ulcers
meet the burden criteria because they are both high cost and high
frequency cases. There are clear prevention guidelines. While there is
some question as to whether all cases with developing pressure ulcers
can be identified on admission, we believe the selection of this
condition will result in a closer examination of the patient's skin on
admission. This will result in better quality of care. We welcome
comments on the proposed inclusion of this condition.
Serious Preventable Events
Serious preventable events are events that should not occur in
health care. The injury prevention community has developed information
on serious preventable events. CMS reviewed the list of serious
preventable events and identified those events for which there was an
ICD-9-CM code that would assist in identifying them. We identified four
types of serious preventable events to include in our evaluation. These
include leaving an object in a patient; performing the wrong surgery
(surgery on the wrong body part, wrong patient, or the wrong surgery);
air embolism following surgery; and providing incompatible blood or
blood products. Three of these serious preventable events have unique
ICD-9-CM codes to identify them. There is not a clear and unique code
for surgery performed on the wrong body part, wrong patient, or the
wrong surgery. Each of these events is discussed separately.
(c) Serious Preventable Event--Object Left in During Surgery
Coding--Retention of a foreign object in a patient after surgery is
identified through ICD-9-CM code 998.4 (Foreign body accidentally left
during a procedure).
Burden (High Cost/High Volume)--For FY 2006, there were 764 cases
reported of Medicare patients who had an object left in during surgery
reported as a secondary diagnosis. The average charges for the hospital
stay were $61,962. This is a rare event. Therefore, it is not high
volume. However, an individual case will likely have high costs, given
that the patient will need additional surgery to remove the foreign
body. Potential adverse events stemming from foreign body could further
raise costs for an individual case.
Prevention guidelines--There are widely accepted and clear
guidelines for the prevention of this event. Prevention guidelines for
avoiding leaving objects in during surgery are located at the following
Web site: http://www.qualityindicators.ahrq.gov/psi_download.htm.e classified as CCs under the current This
event should not occur.
CC--This code is a CC under the current CMS DRGs as well as under
the proposed MS-DRGs.
Considerations--There are no significant considerations for this
condition. There is a unique ICD-9-CM code and wide agreement on the
prevention guidelines. We are proposing to include this condition as
one of our initial hospital-acquired conditions. The cases can be
clearly identified through an ICD-9-CM. This code is a CC under both
the current CMS DRGs and the proposed MS-DRGs. There are clear
prevention guidelines. While the cases may not meet the high frequency
criterion, they do meet the high-cost criterion. Individual cases can
be high cost. We welcome comments on including this condition as one of
our initial hospital-acquired conditions.
(d) Serious Preventable Event--Air Embolism
Coding--An air embolism is identified through ICD-9-CM code 999.1
(Complications of medical care, NOS, air embolism).
Burden (High Cost/High Volume)--This event is rare. For FY 2006,
there were 45 reported cases of air embolism for Medicare patients. The
average charges for the hospital stay were $66,007.
Prevention guidelines--There are clear prevention guidelines for
air embolisms. This event should not occur. Serious preventable event
guidelines can be found at the following Web site: http://www.qualityindicators.ahrq.gov/psi_download.htm
.
CC--This code is a CC under the current CMS DRGs and is an MCC
under the proposed MS-DRGs.
Considerations--There are no significant considerations for this
condition. There is a unique ICD-9-CM code and wide agreement on the
prevention guidelines. In addition, as stated earlier, the condition is
a CC under the current CMS DRGs and an MCC under the proposed MS-DRGs.
While the condition is rare, it does meet the cost burden criterion
because individual cases can be expensive. Therefore, air embolism is a
high-cost condition because average charges per case are high. We
welcome comments on the proposal to include this condition.
[[Page 24721]]
(e) Serious Preventable Event--Blood Incompatibility
Coding--Delivering ABO-incompatible blood or blood products is
identified by ICM-9-CM code 999.6 (Complications of medical care, NOS,
ABO incompatibility reaction).
Burden (High Cost/High Volume)--This event is rare. Therefore, it
is not high volume. For FY 2006, there were 33 reported cases of blood
incompatibility among Medicare patients, with average charges of
$46,492 for the hospital stay. Therefore, individual cases have high
costs.
Prevention guidelines--There are prevention guidelines for avoiding
the delivery of incompatible blood or blood products. The event should
not occur. Serious preventable event guidelines can be found at the
following Web site: http://www.qualityindicators.ahrq.gov/psi_download.htm
CC--This code is a CC under the current CMS DRGs as well as the
proposed MS-DRGs.
Considerations--There are no significant considerations for this
condition. There is a unique ICD-9-CM code which is classified as a CC
under the CMS DRGs as well as the proposed MS-DRGs. There is wide
agreement on the prevention guidelines. While this may not be a high-
volume condition, average charges per case are high. Therefore, we
believe this condition is a high-cost condition and, therefore, meets
our burden criterion. We are proposing to include this condition as one
of our initial hospital-acquired conditions.
(f) Staphylococcus Aureus Bloodstream Infection/Septicemia
Coding--ICD-9-CM Code 038.11 (Staphylococcus aureus septicemia)
identifies this condition. However, the codes selected to identify
septicemia are somewhat complex. The following ICD-9-CM codes may also
be reported to identify septicemia:
995.91 (Sepsis) and 995.92 ( Severe sepsis). These codes
are reported as secondary codes and further define cases with
septicemia.
998.59 (Other postoperative infections). This code
includes septicemia that develops postoperatively.
999.3 (Other infection). This code includes but is not
limited to sepsis/septicemia resulting from infusion, injection,
transfusion, vaccination (ventilator-associated pneumonia also included
here).
Burden (High Cost/High Volume)--CDC reports that there are 290,000
cases of staphylococcus aureus infection annually in hospitalized
patients of which approximately 25 percent are bloodstream infections
or sepsis. For FY 2006, there were 29,500 cases of Medicare patients
who had staphylococcus aureus infection reported as a secondary
diagnosis. The average charges for the hospital stay were $82,678.
Inpatient staphylococcus aureus result in an estimated 2.7 million days
in excess length of stay, $9.5 billion in excess charges, and
approximately 12,000 inpatient deaths per year.
Prevention guidelines--CDC guidelines are located at the following
Web site: http://www.cdc.gov/ncidod/dhqp/gl_intravascular.html.
CC--Codes 038.11, 995.91, 998.59, and 999.3 are classified as CCs
under the current CMS DRGs and as MCCs under the proposed MS-DRGs.
Considerations--Preventive health care associated bloodstream
infections/septicemia that are preventable are primarily those that are
related to a central venous/vascular catheter, a surgical procedure
(postoperative sepsis) or those that are secondary to another
preventable infection (for example, sepsis due to catheter-associated
urinary tract infection). Otherwise, physicians and other public health
experts may argue whether septicemia is reasonably preventable. The
septicemia may not be simply a hospital-acquired infection. It may
simply be a progression of an infection that occurred prior to
admission. Furthermore, physicians cannot always tell whether the
condition was hospital-acquired. We examined whether it might be better
to limit the septicemia cases to a specific organism (for example, code
038.11 (Staphylococcus aureus septicemia)). CDC staff recommended that
we focus on staphylococcus aureus septicemia because this condition is
a significant public health issue. As stated earlier, there is a
specific code for staphylococcus aureus septicemia, code 038.11.
Therefore, the cases would be easy to identify. However, as stated
earlier, while this type of septicemia is identified through code
038.11, coders may also provide sepsis code 995.91 or 995.92 to more
fully describe the staphylococcus aureus septicemia. Codes 995.91 and
995.92 are reported as secondary codes and further define cases with
septicemia. Codes 995.91 and 995.92 are CCs under the current CMS DRGs
and MCCs under the proposed MS-DRGs.
998.59 (Other postoperative infections). This code
includes septicemia that develops postoperatively.
999.3 (Other infection). This code includes but is not
limited to sepsis/septicemia resulting from infusion, injection,
transfusion, vaccination (ventilator-associated pneumonia also indexed
here).
To implement this condition as one of our initial ones, we would
have to exclude the specific code for staphylococcus aureus septicemia,
038.11, and the additional septicemia codes, 995.91, 995.92, 998.59,
and 999.3.
We acknowledge that there are additional issues involved with the
selection of this condition that may involve developing an exclusion
list of conditions present on admission for which we would not apply a
CC exclusion to staphylococcus aureus septicemia. For example, a
patient may come into the hospital with a staphylococcus aureus
infection such as pneumonia. The pneumonia might develop into
staphylococcus aureus septicemia during the admission. It may be
appropriate to consider excluding cases such as those of patients
admitted with staphylococcus aureus pneumonia that subsequently develop
staphylococcus aureus septicemia from the provision. In order to
exclude cases that did not have a staphylococcus aureus infection prior
to admission, we would have to develop a list of specific codes that
identified all types of staphylococcus aureus infections such as code
482.41 (Pneumonia due to staphylococcus aureus). We likely would not
apply the new provision to cases of staphylococcus aureus septicemia if
a patient were admitted with staphylococcus aureus pneumonia. However,
if the patient had other types of infections, not classified as being
staphylococcus aureus, and then developed staphylococcus aureus
septicemia during the admission, we would apply the provision and
exclude the staphylococcus aureus septicemia as a CC. We were not able
to identify any other specific ICD-9-CM codes that identify specific
infections as being due to staphylococcus aureus.
Other types of infections, such as urinary tract infections, would
require the reporting of an additional code, 041.11 (Staphylococcus
aureus), to identify the staphylococcus aureus infection. This
additional coding presents administrative issues, because it will not
always be clear which condition code 041.11 (Staphylococcus aureus) is
describing. We do not believe it would be appropriate to make code
041.11, in combination with other codes, subject to the hospital-
acquired conditions provision until we better understand how to address
the
[[Page 24722]]
administrative issues that would be associated with their selection.
Therefore, we would exclude staphylococcus aureus septicemia cases with
code 482.41 reported as being subject to the hospital-acquired
conditions provision. Stated conversely, we would allow staphylococcus
aureus septicemia to count as a CC if the patient was admitted with
staphylococcus aureus pneumonia.
We recognize that there may be other conditions which we should
consider for this type of exclusion. We are proposing to include
staphylococcus aureus bloodstream infection/septicemia (code 038.11) as
one of our initial hospital-acquired conditions. We would also exclude
codes 995.91, 998.59, and 999.3 from counting as an MCC/CC when they
are reported with code 038.11. The condition can be clearly identified
through ICD-9-CM codes that are classified as CC under the current CMS
DRGs and MCCs under the proposed MS-DRGs. The condition meets our
burden criterion by being both high cost and high volume. There are
prevention guidelines which we acknowledge are subject to some debate
among the medical community. We also acknowledge that we would have to
exclude this condition if a patient were admitted with a staphylococcus
aureus infection of a more limited location, such as pneumonia. We
encourage commenters to make suggestions on this issue and to recommend
any other appropriate exclusion for staphylococcus aureus septicemia.
We encourage comments on the appropriateness of selecting
staphylococcus aureus septicemia as one of our proposed initial
hospital-acquired conditions.
(g) Ventilator Associated Pneumonia (VAP) and Other Types of Pneumonia
Coding `` Pneumonia is identified through the following codes:
073.0 (Ornithosis with pneumonia)
112.4 (Candidiasis of lung)
136.3 (Pneumocystosis)
480.0 (Pneumonia due to adenovirus)
480.1 (Pneumonia due to respiratory syncytial virus)
480.2 (Pneumonia due to parainfluenza virus)
480.3 (Pneumonia due to SARS-associated coronavirus)
480.8 (Pneumonia due to other virus not elsewhere
classified)
480.9 (Viral pneumonia, unspecified)
481 (Pneumococcal pneumonia [Streptococcus pneumoniae
pneumonia])
482.0 (Pneumonia due to Klebsiella pneumoniae)
482.1 (Pneumonia due to Pseudomonas)
482.2 (Pneumonia due to Hemophilus influenzae [H.
influenzae])
482.30 (Pneumonia due to Streptococcus, unspecified)
482.31 (Pneumonia due to Streptococcus, Group A)
482.32 (Pneumonia due to Streptococcus, Group B)
482.39 (Pneumonia due to other Streptococcus)
482.40 (Pneumonia due to Staphylococcus, unspecified)
482.41 (Pneumonia due to Staphylococcus aureus)
482.49 (Other Staphylococcus pneumonia)
482.81 (Pneumonia due to Anaerobes)
482.82 (Pneumonia due to Escherichia coli [E. coli])
482.83 (Pneumonia due to other gram-negative bacteria)
482.84 (Pneumonia due to Legionnaires' disease)
482.89 (Pneumonia due to other specified bacteria)
482.9 (Bacterial pneumonia unspecified)
483.0 (Pneumonia due to Mycoplasma pneumoniae)
There is not a unique code that identifies ventilator associated
pneumonia. The creation of a code for ventilator associated pneumonia
was discussed at the September 29, 2006 meeting of the ICD-9-CM
Coordination and Maintenance Committee meeting. Many issues and
concerns were raised at the meeting concerning the creation of this
proposed new code. It has been difficult to define ventilator-
associated pneumonia. We plan to continue working closely with the CDC
to develop a code that can accurately describe this condition for
implementation in FY 2009. CDC will address the creation of a unique
code for this condition at the September 28-29, 2007 ICD-9-CM
Coordination and Maintenance Committee meeting.
While we list 27 pneumonia codes above, our clinical advisors do
not believe that all of the codes mentioned could possibly be
associated with ventilator-associated pneumonia. Our clinical advisors
specifically question whether the following codes would ever represent
cases of ventilator-associated pneumonia: 073.0, 480.0, 480.1, 480.2,
480.3, 480.8, 480.9, and 483.0. Therefore, we have a range of pneumonia
codes, all of which may not represent cases that could involve
ventilator-associated pneumonia. In addition, we do not have a specific
code that uniquely identifies cases of ventilator-associated pneumonia.
Burden (High Cost/High Volume)--CDC reports that there are 250,205
ventilator-associated pneumonias per year. Because there is not a
unique ICD-9-CM code for ventilator-associated pneumonia, there is not
accurate data for FY 2006 on the number of Medicare patients who had
this condition as a secondary diagnosis. However, we did examine data
for FY 2006 on the number of Medicare patients who listed pneumonia as
a secondary diagnosis. There were 92,586 cases with a secondary
diagnosis of pneumonia, with average charges of $88,781. According to
the journal Critical Care Medicine, patients with ventilator-associated
pneumonia have statistically significantly longer intensive care
lengths of stay (mean = 6.10 days) than those who do not (mean = 5.32-
6.87 days). In addition, patients who develop ventilator-associated
pneumonia incur, on average, greater than or equal to $10,019 in
additional hospital costs compared to those who do not.\13\ Therefore,
we believe that this is a high-volume condition.
---------------------------------------------------------------------------
\13\ Safdar N.: Clinical and Economic Consequences of
Ventilator-Associated Pneumonia: A Systematic Review, Critical Care
Medicine, 2005, 33(10), pp. 2184-2193.
---------------------------------------------------------------------------
Prevention guidelines--Prevention guidelines are located at the
following Web site: http://www.cdc.gov/ncidod/dhqp/ gl--
hcpneumonia.html. However, it is not clear how effective these
guidelines are in preventing pneumonia. Ventilator-associated pneumonia
may be particularly difficult to prevent.
CC--All of the pneumonia codes listed above are CCs under the
current CMS DRGs and under the proposed MS-DRGs, except for the
following pneumonia codes which are non-CCs: 073.0, 480.0, 480.1,
480.2, 480.3, 480.8, 480.9, 483.0. However, as mentioned earlier, there
is not a unique ICD-9-CM code for ventilator-associated pneumonia.
Therefore, this condition does not currently meet the statutory
criteria for being selected.
Considerations--Hospital-acquired pneumonias, and specifically
ventilator associated pneumonias, are an important problem. However,
based on our work with the medical community to develop specific codes
for this condition, we have learned that it is difficult to define what
constitutes ventilator associated pneumonia. Although prevention
guidelines exist, it is not clear how effective these are in preventing
pneumonia. Clinicians cannot always tell which pneumonias are acquired
in a hospital. In addition,
[[Page 24723]]
as mentioned above, there is not a unique code that identifies
ventilator-associated pneumonia. There are a number of codes that
capture a range of pneumonia cases. It is not possible to specifically
identify if these pneumonia cases are ventilator-associated or arose
from other sources. Because we cannot identify cases with ventilator-
associated pneumonia and there are questions about its preventability,
we are not proposing to select this condition as one of our initial
hospital-acquired conditions. However, we welcome public comments on
how to create an ICD-9-CM code that identifies ventilator-associated
pneumonia, and we encourage participation in our September 28-29, 2007
ICD-9-CM Coordination and Maintenance Committee meeting where this
issue will be discussed. We will reevaluate the selection of this
condition in FY 2009.
(h) Vascular Catheter-Associated Infections
Coding--The code used to identify vascular catheter associated
infections is ICD-9-CM code 996.62 (Infection due to other vascular
device, implant, and graft). This code includes infections associated
with all vascular devices, implants, and grafts. It does not uniquely
identify a vascular catheter associated infections. Therefore, there is
not a unique ICD-9-CM code for this infection. CDC and CMS staff
requested that the ICD-9-CM Coordination and Maintenance Committee
discuss the creation of a unique ICD-9-CM code for vascular catheter
associated infections because the issue is important for public health.
The proposal to create a new ICD-9-CM was discussed at the March 22-23,
2007 meeting of the ICD-9-CM Coordination and Maintenance Committee. A
summary of this meeting can be found at: http://www.cdc.gov/nchs/icd9.htm.
Coders would also assign an additional code for the infection
such as septicemia. Therefore, a list of specific infection codes would
have to be developed to go along with code 996.62. If the vascular
catheter associated infection was hospital-acquired, the DRG logic
would have to be modified so that neither the code for the vascular
catheter associated infection along with the specific infection code
would count as a CC.
Burden (High Cost/High Volume)--CDC reports that there are 248,678
central line associated bloodstream infections per year. It appears to
be both high cost and high volume. However, we were not able to
identify Medicare data on these cases because there is no existing
unique ICD-9-CM code.
Prevention guidelines--CDC guidelines are located at the following
Web site: http://www.cdc.gov/ncidod/dhqp/gl_intravascular.html.
CC--Code 996.62 is a CC under the current CMS DRGs and the proposed
MS-DRGs. However, as stated earlier, this code is broader than vascular
catheter-associated infections. Therefore, there is not a unique ICD-9-
CM code to identify the condition at this time, and it does not
currently meet the statutory criteria to be selected. However, as
indicated above, we will be creating a code(s) to identify this
condition and may select it as a condition under the provision
beginning in FY 2009.
Considerations--There is not yet a unique ICD-9-CM code to capture
this condition. If one is implemented on October 1, 2007, we would be
able to specifically identify these cases. Some patients require long-
term indwelling catheters, which are more prone to infections. Ideally
catheters should be changed at certain time intervals. However,
circumstances might prevent such practice (for example, the patient has
a bleeding diathesis). In addition, a patient may acquire an infection
from another source which can colonize the catheter. As mentioned
earlier, coders would also assign an additional code for the infection,
such as septicemia. Therefore, a list of specific infection codes would
have to be developed to go along with code 996.62. If the vascular
catheter-associated infection was hospital-acquired, the DRG logic
would have to be modified so that neither the code for the vascular
catheter-associated infection along with the specific infection code
would count as a CC. Without a specific code for infections due to a
catheter, it would be difficult to identify these patients. Given the
current lack of an ICD-9-CM code for this condition, we are not
proposing to include it as one of our initial hospital-acquired
conditions at this time. However, we believe it shows merit for
inclusion in future lists of hospital-acquired conditions once we have
resolved the coding issues and are able to better identify the
condition in the Medicare data. We will reevaluate the selection of
this condition in FY 2009.
We encourage comments on this condition which was identified as an
important public health issue by several organizations that provided
recommendations on hospital-acquired conditions. We are particularly
interested in receiving comments on how we should handle additional
associated infections that might develop along with the vascular
catheter-associated infection.
(i) Clostridium Difficile-Associated Disease (CDAD)
Coding--This condition is identified by ICD-9-CM code 008.45
(Clostridium difficile).
Burden (High Cost/High Volume)--CDC reports that there are 178,000
cases per year in U.S. hospitals. For FY 2006, there were 110,761
reported cases of Medicare patients with CDAD as a secondary diagnosis,
with average charges for the hospital stay of $52,464. Therefore, this
is a high-volume condition.
Prevention guidelines--Prevention guidelines are not available.
Therefore, we do not believe this condition can reasonably be prevented
through the application of evidence-based guidelines.
CC--Code 008.45 is a CC under the current CMS DRGs and the proposed
MS-DRGs.
Considerations--CDAD is an emerging problem with significant public
health importance. If found early CDAD cases can easily be treated.
However, cases not diagnosed early can be expensive and difficult to
treat. CDAD occurs in patients on a variety of antibiotic regiments,
many of which are unavoidable, and therefore preventability is an
issue. We are not proposing to include CDAD as one of our initial
hospital-acquired conditions at this time, given the lack of prevention
guidelines. We welcome public comments on CDAD, specifically on its
preventability and whether there is potential to develop guidelines to
identify it early in the disease process and/or diminish its incidence.
We will reevaluate the selection of this condition in FY 2009.
(j) Methicillin-Resistant Staphylococcus Aureus (MRSA)
Coding--MRSA is identified by ICD-9-CM code V09.0 (Infection with
microorganisms resistant to penicillins). One would also assign a
code(s) to describe the exact nature of the infection.
Burden (High Cost/High Volume)--For FY 2006, there were 95,103
reported cases of Medicare patients who had MRSA as a secondary
diagnosis. The average charges for these cases were $31,088. This
condition is a high-cost and high-volume infection. MRSA has become a
very common bacteria occurring both in and outside of the hospital
environment.
Prevention guidelines--CDC guidelines are located at the following
Web site: http://www.cdc.gov/ncidod/dhqp/pdf/ar/mdroGuideline2006.pdf.
CC--Code V09.0 is not a CC under the current CMS DRGs and the
proposed
[[Page 24724]]
MS-DRGs. The specific infection would be identified in a code
describing the exact nature of the infection, which may be a CC.
Considerations--As stated earlier, preventability may be hard to
ascertain since the bacteria has become so common both inside and
outside the hospital. There are also considerations in identifying MRSA
infections because hospitals would report the code for MRSA along with
additional codes that would describe the exact nature of the infection.
We would have to develop a list of specific infections that could be
the result of MRSA. We are not proposing to include MRSA as one of our
initial hospital-acquired conditions because the condition is not a CC.
We recognize that associated conditions may be a CC. We welcome
comments on the proposal not to include this condition. Should there be
support for including this condition, we request recommendations on
what codes might be selected to identify the specific types of
infections associated with MRSA.
(k) Surgical Site Infections
Coding--Surgical site infections are identified by ICD-9-CM code
998.59 (Other postoperative infection). The code does not tell the
exact location or nature of the postoperative wound infection. The code
includes wound infections and additional types of postoperative
infections such as septicemia. The coding guidelines instruct the coder
to add an additional code to identify the type of infection. To
implement this condition we would have to remove both code 998.59 and
the specific infection from counting as a CC if they occurred after the
admission. We would have to develop an extensive list of possible
infections that would be subject to the provision. We may also need to
recommend the creation of a series of new ICD-9-CM codes to identify
various types of surgical site infections, should this condition merit
inclusion among those that are subject to the proposed hospital-
acquired conditions provision.
Burden (High Cost/High Volume)--CDC reports that there are 290,485
surgical sites infections each year. As stated earlier, there is not a
unique code for surgical site infection. Therefore, we examined
Medicare data on patients with any type of postoperative infection. For
FY 2006, there were 38,763 reported cases of Medicare patients who had
a postoperative infection. These patients had average charges for the
hospital stay of $79,504. We are unable to determine how many of these
patients had surgical site infections.
Prevention guidelines--CDC guidelines are available at the
following Web site: http://www.cdc.gov/ncidod/dhqp/gl_surgicalsite.html
CC--Code 998.59 is a CC under the current CMS DRGs and the proposed
MS-DRGs.
Considerations--As mentioned earlier, code 998.59 is not exclusive
to surgical site infections. It includes other types of postoperative
infections. Therefore, code 998.59 does not currently meet the
statutory criteria for being subject to the provision because it does
not uniquely identify surgical site infections. To identify surgical
site infections, we would need new codes that provide more detail about
the type of postoperative infection as well as the site of the
infection. In addition, one would report both code 998.59 as well a
more specific code for the specific type of infection, making
implementation difficult. While there are prevention guidelines, it is
not always possible to identify the specific types of surgical
infections that are preventable. Therefore, we are not proposing to
select surgical site infections as one of our proposed hospital-
acquired conditions at this time. However, we welcome public comments
on whether we can develop criteria and codes to identify preventable
surgical site infections that would assist us in reducing their
incidence. We are exploring ways to identify surgical site infections
and will reevaluate this condition in FY 2009.
(l) Serious Preventable Event--Surgery on Wrong Body Part, Patient, or
Wrong Surgery
Coding--Surgery performed on the wrong body part, wrong patient, or
the wrong surgery would be identified by ICD-9-CM code E876.5
(Performance of inappropriate operation). This diagnosis code does not
specifically identify which of these events has occurred.
Burden (High Cost/High Volume)--As stated earlier, there are not
unique ICD-9-CM codes which capture surgery performed on the wrong body
part or the wrong patient, or the wrong surgery. Therefore, we examined
Medicare data on the code for performance of an inappropriate
operation. For FY 2006, there was one Medicare case reported with this
code, and the patient had average charges for the hospital stay of
$24,962. This event is rare. Therefore, it is not high volume.
Individual cases could have high costs. However, we were unable to
determine the impact with our limited data.
Prevention guidelines--There are prevention guidelines for
performing the correct surgery on the correct patient or correct
patient's body part. This event should not occur.
CC--This code is not a CC under the current CMS DRGs and the
proposed MS-DRGs. Therefore, it does not meet the criteria for
selection under section 1886(d)(4)(D)(iv) of the Act. However, Medicare
does not pay for performing surgery on the wrong body part or patient,
or performing the wrong surgery. These services are not considered to
be reasonable and necessary and are excluded from Medicare coverage.
Considerations--There are significant considerations for the
selection of this condition. There is not a unique ICD-9-CM code that
would describe the nature of the inappropriate operation. All types of
inappropriate operations are included in code E876.5. Unlike other
conditions, performance of an inappropriate operation is not a
complication of a prior medical event that was medically necessary.
Rather, in this case, there was a needed intervention but it was done
to either the wrong body part or the wrong patient, or was not the
correct operation. Thus, a service was completed that was not
reasonable and necessary and Medicare does not pay for any inpatient
service associated with the wrong surgery. It is not necessary for us
to select this condition because Medicare does not pay for it under any
circumstances.
(m) Falls
Coding--There is no single code that shows that a patient has
suffered a fall in the hospital. Codes would be assigned to identify
the nature of any resulting injury from the fall such as a fracture,
contusion, concussion, etc. There is a code to indicate that a patient
fell from bed, code E884.4 (Fall from bed). One would then assign a
code that identifies the external cause of the injury (the fall from
the bed) and an additional code(s) for any resulting injury (a
fractured bone).
Burden (High Cost/High Volume)--As stated earlier, there is not a
code to capture all types of falls. Therefore, we examined Medicare
data on the number of Medicare beneficiaries who fell out of bed. For
FY 2006, there were 2,591 cases reported of Medicare patients who fell
out of bed. These patients had average charges of the hospital stay of
$24,962. However, depending on the nature of the injury, costs may vary
in specific cases.
Prevention guidelines--Falls may or may not be preventable. Serious
preventable event guidelines can be found at the following Web site:
http://www.qualityindicators.ahrq.gov/psi_download.htm
[[Page 24725]]
CC--Code E884.4 is not a CC under the current CMS DRGs or the
proposed MS-DRGs.
Considerations--There are not clear codes that identify all types
of falls. Hospitals would also have to use additional codes for
fractures and other injuries that result from the fall. In addition,
depending on the circumstances, the falls may or may not be
preventable. We are not proposing the inclusion of falls as one of our
initial hospital-acquired conditions at this time because we can only
identify a limited number of these cases, and they are not classified
as a CC. However, we welcome public comments on how to develop codes or
coding logic that would allow us to identify injuries that result from
falls in the hospital so that Medicare would not recognize the higher
costs associated with treating patients who acquire these conditions in
the hospital. We will reevaluate this condition in FY 2009.
The following table summarizes whether or not the potential
conditions meet our criteria and if there are significant
considerations with selecting the particular condition. As mentioned
earlier, we have listed these conditions in the priority order
according to how well they meet the statutory criteria. As discussed
earlier, we are proposing to select the first six conditions (catheter
associated urinary tract infections through Staphylococcus aureus
septicemia) as our initial hospital-acquired conditions. We would not
include the last seven conditions (ventilator-associated pneumonia
through falls) as initial hospital-acquired conditions. We welcome
comments on how appropriately we have evaluated and proposed the
selection of the first six conditions. We also encourage specific
comments on any additional conditions we should select for October 1,
2008 implementation. We request commenters to include a rationale for
selecting any suggested additional conditions, as well as an analysis
of why each suggested additional condition meets the criteria under
section 1886(d)(4)(D)(iv) of the Act and whether there would be coding
issues or other considerations associated with selecting each
condition.
Proposed Hospital-Acquired Conditions and Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed hospital-acquired Burden--high cost Prevention
condition Coding--unique code? and/or high volume? guidelines? CC? Considerations?
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Catheter associated urinary Yes................. Yes................. Yes................. Yes................. Minimal--additional infection
tract infections. codes.
2. Pressure ulcers (Decubitus Yes................. Yes................. Yes................. Yes................. No.
ulcers).
3. Serious preventable event-- Yes................. Yes--high cost in Yes................. Yes................. No.
Object left in surgery. specific
circumstances.
4. Serious preventable event--air Yes................. Yes--high cost in Yes................. Yes................. No .
embolism. specific
circumstances.
5. Serious preventable event-- Yes................. Yes--high cost in Yes................. Yes................. No.
Blood incompatibility. specific
circumstances.
6. Staphylococcus aureus Yes--multiple codes Yes................. Yes................. Yes................. Multiple codes.
septicemia. reported.
7. Ventilator associated No VAP code, Yes................. Yes................. No--no unique codes. Preventability issues. VAPs--
pneumonia (VAP)/Pneumonia/. multiple pneumonia identification issues.
codes.
8. Vascular catheter associated No.................. Yes................. Yes................. Yes--but code is too Preventability issues.
infections. broad.
9. Clostridium difficile- Yes................. Yes................. No.................. Yes................. Preventability issues.
associated disease (CDAD).
10. Methicillin-resistant Yes................. Yes................. Yes................. No.................. Preventability issues.
staphylococcus aureus (MRSA).
11. Surgical site infections..... No.................. Yes................. Yes................. Yes--but code is too Cannot identify.
broad.
12. Serious preventable event-- Yes................. Yes--high cost in Yes................. No.................. Not a CC.
Wrong surgery. specific
circumstances.
13. Falls........................ No--not for all Yes--high cost in No--for all types of No.................. Cannot identify.
types of falls. specific falls.
circumstances.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As stated earlier, we are soliciting comments on the six conditions
we proposed to include among the initial hospital-acquired conditions.
We welcome any comments on the clinical aspects of the conditions and
on which conditions should be selected for implementation on October 1,
2008. We also solicit comments on any problematic issues for specific
conditions that may support not selecting them as one of the initial
conditions. We encourage comments on how some of the administrative
problems can be overcome if there is support for a particular
condition.
7. Other Issues
Under section 1886(d)(4)(D)(vi) of the Act, ``[a]ny change
resulting from the application of this subparagraph shall not be taken
into account in adjusting the weighting factors under subparagraph
(C)(i) or in applying budget neutrality under subparagraph (C)(iii).''
Subparagraph (C)(i) refers to DRG classifications and relative weights.
Therefore, the statute requires the Secretary to continue counting the
conditions selected under section 5001(c) of the DRA as MCCs or CCs
when updating the relative weights annually. Thus, the higher costs
[[Page 24726]]
associated with a case with a hospital-acquired MCC or CC will continue
to be assigned to the MCC or CC DRG when calculating the relative
weight but payment will not be made to the hospital at one of these
higher-paying DRGs. Further, subparagraph (C)(iii) refers to the budget
neutrality calculations that are done so aggregate payments do not
increase as a result of changes to DRG classifications and relative
weights. Again, the higher costs associated with the cases that have a
hospital-acquired MCC or CC will be included in the budget neutrality
calculation but Medicare will make a lower payment to the hospital for
the specific case that include an MCC or CC. Thus, to the extent that
the provision applies and cases with an MCC or CC are assigned to a
lower-paying DRG, section 5001(c) of the DRA will result in cost
savings to the Medicare program. We note that the provision will only
apply when the selected conditions are the only MCCs and CCs present on
the claim. Therefore, if a nonselected MCC or CC is on the claim, the
case will continue to be assigned to the higher paying MCC or CC DRG,
and there will be no savings to Medicare from the case. We believe the
provision will apply in a small minority of cases because it is rare
that one of the selected conditions will be the only MCC or CC present
on the claim. We provide our estimate of the savings associated with
this provision in the impact section of this proposed rule.
G. Proposed Changes to Specific DRG Classifications
1. Pre-MDC: Intestinal Transplantation
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Intestinal Transplantation'' at the beginning of
your comment.)
In the FY 2005 IPPS final rule (69 FR 48976), we reassigned
intestinal transplant cases from CMS DRG 148 (Major Small and Large
Bowel Procedures with CC) and CMS DRG 149 (Major Small and Large Bowel
Procedures without CC) to CMS DRG 480 (Liver Transplant and/or
Intestinal Transplantation). In the FY 2006 IPPS final rule (70 FR
47286), we continued to evaluate these cases to see if a further DRG
change was warranted. While we found that intestinal only transplants
and combination liver-intestine transplants have higher average charges
than other cases in CMS DRG 480, these cases are extremely rare (there
were only 4 cases in FY 2004) and the insufficient number of cases does
not warrant creating a separate DRG.
For FY 2008, we examined the September 2006 update of the FY 2006
MedPAR file and found 1,208 cases assigned to CMS DRG 480. In the
proposed MS-DRGs described in section II.C. of the preamble of this
proposed rule, we are proposing to split CMS DRG 480 into two severity
levels: proposed MS-DRG 005 (Liver Transplant and/or Intestinal
Transplant with MCC) and proposed MS-DRG 006 (Liver Transplant and/or
Intestinal Transplant without MCC). The following table displays our
results:
------------------------------------------------------------------------
Average
Proposed MS-DRG Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 006--All cases............... 446 10.05 $129,519
MS-DRG 006--Intestinal transplant 3 34 354,793
cases only.........................
MS-DRG 005--All cases............... 762 22.25 243,271
MS-DRG 005--Intestinal transplant 9 40.22 460,089
cases only.........................
MS-DRG 005--Intestinal and liver 1 56 1,179,425
transplant.........................
------------------------------------------------------------------------
Under the proposed MS-DRGs, 10 of 13 intestinal transplant cases
are assigned to proposed MS-DRG 005 based on the secondary diagnosis of
the patient. The three remaining intestinal transplant cases do not
have an MCC and would have been assigned to proposed MS-DRG 006, absent
further changes to the DRG logic. These three intestinal transplants
have average charges of approximately $354,793 and an average length of
stay of 34 days. Average charges and length of stay for these three
cases are more comparable to the average charges of approximately
$243,271 and average length of stay of 40.22 days for all cases
assigned to proposed MS-DRG 005. For this reason, we are proposing to
move all intestinal transplant cases to proposed MS-DRG 005. As part of
this proposal, we would redefine proposed MS-DRG 005 as ``Liver
Transplant with MCC or Intestinal Transplant.'' The presence of a liver
transplant with MCC or an intestinal transplant would assign a case to
the higher severity level. Proposed MS-DRG would also be redefined as
``Liver Transplant without MCC.''
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Implantable Neurostimulators
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Neurostimulators'' at the beginning of your
comment.)
We received a joint request from three manufacturers to review the
DRG assignment for cases involving neurostimulators. The commenters are
concerned that:
Neurostimulator cases may be assigned to 30 different DRGs
in 12 different MDCs depending upon the patient's principal diagnosis.
Neurostimulator cases represent a small proportion of the
total cases in their assigned DRG and have higher costs.
The 11 new ICD-9-CM codes created beginning in FY 2007
that identify pain are assigned to MDC 23 (Factors Influencing Health
Status and Other Contacts With Health Services) rather than MDC 1
(Diseases and Disorders of the Nervous System). The commenters are
concerned that these pain codes will be a common principal diagnosis
for patients who receive a neurostimulator and will be assigned to MDC
23, which contains a wide variety of dissimilar diagnoses. The new ICD-
9-CM codes are: 338.0 (Central pain syndrome), 338.11 (Acute pain due
to trauma), 338.12 (Acute post-thoracotomy pain), 338.18 (Other acute
postoperative pain), 338.19 (Other acute pain), 338.21 (Chronic pain
due to trauma), 338.22 (Chronic post-thoracotomy pain), 338.28 (Other
chronic postoperative pain), 338.29 (Other chronic pain), 338.3
(Neoplasm related pain (acute)(chronic)), and 338.4 (Chronic pain
syndrome)
The commenters recommended that we:
Reroute all spinal and peripheral neurostimulator cases
into a common set of base DRGs.
[[Page 24727]]
Reclassify ICD-9-CM pain codes 338.0 through 338.4
currently assigned to MDC 23 into MDC 1 when reported as principal
diagnosis.
Revise surgical CMS DRGs in MDC 1 based on whether the
patient received a major device.
Split the single surgical CMS DRG in MDC 19 (Mental
Diseases and Disorders) and MDC 23 into two CMS DRGs: one CMS DRG for
minor procedures as defined by CMS DRGs 477 (Non-Extensive O.R.
Procedure Unrelated to Principal Diagnosis) and CMS DRG 468 (Extensive
O.R. Procedure Unrelated to Principal Diagnosis) and one CMS DRG for
major procedures.
Create a new CMS DRG in MDC 1 for major devices.
The commenters recognize that implementing a re-routing feature in
the CMS DRG system would be a major undertaking and, alternatively,
suggested reassigning the pain codes to MDC 1 as an interim step. We
agree with this suggestion as described further below. With respect to
the suggestion to split the single surgical CMS DRG in MDCs 19 and 23
into two CMS DRGs and create a major device CMS DRG within MDC 1, we
encourage the commenters to examine the assignment of neurostimulator
cases under the MS-DRGs to determine whether the changes we are
proposing to adopt to better recognize severity in the CMS DRG system
would address these concerns.
The implantation of a neurostimulator requires two types of
procedures. First, the surgeons implant leads containing electrodes
into the targeted section of the brain, spine, or peripheral nervous
system. Second, a neurostimulator pulse generator is implanted into the
pectoral region and extensions from the neurostimulator pulse generator
are tunneled under the skin and connected with the proximal ends of the
leads. Hospitals stage the two procedures required for a full system
neurostimulator implant.
There are separate ICD-9-CM procedure codes that identify the
implant of the leads and the insertion of the pulse generator. The
three codes for the leads insertion are: 02.93 (Implantation or
replacement of intracranial neurostimulator lead(s)); 03.93
(Implantation or replacement of spinal neurostimulator lead(s)); and
code 04.92 (Implantation or replacement of peripheral neurostimulator
lead(s). The five codes for the insertion of the pulse generator are:
86.94 (Insertion or replacement of single array neurostimulator pulse
generator, not specified as rechargeable); 86.95 (Insertion or
replacement of dual array neurostimulator pulse generator, not
specified as rechargeable); 86.96 (Insertion or replacement of other
neurostimulator pulse generator); 86.97 (Insertion or replacement of
single array rechargeable neurostimulator pulse generator); and 86.98
(Insertion or replacement of dual array rechargeable neurostimulator
pulse generator).
The patient's principal diagnosis determines the MDC assignment.
Implant of a cranial, spinal or peripheral neurostimulator will result
in assignment of the case to a surgical DRG within that MDC. Although
the commenters are correct that neurostimulator cases can potentially
be assigned to many different CMS DRGs based on the patient's principal
diagnosis, they also provided data that showed that nearly 90 percent
are assigned to 6 different CMS DRGs that cross two MDCs. In MDC 1,
neurostimulator cases are assigned to four CMS DRGs: CMS DRG 7
(Peripheral and Cranial Nerve and Other Nervous System Procedures With
CC); CMS DRG 8 (Peripheral and Cranial Nerve and Other Nervous System
Procedures Without CC); CMS DRG 531 (Spinal Procedures With CC); and
CMS DRG 532 (Spinal Procedures Without CC). In MDC 8 (Disease and
Disorders of the Musculoskeletal System and Connective Tissue),
neurostimulator cases are assigned to two CMS DRGs: CMS DRG 499 (Back
and Neck Procedures Except Spinal Fusion With CC); and CMS DRG 500
(Back and Neck Procedures Except Spinal Fusion Without CC).
With very limited exceptions, such as tracheostomies and certain
types of transplants, the principal diagnosis is fundamental to the
assignment of a case to an MDC within the DRG system. By relying on the
patient's principal diagnosis, the DRG system will group together
patients who are clinically similar. For this reason, we are concerned
about adopting the suggestion that all neurostimulator cases be
rerouted to a common DRG irrespective of the patient's principal
diagnosis. We believe such a step would be fundamentally inconsistent
with the idea of creating common groups of patients who are clinically
similar based on diagnosis and procedures. For this reason, we do not
believe that a rerouting step should be adopted that would group
together all neurostimulator cases.
However, we do agree with the commenters' suggestion that the new
ICD-9-CM codes created in FY 2007 for central and chronic pain syndrome
and chronic pain (codes 338.0, 338.21 through 338.29, and 338.4) should
be assigned to MDC 1 when present as the principal diagnosis. The
commenters requested that we reclassify the pain codes (338.0 through
338.4) from MDC 23 to MDC 1. Our medical consultants advised that the
acute pain codes (codes 338.11 through 338.19) should remain in MDC 23
because the acute pain is not a neurological condition. According to
the commenters, the National Center for Health Statistics' (NCHS)
choice in locating the pain codes within ICD-9-CM's Nervous System
chapter has much clinical validity, particularly for chronic pain. The
commenters further noted that acute pain is typically self-limited, a
symptomatic response to an immediate insult that serves the body as a
warning sign. However, chronic pain is unrelenting and serves no
warning or protective function. It is a disease process of its own
accord, according to the commenters.
The commenters described pain as follows. Broadly, there are two
main categories of pain: nociceptive and neuropathic. Nociceptive pain
is caused by sensory neurons, called nociceptors, responding to tissue
damage. This type of pain is the body's normal response to injury. The
pain is usually localized and time-limited. That is, when the tissue
damage heals, the pain typically resolves. Acute pain is typically
nociceptive. In general, nociceptive pain is typically treated with
anti-inflammatories and, in more severe cases, with opioids via a
morphine pump for example.
In contrast, neuropathic pain is caused by malfunctioning or
pathologically altered nervous pathways stemming from injury to the
nervous system, either as a direct result of trauma to a nerve (phantom
limb syndrome, reflex sympathetic dystrophy/complex regional pain
syndrome after injury) or due to other medical conditions that cause
damage to the nerve such as herpes (postherpetic neuralgia), diabetes
(diabetic neuropathy), and peripheral vascular disease (critical limb
ischemia). Failed back surgery syndrome (FBSS) is another common source
of neuropathic pain. Typically, neuropathic pain is chronic and may
persist for months or years beyond the healing of damaged tissue.
Because the nerves themselves have been damaged, neuropathic pain can
be considered its own disease process. Neuropathic pain may be more
difficult to treat than nociceptive pain and has been shown to be more
responsive to neurostimulation.
The pain codes, created effective October 1, 2006, are currently
assigned to MDC 23. The neurostimulator cases with a principal
diagnosis using the pain codes were assigned to CMS DRG
[[Page 24728]]
461 (O.R. Procedure With Diagnoses of Other Contact With Health
Services) for the first time in FY 2007. As explained above, prior to
our adoption of the new pain codes in FY 2007, these cases had
historically been assigned to CMS DRGs 7 and 8 (Peripheral and Cranial
Nerve and Other Nervous System Procedure With and Without CC,
respectively) tin MDC 1. Adopting the commenters' recommendation would
result in the neurostimulator cases being assigned to their historic
CMS DRGs.
Our medical officers agree that cases that use the new pain
diagnosis codes for central and chronic pain syndrome and chronic pain
(codes 338.0, 338.21 through 338.29, and 338.4) as a principal
diagnosis should be assigned to MDC 1. For this reason, we are
proposing to assign cases with a principal diagnosis of central pain
syndrome (code 338.0), chronic pain due to trauma (code 338.21),
chronic post-thoracotomy pain (code 338.22), other chronic
postoperative pain (code 338.28), other chronic pain (code 338.29), or
chronic pain syndrome (code 338.4) to MDC 1, although we plan to
monitor their use and may reassign them if needed.
b. Intracranial Stents
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Intracranial Stents'' at the beginning of your
comment.)
Effective October 1, 2004, the ICD-9-CM Coordination and
Maintenance Committee created procedure code 00.62 (Percutaneous
angioplasty or atherectomy of intracranial vessel(s)). At the same
time, we created code 00.65 (Percutaneous insertion of intracranial
vascular stent(s)). It is our customary practice to assign new codes to
the same DRG as their predecessor codes. Code 00.62 was removed from
code 39.50 (Angioplasty or atherectomy of other noncoronary vessel(s)),
which is assigned to CMS DRG 533 (Extracranial Procedures with CC) and
CMS DRG 534 (Extracranial Procedures Without CC) (proposed MS-DRGs 37,
38, and 39 (Extracranial Procedures With MCC, With CC, and Without CC/
MCC, respectively)) when the patient has principal diagnosis in MDC 1.
Therefore, we assigned code 00.62 to CMS DRGs 533 and 534 in MDC 1
beginning in FY 2005. In addition, we made code 00.65 a non-O.R.
procedure for DRG assignment. We also assigned code 00.62 to the Non-
Covered Procedure edit of the MCE, as Medicare had a national
noncoverage determination for intracranial angioplasty and atherectomy
with stenting.
Effective November 7, 2006, Medicare covers percutaneous
transluminal angioplasty (PTA) and stenting of intracranial arteries
for the treatment of cerebral artery stenosis in cases in which
stenosis is 50 percent or greater in patients with intracranial
atherosclerotic disease when furnished in accordance with FDA-approved
protocols governing Category B Investigational Device Exemption (IDE)
clinical trials. CMS determined that coverage of intracranial PTA and
stenting is reasonable and necessary under these circumstances. All
other indications for PTA without stenting to treat obstructive lesions
of the vertebral and cerebral arteries remain noncovered. This decision
can be found online in the CMS Coverage Manual: http://www.cms.hhs.gov/Manuals/IOM/itemdetail.asp
at section 20.7.B.5.
A manufacturer recently met with CMS to request that code 00.62 be
reassigned to CMS DRGs 1 and 2 (Craniotomy Age > 17 With and Without
CC, respectively) (proposed MS-DRGs 37 (Extracranial Procedures With
MCC), 38 (Extracranial Procedures With CC), and 39 (Extracranial
Procedures Without CC/MCC)) and CMS DRG 543 (Craniotomy with Major
Device Implant or Acute Complex Central Nervous System Principal
Diagnosis) (proposed MS-DRGs 23 and 24 (Craniotomy With Major Device
Implant or Acute Complex Central Nervous System Principal Diagnosis
With MCC and Without MCC, respectively). The manufacturer noted that
other similar endovascular intracranial procedures that treat a
cerebrovascular blockage are currently assigned to the craniotomy CMS
DRGs. These endovascular-approach cases already assigned to the
craniotomy CMS DRGs are identified by procedure codes 39.72
(Endovascular repair or occlusion of head and neck vessels), 39.74
(Endovascular removal of obstruction from head and neck vessel(s)), and
39.79 (Other endovascular repair (of aneurysm) of other vessels). Under
the proposed MS-DRGs, we are proposing to assign procedure codes 39.72,
39.74, and 39.79 to MS-DRGs 011 through 013 and MS-DRG 543. Although we
are concerned about the assignment of additional endovascular
procedures to an open surgical DRG, we agree that there is clinical
consistency between procedure codes 39.72, 39.74, and 39.79 and
procedure code 00.62. For this reason, we agree that procedure code
00.62 should be assigned to CMS DRGs 1, 2, and 543 (proposed MS-DRGs
37, 38, and 39 and 243 and 24, respectively, that are divided by the
presence or absence of specific CCs).
For FY 2008, we are proposing to remove code 00.62 from CMS DRGs
533 and 534 and assign them to proposed MS-DRGs 37, 38, and 39, as well
as to proposed MS-DRGs 23 and 24.
In order to assure appropriate DRG assignment as described above,
we are proposing to make conforming changes to the MCE by removing code
00.62 from the Non-Covered Procedure edit. However, as intracranial PTA
is only covered when performed in conjunction with insertion of a
stent, we are proposing to redefine the edit by specifying that code
00.62 must be accompanied by code 00.65 (Percutaneous insertion of
intracranial vascular stent(s)). Should code 00.65 not be reported on
the claim, the case would fail the MCE edit. For a full discussion of
this proposed change, we refer readers to the MCE discussion in section
II.F.6. of the preamble of this proposed rule.
Although we are proposing to assign endovascular intracranial
procedures to the same DRG as craniotomy, we remain concerned that
endovascular intracranial procedures are clinically different than open
craniotomy surgical procedures and may have very different resource
requirements. At the current time, there are an insufficient number of
cases to warrant creation of a separate base DRG for endovascular
intracranial procedures. However, we intend to revisit the assignment
of intracranial endovascular procedures at a later date when more data
are available to analyze these cases.
3. MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth, and Throat)--
Cochlear Implants
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Cochlear Implants'' at the beginning of your
comment.)
Cochlear implants were first covered by Medicare in 1986 and were
assigned to CMS DRG 49 (Major Head and Neck Procedures) in MDC 3
(Diseases and Disorders of the Ear, Nose, Mouth, and Throat). CMS DRG
49 is the highest weighted DRG in that MDC. However, two manufacturers
of cochlear implants contend that this DRG assignment is clinically and
economically inappropriate and have requested that cochlear implant
cases be reassigned from CMS DRG 49 to CMS DRG 543 (Craniotomy With
Major Device Implant or Acute Complex Central Nervous System Principal
Diagnosis).
The manufacturers stated that procedures assigned to CMS DRG 49 are
performed mostly for diseases such as head and neck cancers, while
procedures in CMS DRG 543 include
[[Continued on page 24729]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 24729-24778]] Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems and Fiscal Year 2008 Rates
[[Continued from page 24728]]
[[Page 24729]]
operations on and inside the skull and implantation of complex devices,
including intracranial neurostimulators. The manufacturers described
the cochlear implant procedure as requiring incisions behind the ear to
remove a section of the temporal bone, followed by microscopic
neurotologic surgery under general anesthesia, and is typically
completed in 2 to 4 hours to restore hearing to the profoundly deaf.
For these reasons, these manufacturers believe cochlear implant
procedures are similar to open craniotomies.
Based on their analysis of the FY 2005 MedPAR data, the
manufacturers identified a total of 139 cochlear implant cases using
ICD-9-CM procedure codes 20.96 (Implantation or replacement of cochlear
prosthetic device NOS), 20.97 (Implantation or replacement of cochlear
prosthetic device, single channel), and 20.98 (Implantation or
replacement of cochlear prosthetic device, multiple channel). The
manufacturers reported 121 out of 139 cochlear implant cases were
assigned to CMS DRG 49 with average standardized charges of
approximately $58,078.
When we reviewed the FY 2006 MedPAR data, we identified 104
cochlear implant cases assigned to CMS DRG 49. In the proposed MS-DRGs,
CMS DRG 49 is subdivided into two severity levels: Proposed MS-DRG 129
(Major Head and Neck Procedures With CC or MCC) and proposed MS-DRG 130
(Major Head and Neck Procedures Without CC). The following table
displays our results:
------------------------------------------------------------------------
Average
Proposed MS-DRG Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 130--All cases............ 1,095 3.04 $23,928
MS-DRG 130--Code 20.96 cases only 38 1.63 51,740
MS-DRG 130--Code 20.97 only...... 2 1.50 38,855
MS-DRG 130--Code 20.98 only...... 45 1.24 50,219
MS-DRG 129--All cases............ 1,244 5.35 34,169
MS-DRG 129--Code 20.96 only...... 10 2.70 81,351
MS-DRG 129--Code 20.97 only...... 1 5.00 95,441
MS-DRG 129--Code 20.98 only...... 8 3.13 53.510
------------------------------------------------------------------------
Under the proposed MS-DRGs, 19 out of 104 cochlear implant cases
are assigned to proposed MS-DRG 129 based on the secondary diagnosis of
the patient. The 85 remaining cochlear implant cases do not have a CC
or MCC and would be assigned to proposed MS-DRG 130, absent further
changes to the DRG logic.
The average charges of approximately $54,238 for cochlear implant
cases are higher than the average charges of approximately $29,375 for
the other cases in CMS DRG 49. However, the average charges are not as
high as the average charges of approximately $78,118 for cases assigned
to CMS DRG 543. Further, our medical advisors do not believe that
surgery to implant a cochlear implant is clinically similar to an open
craniotomy in MDC 1 because typically a craniotomy involves removing
and then replacing a section of the skull in order to perform a
procedure on or within the brain, whereas a cochlear implant involves
drilling a hole in the mastoid bone in order to insert the implant into
the inner ear.
We have been unable to address this issue under the current DRGs
because there are not enough inpatient cochlear implant cases to
warrant creation of a separate DRG. Although these cases will continue
to have higher charges than other cases in their assigned DRG, we are
proposing to move the cochlear implant cases to the higher DRG severity
level within CMS DRG 49. As part of this proposal, we would redefine
proposed MS-DRG 129 as ``Major Head and Neck Procedures With CC or MCC
or Major Device''. The presence of a major head and neck procedure with
a CC or MCC or major device would assign the case to the higher
severity level within CMS DRG 49.
4. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Hip and Knee Replacements
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Hip and Knee Replacements'' at the beginning of
your comment.)
In the FY 2006 IPPS final rule (70 FR 47303), we deleted DRG 209
(Major Joint and Limb Reattachment Procedures of Lower Extremity) and
created two new DRGs: 544 (Major Joint Replacement or Reattachment of
Lower Extremity) and 545 (Revision of Hip or Knee Replacement). The two
new DRGs were created to identify that revisions of joint replacement
procedures are significantly more resource intensive than original hip
and knee replacements procedures. DRG 544 includes the following
procedure code assignments:
81.51, Total hip replacement
81.52, Partial hip replacement
81.54, Total knee replacement
81.56, Total ankle replacement
84.26, Foot reattachment
84.27, Lower leg or ankle reattachment
84.28, Thigh reattachment
DRG 545 includes the following procedure code assignments:
00.70, Revision of hip replacement, both acetabular and
femoral components
00.71, Revision of hip replacement, acetabular component
00.72, Revision of hip replacement, femoral component
00.73, Revision of hip replacement, acetabular liner and/
or femoral head only
00.80, Revision of knee replacement, total (all
components)
00.81, Revision of knee replacement, tibial component
00.82, Revision of knee replacement, femoral component
00.83, Revision of knee replacement, patellar component
00.84, Revision of knee replacement, tibial insert (liner)
81.53, Revision of hip replacement, not otherwise
specified
81.55, Revision of knee replacement, not otherwise
specified
Further, we created a number of new ICD-9-CM procedure codes
effective October 1, 2005, that better distinguish the many different
types of joint replacement procedures that are currently being
performed. In the FY 2006 IPPS final rule (70 FR 47305), we indicated
that a commenter had requested that, once we receive claims data using
the new procedure codes, we closely examine data from the use of the
codes under the two new DRGs to determine if future additional DRG
modifications are needed.
Further, the American Association of Hip & Knee Surgeons (AAHKS)
recommended that we make further
[[Page 24730]]
refinements to the DRGs for knee and hip arthroplasty procedures. AAHKS
previously presented data to CMS on the important differences in
clinical characteristics and resource utilization between primary and
revision total joint arthroplasty procedures. AAHKS stated that CMS'
decision to create a separate DRG for revision of total joint
arthroplasty (TJA) in October 2005 resulted in more equitable
reimbursement for hospitals that perform a disproportionate share of
complex revision of TJA procedures, recognizing the higher resource
utilization associated with these cases. AAHKS stated that this
important payment policy change led to increased access to care for
patients with failed total joint arthroplasties, and ensured that high
volume TJA centers could continue to provide a high standard of care
for these challenging patients.
AAHKS further stated that the addition of new, more descriptive
ICD-9-CM diagnosis and procedure codes for TJA in October 2005 gave it
the opportunity to further analyze differences in clinical
characteristics and resource intensity among TJA patients and
procedures. Inclusive of the preparatory work to submit its
recommendations, the AAHKS compiled, analyzed, and reviewed detailed
clinical and resource utilization data from over 6,000 primary and
revision TJA procedure codes from 4 high volume joint arthroplasty
centers located within different geographic regions of the United
States: University of California, San Francisco, CA; Mayo Clinic,
Rochester, MN; Massachusetts General Hospital, Boston, MA; and the
Hospital for Special Surgery, New York, NY. Based on its analysis,
AAHKS recommended that CMS examine Medicare claims data and consider
the creation of separate DRGs for total hip and total knee arthroplasty
procedures. DRG 545 currently contains revisions of both hip and knee
replacement procedures. AAHKS stated that based on the differences
between patient characteristics, procedure characteristics, resource
utilization, and procedure code payment rates between total hip and
total knee replacements, separate DRGs were warranted. Furthermore,
AAHKS recommended that CMS create separate base DRGs for routine versus
complex joint revision or replacement procedures as shown below.
Routine Hip Replacements
00.73, Revision of hip replacement, acetabular liner and/
or femoral heal only
00.85, Resurfacing hip, total, acetabulum and femoral head
00.86, Resurfacing hip, partial, femoral head
00.87, Resurfacing hip, partial, acetabulum
81.51, Total hip replacement
81.52, Partial hip replacement
81.53, Revision of hip replacement, not otherwise
specified
Complex Hip Replacements
00.70, Revision of hip replacement, both acetabular and
femoral components
00.71, Revision of hip replacement, acetabular component
00.72, Revision of hip replacement, femoral component
Routine Knee Replacements and Ankle Procedures
00.83, Revision of knee replacement, patellar component
00.84, Revision of knee replacement, tibial insert (liner)
81.54, Revision of knee replacement, not otherwise
specified
81.55, Revision of knee replacement, not otherwise
specified
81.56, Total ankle replacement
Complex Knee Replacements and other reattachments
00.80, Revision of knee replacement, total (all
components)
00.81, Revision of knee replacement, tibial component
00.82, Revision of knee replacement, femoral component
84.26, Foot reattachment
84.27, Lower leg or ankle reattachment
84.28, Thigh reattachment
AAHKS also recommended the continuation of DRG 471 (Bilateral or
Multiple Major Joint Procedures of Lower Extremity) without
modifications. DRG 471 includes any combination of two or more of the
following procedure codes:
00.70, Revision of hip replacement, both acetabular and
femoral components
00.80, Revision of knee replacement, total (all
components)
00.85, Resurfacing hip, total, acetabulum and femoral head
00.86, Resurfacing hip, partial, femoral head
00.87, Resurfacing hip, partial, acetabulum
81.51, Total hip replacement
81.52, Partial hip replacement
81.54, Total knee replacement
81.56, Total ankle replacement
As discussed in section II.C. of the preamble of this proposed
rule, we are proposing to adopt MS-DRGs to better recognize severity of
illness for FY 2008. The proposed MS-DRGs include two new severity of
illness levels under the current base DRG 544. We are also proposing to
add three new severity of illness levels to the base DRG for Revision
of Hip or Knee Replacement (currently DRG 545). The new MS-DRGs are as
follows:
Proposed MS-DRG 466 (Revision of Hip or Knee Replacement
with MCC)
Proposed MS-DRG 467 (Revision of Hip or Knee Replacement
with CC)
Proposed MS-DRG 468 (Revision of Hip or Knee Replacement
without CC)
Proposed MS-DRG 483 (Major Joint Replacement or
Reattachment of Lower Extremity with CC/MCC)
Proposed MS-DRG 484 (Major Joint Replacement or
Reattachment of Lower Extremity without CC/MCC)
We found that the proposed MS-DRGs greatly improved our ability to
identify joint procedures with higher resource costs. The following
table indicates the average charges for each new proposed MS-DRG for
the joint procedures.
Proposed MS-DRGs That Replace DRGs 544 and 535 With New Severity Levels
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
Proposed MS-DRG cases of stay charges
----------------------------------------------------------------------------------------------------------------
MS-DRG 466...................................................... 390,344 4.03 $33,465.85
MS-DRG 467...................................................... 28,211 8.46 53,676.09
MS-DRG 468...................................................... 26,718 4.06 38,720.28
MS-DRG 483...................................................... 10,078 6.06 48,575.01
MS-DRG 484...................................................... 3,886 9.55 69,649.08
----------------------------------------------------------------------------------------------------------------
[[Page 24731]]
AAHKS analyzed Medicare data under the current DRG system and was
unaware of how its analysis would change under the proposed MS-DRGs.
Under the current DRGs, the AAHKS recommendation would replace 2 DRGs
with 4 new ones. However, under the proposed MS-DRGs, the AAHKS
recommendation would result in 5 DRGs becoming 12. Because AAHKS is
recommending four new joint replacement DRGs (two for knees and two for
hips), each would need to be subdivided into severity levels under our
proposed MS-DRG system. Therefore, the four new joint DRGs could be
subdivided into three levels each, leading to 12 new DRGs. At this
time, we believe that the changes we are proposing to make to adopt the
proposed MS-DRGs are sufficiently better for recognizing severity of
illness among the hip and knee replacement cases. We do not believe
that there would be significant improvements in the proposed MS-DRGs
recognition of severity of illness from creating an additional 7 DRGs.
However, we acknowledge the valuable assistance the AAHKS has provided
to CMS in creating the new joint replacement procedure codes and
modifying the joint replacement DRGs beginning in FY 2006. These
efforts greatly improved our ability to categorize significantly
different groups of patients according to severity of illness. We
welcome comments from AAHKS on whether the proposed MS-DRGs recognize
patient complexity and severity of illness in the hip and knee
replacement DRGs consistent with the concerns it expressed to us in
previous comments. We also welcome public comments from others as well
on whether the proposed changes to the hip and knee replacement DRGs
better recognize severity of illness and complexity of these operations
in the Medicare patient population.
b. Spinal Fusions
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Spinal Procedures'' at the beginning of your
comment.)
In the FY 2007 final rule (71 FR 47947), we discussed a request
that urged CMS to consider applying a severity concept to all of the
back and spine surgical cases, similar to the approach that was used in
the FY 2006 final rule in refining the cardiac DRGs with an MCV.
Specifically, the commenter recommended that the use of spinal devices
be uniquely identified within the spine DRGs. The commenter's
suggestion involved the development of 10 new spine DRGs as well as
additional modifications. One of these modifications included revising
DRG 546 (Spinal Fusions Except Cervical with Curvature of the Spine or
Malignancy). The commenter stated DRG 546 did not adequately recognize
clinical severity or the resource differences among spinal fusion
patients whose surgeries include fusing multiple levels of their spinal
vertebrae.
We agreed with the commenter that it was important to recognize
severity when classifying groups of patients into specific DRGs. In
addition, in response to recommendations from MedPAC's March 2005
Report to Congress, we stated that we were conducting a comprehensive
analysis of the entire DRG system to determine if we could better
identify severity of illness. We further stated that until results from
our analysis were available, it would be premature to implement a
severity concept for the spine DRGs. Therefore, we did not make any
adjustments to those DRGs at that time.
Under the proposed MS-DRGs described in section II.D. of the
preamble of this proposed rule, we are proposing a number of
refinements that would better recognize severity for FY 2008. The
proposed MS-DRGs include several refinements to the spine DRGs. These
refinements are described in detail below.
In the FY 2006 IPPS final rule, we noted that there are numerous
innovations occurring in spinal surgery such as artificial spinal disc
prostheses, kyphoplasty, vertebroplasty and the use of spine
decompression devices. As part of our analysis of the DRG system for
this proposed rule, we did a comprehensive review of the DRGs for
spinal fusion and other back and neck procedures to determine whether
additional refinements beyond the proposed MS-DRGs were necessary. We
studied data from the FY 2006 MedPAR file for the entire group of spine
DRGs. This group included DRG 496 (Combined Anterior/Posterior Spinal
Fusion), DRGs 497 and 498 (Spinal Fusion Except Cervical With and
Without CC, respectively), DRGs 499 and 500 (Back and Neck Procedures
Except Spinal Fusion With and Without CC, respectively), DRGs 519 and
520 (Cervical Spinal Fusion With and Without CC, respectively), and DRG
546 (Spinal Fusion Except Cervical with Curvature of the Spine or
Malignancy).
As indicated earlier, we are proposing a two or three-way split for
each of these spine DRGs to better recognize severity of illness,
complexity of service, and resource utilization. In addition, we
examined the procedure codes that identify multiple fusion or refusion
of the vertebrae (codes 81.62 through 81.64) to determine if the data
supported further refinement when a greater number of vertebrae are
fused.
In applying the proposed MS-DRG logic, CMS DRG 497 and 498 were
collapsed and the result is a split with two severity levels: proposed
MS-DRG 459 (Spinal Fusion Except Cervical With MCC) and proposed MS-DRG
460 (Spinal Fusion Except Cervical Without MCC). There were a total of
51,667 cases in proposed MS-DRGs 459 and 460. We identified 288 cases
where nine or more noncervical vertebrae were fused (code 81.64) that
currently are assigned to proposed MS-DRGs 459 and 460. The average
charges and length of stay for cases in these MS-DRGs are closer to the
average charges and length of stay for cases in proposed MS-DRGs 456
through 458 (Spinal Fusion Except Cervical With Curvature of the Spine
or Malignancy With MCC, With CC, and Without CC, respectively). For
example, in proposed MS-DRG 460, there were 238 cases with an average
length of stay of 6.20 days and average charges of $110,908 when nine
or more noncervical vertebrae are fused. There are an additional 50
cases where nine or more vertebrae were fused in proposed MS-DRG 459
with average charges of $171,839. Without any further modification to
the proposed MS-DRGs, these cases would be assigned to proposed MS-DRGs
459 and 460 that have average charges of $59,698, and $99,298,
respectively. The average charges for these cases are more comparable
to $142,871, $95,489, and $77,528, respectively, for proposed MS-DRGs
456 through 458. We believe these data support assigning cases where
nine or more noncervical vertebrae are fused from proposed MS-DRG 459
and 460 into proposed MS-DRG 456 through 458. The table below
represents our findings.
------------------------------------------------------------------------
Average
Proposed MS-DRG Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 459 (Spinal Fusion Except 3,186 10.10 $99,298
Cervical With MCC)--All Cases...
[[Page 24732]]
MS-DRG 459 (Spinal Fusion Except 50 13.00 171.839
Cervical With MCC)--Cases with
Procedure Code 81.64 (Fusion or
refusion of 9 or more vertebrae)
MS-DRG 460 (Spinal Fusion Except 48,481 4.36 59,698
Cervical Without MCC)--All Cases
MS-DRG 460 (Spinal Fusion Except 238 6.20 110,908
Cervical Without MCC)--Cases
with Procedure Code 81.64
(Fusion or refusion of 9 or more
vertebrae)......................
MS-DRG 456 (Spinal Fusion Except 548 14.79 142,871
Cervical With Curvature of the
Spine or Malignancy With MCC)--
All Cases.......................
MS-DRG 456 (Spinal Fusion Except 61 13.34 170,655
Cervical With Curvature of the
Spine or Malignancy With MCC)--
Cases With Procedure Code 81.64
(Fusion or refusion of 9 or more
vertebrae)......................
MS-DRG 457 (Spinal Fusion Except 1,500 8.14 95,489
Cervical With Curvature of the
Spine or Malignancy With CC)--
All Cases.......................
MS-DRG 457 (Spinal Fusion Except 146 8.88 125,722
Cervical With Curvature of the
Spine or Malignancy With CC)--
Cases With Procedure Code 81.64
(Fusion or refusion of 9 or more
vertebrae)......................
MS-DRG 458 (Spinal Fusion Except 1,340 4.58 77,528
Cervical With Curvature of the
Spine or Malignancy Without CC--
All Cases.......................
MS-DRG 458 (Spinal Fusion Except 81 6.21 123,823
Cervical With Curvature of the
Spine or Malignancy Without CC)--
Cases With Procedure Code 81.64
(Fusion or refusion of 9 or more
vertebrae)......................
------------------------------------------------------------------------
Therefore, we are proposing to move those cases that include fusing
or refusing nine or more vertebrae from proposed MS-DRGs 459 and 460
into proposed MS-DRGs 456 through 458. This proposed modification would
include revising the MS-DRG title to reflect the fusion of nine or more
vertebrae. The revised titles for proposed MS-DRGs 456 through 458
would be as follows:
Proposed MS-DRG 456 (Spinal Fusion Except Cervical with
Spinal Curvature or Malignancy or 9+ Fusions With MCC)
Proposed MS-DRG 457 (Spinal Fusion Except Cervical with
Spinal Curvature or Malignancy or 9+ Fusions With CC)
Proposed MS-DRG 458 (Spinal Fusion Except Cervical with
Spinal Curvature or Malignancy or 9+ Fusions Without CC/MCC)
We invite public comment on this topic as well as on the additional
changes we are proposing to the spine MS-DRGs discussed below.
Further analysis demonstrates that spinal fusion cases with a
principal diagnosis of tuberculosis or osteomyelitis also have higher
average charges than other cases in CMS DRG 497 (proposed MS-DRGs 459
and 460) that are more similar to the cases assigned to CMS DRG 546
(proposed MS-DRGs 456 through 458). Although the volume of cases is
relatively low, the data show very high average charges for these
patients. The following tables display our results:
------------------------------------------------------------------------
Average
Proposed MS-DRG Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 459 (Spinal Fusion Except 3,186 10.10 $99,298
Cervical With MCC)..............
MS-DRG 460 (Spinal Fusion Except 48,481 4.36 59,698
Cervical Without MCC)...........
------------------------------------------------------------------------
------------------------------------------------------------------------
Average
Proposed MS-DRG Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 456 (Spinal Fusion Except 548 14.79 $142,870
Cervical with Spinal Curvature
or Malignancy or 9+ Fusions With
MCC)............................
MS-DRG 457 (Spinal Fusion Except 1,500 8.14 95,489
Cervical with Spinal Curvature
or Malignancy or 9+ Fusions With
CC).............................
MS-DRG 458 (Spinal Fusion Except 1,340 4.58 77,528
Cervical With Spinal Curvature
or Malignancy or 9+ Fusions
Without CC/MCC).................
------------------------------------------------------------------------
------------------------------------------------------------------------
Tuberculosis and Osteomyelitis
-------------------------------------------------------------------------
Average
Principal diagnosis Number of length of Average
cases stay charges
------------------------------------------------------------------------
Codes 015.02, 015.04, 015.05, 194 24.8 $128,073
730.08, 730.18 and 730.28.......
------------------------------------------------------------------------
For this reason, we are proposing to add the following diagnoses to
the principal diagnosis list for proposed MS-DRGs 456 through 458:
015.02, Tuberculosis of bones and joints, vertebral
column, bacteriological or histological examination unknown (at
present)
015.04, Tuberculosis of bones and joints, vertebral
column, tubercle bacilli not found (in sputum) by microscopy, but found
by bacterial culture
015.05, Tuberculosis of bones and joints, vertebral
column, tubercle bacilli not found by bacteriological examination, but
tuberculosis confirmed histologically
730.08, Acute osteomyelitis of other specified sites
[[Page 24733]]
730.18, Chronic osteomyelitis of other specified sites
730.28, Unspecified osteomyelitis of other specified sites
For the complete list of principal diagnosis codes that lead to
assignment of CMS DRG 546 (proposed MS-DRGs 496 through 498), we refer
readers to section II.D.4.b. of the preamble of the FY 2007 IPPS final
rule (71 FR 47947).
c. Spinal Disc Devices
Over the past several years, manufacturers of spinal disc devices
have requested reassignment of DRGs for their products and applied for
new technology add-on payments. CHARITETM is one of these
devices. CHARITETM is a prosthetic intervertebral disc. On
October 26, 2004, the FDA approved the CHARITETM Artificial
Disc for single level spinal arthroplasty in skeletally mature patients
with degenerative disc disease between L4 and S1. On October 1, 2004,
we created new procedure codes for the insertion of spinal disc
prostheses (codes 84.60 through 84.69). We provided the CMS DRG
assignments for these new codes in Table 6B of the FY 2005 IPPS
proposed rule (69 FR 28673). We received comments on the FY 2005
proposed rule recommending that we change the assignments for these
codes from CMS DRG 499 (Back and Neck Procedures Except Spinal Fusion
With CC) and CMS DRG 500 (Back and Neck Procedures Except Spinal Fusion
Without CC) to the CMS DRGs for spinal fusion, CMS DRG 497 (Spinal
Fusion Except Cervical With CC) and CMS DRG 498 (Spinal Fusion Except
Cervical Without CC) for procedures on the lumbar spine and to CMS DRGs
519 and 520 for procedures on the cervical spine. In the FY 2005 IPPS
final rule (69 FR 48938), we indicated that CMS DRGs 497 and 498 are
limited to spinal fusion procedures. Because the surgery involving the
CHARITETM Artificial Disc is not a spinal fusion, we decided
not to include this procedure in these CMS DRGs. However, we stated
that we would continue to analyze this issue and solicited further
public comments on the DRG assignment for spinal disc prostheses.
In the FY 2006 final rule (70 FR 47353), we noted that, if a
product meets all of the criteria for Medicare to pay for the product
as a new technology under section 1886(d)(5)(K) of the Act, there is a
clear preference expressed in the statute for us to assign the
technology to a DRG based on similar clinical or anatomical
characteristics or costs. However, for FY 2006, we did not find that
the CHARITETM Artificial Disc met the substantial clinical
improvement criterion and, thus, did not qualify as a new technology.
Consequently, we did not address the DRG classification request made
under the authority of this provision of the Act.
We did evaluate whether to reassign the CHARITETM
Artificial Disc to different CMS DRGs using the Secretary's authority
under section 1886(d)(4) of the Act (70 FR 47308). We indicated that we
did not have Medicare charge information to evaluate CMS DRG changes
for cases involving an implant of a prosthetic intervertebral disc like
the CHARITETM and did not make a change in its CMS DRG
assignments. We stated that we would consider whether changes to the
CMS DRG assignments for the CHARITETM Artificial Disc were
warranted for FY 2007, once we had information from Medicare's data
system that would assist us in evaluating the costs of these patients.
As we discussed in the FY 2007 IPPS proposed rule (71 FR 24036), we
received correspondence regarding the CMS DRG assignments for the
CHARITETM Artificial Disc, code 84.65 (Insertion of total
spinal disc prosthesis, lumbosacral). The commenter had previously
submitted an application for the CHARITETM Artificial Disc
for new technology add-on payments for FY 2006 and had requested a
reassignment of cases involving CHARITETM implantation to
CMS DRGs 497 and 498. The commenter asked that we examine claims data
for FY 2005 and reassign procedure code 84.65 from CMS DRGs 499 and 500
into CMS DRGs 497 and 498. The commenter again stated the view that
cases with the CHARITETM Artificial Disc reflect comparable
resource use and similar clinical indications as do those in CMS DRGs
497 and 498. If CMS were to reject reassignment of the
CHARITETM Artificial Disc to CMS DRGs 497 and 498, the
commenter suggested creating two separate DRGs for lumbar disc
replacements.
On February 15, 2006, we posted a proposed national coverage
determination (NCD) on the CMS Web site seeking public comment on our
proposed finding that the evidence is not adequate to conclude that
lumbar artificial disc replacement with the CHARITETM
Artificial Disc is reasonable and necessary. The proposed NCD stated
that lumbar artificial disc replacement with the CHARITETM
Artificial Disc is generally not indicated in patients over 60 years
old. Further, it stated that there is insufficient evidence among
either the aged or disabled Medicare population to make a reasonable
and necessary determination for coverage. With an NCD pending to make
spinal arthroplasty with the CHARITETM Artificial Disc
noncovered, we indicated in the FY 2007 IPPS proposed rule that we did
not believe it was appropriate at that time to reassign procedure code
84.65 from CMS DRGs 499 and 500 to CMS DRGs 497 and 498.
After considering the public comments and additional evidence
received, we made a final NCD on May 16, 2006, that Medicare would not
cover the CHARITETM Artificial Disc for the Medicare
population over 60 years of age. For Medicare beneficiaries 60 years of
age and under, local Medicare contractors have the discretion to
determine coverage for lumbar artificial disc replacement procedures
involving the CHARITETM Artificial Disc. The final NCD can
be found on the CMS Web site at: http://www.cms.hhs.gov/mcd/viewncd.asp:ncd-id
150.10&ncd--
version1&basket=ncd%3A150%2E10%3A1%3ALumbar+Artificial+Disc+Replacement%
280ADR%29.
We agreed with a commenter on the FY 2007 IPPS proposed rule that
it was not appropriate to consider a DRG revision at that time for the
CHARITETM Artificial Disc, given the recent decision to
limit coverage for surgical procedures involving this device. Although
we had reviewed the Medicare charge data, we were concerned that there
were a very small number of cases for patients under 60 years of age
who had received the CHARITETM Artificial Disc. We believed
it appropriate to base the decision of a DRG change on charge data only
on the population for which the procedure is covered. We had an
extremely small number of cases for Medicare beneficiaries under 60 on
which to base such a decision. For this reason, we did not believe it
was appropriate to modify the CMS DRGs in FY 2007 for
CHARITETM cases.
For FY 2008, we collapsed CMS DRGs 499 and 500 (Back and Neck
Procedures Except Spinal Fusion With and Without CC, respectively) and
identified a total of 74,989 cases. Under the proposed MS-DRGs, the
result of the analysis of the data supports that these CMS DRGs split
into two severity levels: proposed MS-DRG 490 (Back and Neck Procedures
Except Spinal Fusion with CC or MCC) and proposed MS-DRG 491 (Back and
Neck Procedures Except Spinal Fusion Without CC or MCC). We found a
total of 53 cases that used the CHARITETM Artificial Disc.
Without any further modification to the proposed MS-DRGs, average
charges are $26,481 for 6 cases with a CC or MCC and $37,324 for 47
CHARITETM cases
[[Page 24734]]
without a CC or MCC. (We find it counterintuitive that average charges
for cases in the higher severity level are lower but checked our data
and found it to be correct).
We also analyzed data for other spinal disc devices. Average
charges for the X Stop Interspinous Process Decompression Device (code
84.58) are $31,400 for cases with a CC or MCC and $28,821 for cases
without a CC or MCC. Average charges for other specified spinal devices
described by code 84.59 (Coflex, Dynesys, M-Brace) are $34,002 for 18
cases with a CC or MCC and $33,873 for 65 cases without a CC or MCC. We
compared these average charges to data in the proposed spinal fusion
MS-DRGs 453 (Combined Anterior/Posterior Spinal Fusion With MCC), 454
(Combined Anterior/Posterior Spinal Fusion With CC), 455 (Combined
Anterior/Posterior Spinal Fusion Without CC/MCC), 459 (Spinal Fusion
Except Cervical With MCC), and 460 (Spinal Fusion Except Cervical
Without MCC). These cases have lower average charges than the spinal
fusion MS-DRGs. The following tables display the results:
------------------------------------------------------------------------
Average
Proposed MS-DRGs 490 and 491 Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 490--All Cases............ 17,493 5.13 $29,656
MS-DRG 490--Cases with Procedure 6 3.33 26,481
Code 84.65 (CHARITETM)..........
MS-DRG 491--All Cases............ 57,496 2.27 17,789
MS-DRG 491--Cases with Procedure 47 2.43 37,324
Code 84.65 (CHARITETM)..........
MS-DRG 491--Cases without 57,449 2.27 17,773
Procedure Code 84.65 (CHARITETM)
------------------------------------------------------------------------
------------------------------------------------------------------------
Average
Proposed MS-DRGs 490 and 491 Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 490--All Cases............ 17,493 5.13 $29,656
MS-DRG 490--Cases with Procedure 179 2.65 31,400
Code 84.58 (X Stop).............
MS-DRG 490--Cases without 17,314 5.15 29,638
Procedure Code 84.58 (X Stop)...
MS-DRG 491--All Cases............ 57,496 2.27 17,789
MS-DRG 491--Cases with Procedure 1,174 1.34 28,821
Code 84.58 (X Stop).............
MS-DRG 491--Cases without 56,322 2.29 17,559
Procedure Code 84.58 (X-Stop)...
------------------------------------------------------------------------
------------------------------------------------------------------------
Average
Proposed MS-DRGs 490 and 491 Number of length of Average
cases stay charges
------------------------------------------------------------------------
MS-DRG 490--All Cases............ 17,493 5.13 $29,656
MS-DRG 490--Cases with Procedure 18 5.56 34,002
Code 84.59 (Coflex/Dynesys/M-
Brace)..........................
MS-DRG 490--Cases without 17,475 5.13 29,651
Procedure Code 84.59 (Coflex/
Dynesys/M-Brace)................
MS-DRG 491--All Cases............ 57,496 2.27 17,789
MS-DRG 491--Cases with Procedure 65 2.35 33,873
Code 84.59 (Coflex/Dynesys/M-
Brace)..........................
MS-DRG 491--Cases without 57,431 2.27 17,770
Procedure Code 84.59 (Coflex/
Dynesys/M-Brace)................
------------------------------------------------------------------------
------------------------------------------------------------------------
Average
Proposed MS-DRGs 453, 454, 455, Number of length of Average
459 and 460 cases stay charges
------------------------------------------------------------------------
MS-DRG 453--Combined Anterior/ 792 15.84 $180,658
Posterior Spinal Fusion With MCC
MS-DRG 454--Combined Anterior/ 1,411 8.69 116,402
Posterior Spinal Fusion With CC.
MS-DRG 455--Combined Anterior/ 1,794 4.84 85,927
Posterior Spinal Fusion Without
CC/MCC..........................
MS-DRG 459--Spinal Fusion Except 3,186 10.10 99,298
Cervical with MCC...............
MS-DRG 460--Spinal Fusion Except 48,481 4.36 59,698
Cervical Without MCC............
------------------------------------------------------------------------
The data demonstrate that the average charges for
CHARITETM and the other devices are higher than other cases
in proposed MS-DRGs 490 and 491 but lower than proposed MS-DRGs 453
through 55 and 459 and 460. For this reason, we do not believe that any
of the cases that use these spine devices should be assigned to the
spinal fusion MS-DRGs. However, we do believe that the average charges
for cases using these spine devices are more similar to the higher
severity level in MS-DRG 490.
As such, we are proposing to move cases with procedure codes 84.58,
84.59, and 84.65 into proposed MS-DRG 490 and revise the title to
reflect disc devices. The proposed modified MS-DRG title would be: MS-
DRG 490 (Back and Neck Procedures Except Spinal Fusion with CC or MCC
or Disc Devices).
We believe these proposed changes to the spine DRGs are appropriate
to recognize the similar utilization of resources, differences in
levels of severity, and complexity of the services performed for
various types of spinal procedures described above. We encourage
commenters to provide input on this approach to better recognize the
types of patients these procedures are being performed upon and their
outcomes.
d. Other Spinal DRGs
We did not identify any data to support moving cases in or out of
CMS DRGs 496 (Combined Anterior/Posterior Spinal Fusion), 519 (Cervical
Spinal Fusion With CC), or 520 (Cervical Spinal Fusion Without CC)).
Under the proposed MS-DRG system, CMS DRG 496 would be split into three
severity levels: proposed MS-DRG 453 (Combined Anterior/Posterior
Spinal Fusion With MCC), proposed MS-DRG 454 (Combined Anterior/
Posterior Spinal Fusion With CC), and proposed MS-DRG 455 (Combined
Anterior/Posterior Spinal Fusion Without CC).
[[Page 24735]]
CMS DRG 519 would also be split into three severity levels: proposed
MS-DRG 471 (Cervical Fusion With MCC), proposed MS-DRG 472 (Cervical
Fusion With CC), and proposed MS-DRG 473 (Cervical Fusion Without CC).
We are not proposing changes to these DRGs at this time.
5. MDC 17 (Myeloproliferative Diseases and Disorders, Poorly
Differentiated Neoplasm): Endoscopic Procedures
(If you choose to comment on issues in this section, please include
the caption ``DRGs: Endoscopy'' at the beginning of your comment.)
We received a request from a manufacturer to review the DRG
assignment of codes 33.71 (Endoscopic insertion or replacement of
bronchial valve(s)), 33.78 (Endoscopic removal of bronchial device(s)
or substances), and 33.79 (Endoscopic insertion of other bronchial
device or substances) with the intent of moving these three codes out
of CMS DRG 412 (History of Malignancy With Endoscopy) (proposed MS-DRGs
843, 844, and 845). The requestor has noted that CMS DRG 412 is titled
to be a DRG for cases with a history of malignancy, and none of the
three codes (33.71, 33.78, or 33.79) necessarily involve treatment for
malignancies. In addition, the requestor believed the integrity of the
DRG is compromised because the other endoscopy codes assigned to CMS
DRG 412 are all diagnostic in nature, while codes 33.71, 33.78, and
33.79 represent therapeutic procedures.
The requestor also stated that while the diagnostic endoscopies in
CMS DRG 412 do not have significant costs for equipment or
pharmaceutical agents beyond the basic endoscopy, the therapeutic
procedures described by codes 33.71, 33.78, and 33.79 involve
substantial costs for devices or substances in relation to the cost of
the endoscopic procedure itself. The requestor was concerned that, if
these three codes continue to be assigned to CMS DRG 412, payment will
be so inadequate as to constitute a substantial barrier to Medicare
beneficiaries for these treatments.
ICD-9-CM procedure codes 33.71, 33.78, and 33.79 were all created
for use beginning October 1, 2006. As these codes have been in use only
for a few months, we have no data to make a different DRG assignment.
We assigned these codes based on the advice of our medical officers to
a DRG that includes similar clinical procedures.
On the matter of codes 33.71, 33.78, and 33.79 being therapeutic in
nature while all other endoscopies assigned to CMS DRG 412 are
diagnostic, we disagree with the commenter. CMS DRG 412 includes
procedure codes for therapeutic endoscopic destruction of lesions of
the bronchus, lung, stomach, anus, and duodenum, as well as codes for
polypectomy of the intestine and rectum. In addition, we note that
there are codes for insertion of therapeutic devices currently located
in this DRG.
We believe it would be premature to assign these codes to another
DRG without any supporting data. We will reconsider our decision for
these codes if we have data suggesting that a DRG reassignment is
warranted. Therefore, aside from the proposed changes to the MS-DRGs,
we are not proposing to change the current DRG assignment for codes
33.71, 33.78, and 33.79 at this time.
6. Medicare Code Editor (MCE) Changes
(If you choose to comment on issues in this section, please include
the caption ``Medicare Code Editor'' at the beginning of your comment.)
As explained under section II.B.1. of this preamble, the Medicare
Code Editor (MCE) is a software program that detects and reports errors
in the coding of Medicare claims data. Patient diagnoses, procedure(s),
discharge status, and demographic information go into the Medicare
claims processing systems and are subjected to a series of automated
screens. The MCE screens are designed to identify cases that require
further review before classification into a DRG.
For FY 2008, we are proposing to make the following changes to the
MCE edits.
a. Non-Covered Procedure Edit: Code 00.62 (Percutaneous angioplasty or
atherectomy of intracranial vessel(s))
As discussed in II.G.2. of the preamble of this proposed rule,
under MDC 1, code 00.62 is a covered service when performed in
conjunction with code 00.65 (Percutaneous insertion of intracranial
vascular stent(s)). Effective November 6, 2006, Medicare covers PTA and
stenting of intracranial arteries for the treatment of cerebral artery
stenosis in cases in which stenosis is 50 percent or greater in
patients with intracranial atherosclerotic disease when furnished in
accordance with the FDA-approved protocols governing Category B
Investigational Device Exemption (IDE) clinical trials. CMS determines
that coverage of intracranial PTA and stenting is reasonable and
necessary under these circumstances. Therefore, we are proposing to
make a conforming change and to add the following language to this
edit: Procedure code 00.62 (PTA of intracranial vessel(s)) is
identified as a noncovered procedure except when it is accompanied by
procedure code 00.65 (Intracranial stent).
b. Non-Specific Principal Diagnosis Edit 7 and Non-Specific O.R.
Procedures Edit 10
When MCE Non-Specific Principal Diagnosis Edit 7 and Non-Specific
O.R. Procedures Edit 10 were created at the beginning of the IPPS, it
was with the intent that they were to encourage hospitals to code as
specifically as possible. While the codes on both edits are valid
according to the ICD-9-CM coding scheme, more precise codes are
preferable to give a more complete understanding of the services
provided on the Medicare claims. When the MCE was created, we had
intended that these specific edits would allow educational contact
between the provider and the contractor. It was never the intention
that these edits would be used to deny/reject or return-to-provider
claims submitted with non-specific codes. However, we found these two
edits to be misunderstood, and found that claims were erroneously being
denied, rejected, or returned. On November 11, 2006, CMS issued a Joint
Signature Memorandum which instructed all fiscal intermediaries and all
Part A and Part B Medicare Administrative Contractors (A/B MACs) to
deactivate the Fiscal Intermediary Shared System Edits W1436 through
W1439 and W1489 through W1491 which edited for Non-Specific Diagnoses
and the Non-Specific Procedures.
Therefore, we are proposing to make a conforming change to the MCE
by removing the following codes from Edit 7:
00320 1109 1543
01590 1129 1579
01591 1149 1589
01592 1279 1590
01593 129 1609
01594 1309 1619
01596 13100 1629
0369 1319 1639
0399 1329 1649
0528 1369 1709
05310 1370 1719
0538 1371 1729
05440 1372 1739
0548 1373 1749
0558 1374 1769
05600 138 179
0568 1390 1809
06640 1391 1839
07070 1398 1874
07071 1409 1879
0728 1419 1889
0738 1429 1899
07420 1439 1909
08240 1449 1929
0979 1469 1949
09810 1479 1969
09830 1509 1991
[[Page 24736]]
09950 1519 20490
0999 1529 20491
1009 1539 20590
20591 2779 36910
20690 2793 36911
20691 2799
20890 28730 36912
20891 28800 36913
2129 28850 36914
2139 28860 36915
2149 28950 36916
2159 3239 36917
2169 3249 36918
2189 326 36920
2199 32700 36921
2229 32710 36922
2239 32720 36923
2249 32730 36924
2259 32740 36925
2279 3309 3693
22800 3319 3694
2299 3349 36960
2306 3359 36961
2319 34120 36962
2329 3419 36963
2349 3439 36964
23690 3449 36965
23770 34690 36966
23875 34691 36967
2390 3489 36968
2391 3499 36969
2392 3509 36970
2393 3519 36971
2394 3529 36972
2396 3539 36973
2397 3569 36974
2398 3579 36975
2399 3589 36976
2469 3599 3698
2519 3609 3699
25200 3619 3709
2529 3629 3719
2539 3639 3729
2549 3649 3739
25510 3659 3749
2569 3669 3759
2579 3679 3769
2589 3689 3779
2681 36900 3789
2709 36901 37960
2719 36902 3809
2729 36903 3819
2739 36904 3829
27540 36905 3839
2759 36906 3849
27650 36907 3859
27730 36908 3879
38800 52140 6089
38810 5219 6109
38830 52320 6169
38840 52330 6170
38860 52340 61800
38870 5239 6184
3889 52400 6189
38900 52420 6199
38910 52430 6209
3897 52450 62130
3899 52460 6219
41090 52470 62210
41091 5249 6229
41092 52520 6239
412 52540 6249
4149 52550 6269
4179 52560 6279
42650 5259 62920
4275 5269 63390
4279 5279 63391
42820 52800 64090
42830 5299 64091
42840 5309 64093
4289 53640 64100
4299 5379 64110
4329 5539 64120
43390 56400 64130
43490 5649 64180
4379 5679 64190
4389 5689 64191
4419 56960 64193
4429 5699 64200
4449 5739 64210
44620 57510 64220
4479 5759 64230
4519 5769 64240
45340 5779 64250
4539 5799 64260
4579 5859 64270
4599 5889 64290
4619 5890 64300
46450 5891 64310
46451 5899 64320
4749 5909 64380
4919 5959 64390
5169 5969 64400
51900 5989 64410
5199 59960 64420
5209 5999 64600
52100 60090 64610
60091 64620
52110 6019 64630
52120 6029 64640
52130 60820 64650
64660 65290 65820
64670 65291 65830
64680 65293 65840
64690 65300 65880
64700 65310 65890
64710 65320 65891
64720 65330 65893
64730 65340 65900
64740 65350 65910
64750 65360 65920
64760 65370 65930
64780 65380 65940
64790 65390 65950
64791 65391 65960
64792 65393 65980
64793 65400 65990
64794 65410 65991
64800 65420 65993
64810 65430 66000
64820 65440 66010
64830 65450 66020
64840 65460 66030
64850 65470 66040
64860 65480 66050
64870 65490 66060
64880 65491 66070
64890 65492 66080
64900 65493 66090
64910 65494 66100
64920 65500 66110
64930 65510 66120
64940 65520 66130
64950 65530 66140
64960 65540 66190
65100 65550 66191
65110 65560 66193
65120 65570 66200
65130 65580 66210
65140 65590 66220
65150 65591 66230
65160 65593 66300
65180 65600 66310
65190 65610 66320
65191 65620 66330
65193 65630 66340
65200 65640 66350
65210 65650 66360
65220 65660 66380
65230 65670 66390
65240 65680 66391
65250 65690 66393
65260 65700 66400
65270 65800 66410
65280 65810 66420
66430 67110 7059
66440 67120 7069
66441 67130 70700
66444 67140 70710
66450 67150 7079
66480 67180 7149
66490 67190 71590
66491 67191 7179
66494 67192 71849
66500 67193 71850
66510 67194 71870
66520 67200 72230
66530 67300 72270
66540 67310 72280
66550 67320 72290
66560 67330 7239
66570 67380 7244
66580 67400 7289
66590 67410 73000
66591 67420 73010
66592 67430 73020
66593 67440 73030
66594 67450 73090
66600 67480 73091
66610 67490 73092
66620 67492 73093
66630 67494 73094
66700 67500 73095
66710 67510 73096
66800 67520 73097
66810 67580 73098
66820 67590 73099
66880 67600 73310
66890 67610 73340
66891 67620 73390
66892 67630 7359
66893 67640 73600
66894 67650 73620
66900 67660 73630
66910 67680 73670
66920 67690 7369
66930 67691 73810
66940 67692 7389
66950 67693 74100
66960 67694 74190
66970 677 7429
66980 6809 7439
66990 6819 7449
66991 6829 7459
66992 68600 7469
66993 6869 74760
66994 6949 7489
67000 7019 74900
67100 7049 74910
7509 7769 9009
7529 7789 9029
75310 7799 9039
75312 78031 9048
75320 78051 9049
7539 78052 9050
7559 78053 9051
75670 78054 9052
7579 78055 9053
[[Page 24737]]
7599 78057 9054
7600 78058 9055
7601 78079 9056
7602 7825 9057
7603 78261 9058
7604 78262 9059
7605 78340 9060
7606 78830 9061
76070 78900 9062
76072 78930 9063
76073 78940 9064
76074 78960 9065
76079 79009 9066
7608 7901 9067
7609 7904 9068
7610 7905 9069
7611 7906 9070
7612 79091 9071
7613 79092 9072
7614 79099 9073
7615 7929 9074
7616 79380 9075
7617 79500 9079
7618 7954 9080
7619 7964 9081
7629 7969 9082
7630 7993 9083
7631 79989 9084
7632 7999 9085
7633 8290 9086
7634 ....................... 9089
7635 8291 9090
7636 8398 9091
7637 8399 9092
76383 8409 9093
7639 8419 9094
76520 8439 9095
7679 8469 9099
7689 8479 9219
77010 8489 9229
7709 8678 9239
77210 8679 9249
7729 86800 9269
7759 86810 9279
9289 94404 9659
9299 94405 9679
9349 94406 9699
9399 94407 9709
94100 94408 9739
94101 94500 9769
94102 94501 9779
94103 94502 9809
94104 94503 9849
94105 94504 9859
94106 94505 9889
94107 94506 9899
94108 94509 9929
94109 9460 9939
94200 9479 99520
94201 9490 99522
94202 9491 99523
94203 9492 99529
94204 9493 99550
94205 9494 99580
94209 9495 99590
94300 9519 99600
94301 9529 99630
94302 9539 99640
94303 9549 99660
94304 9559 99670
94305 9569 99680
94306 9579 99690
94309 95890 99700
94400 9599 99760
94401 9609 9989
94402 9639 ......................
94403 9649 ......................
In addition, we are proposing to make a conforming change to the
MCE by removing the following codes from Edit 10:
0650 3770 4400
0700 3800 4440
0763 3810 4500
0769 3830 4590
0780 3840 4610
2630 3850 4620
3500 3860 4640
3510 3880 4650
3520 4040 4660
3550 4050 4680
3560 4100 5300
3570 4210 5310
3610 4240 5640
3710 ....................... 7550
7670 7880 8070
7700 7890 8080
7720 7910 8090
7760 7920 8100
7770 7930 8120
7780 7940 8130
7790 7950 8153
7800 7960 8155
7810 7980 8400
7820 7990 8440
7830 8000 8460
7840 8010 8469
7850 8020 8660
7870 8040 8670
c. Limited Coverage Edit 17
Edit 17 in the MCE contains ICD-9-CM procedure codes describing
medically complex procedures, including lung volume reduction surgery,
organ transplants, and implantable heart assist devices which are to be
performed only in certain preapproved medical centers. CMS has
established, through a regulation (CMS-3835-F: Medicare Conditions of
Participation: Requirements for Approval and Reapproval of Transplant
Centers to Perform Organ Transplants, published in the Federal Register
on March 30, 2007 (72 FR 15198)), a survey and certification process
for organ transplant programs. The organs covered in this regulation
are heart, heart and lung combined, intestine, kidney, liver, lung,
pancreas, and multivisceral. Historically, kidney transplants have been
regulated under the End-Stage Renal Disease (ESRD) conditions for
coverage. Other types of organ transplant facilities have been
regulated under various NCDs.
The regulation becomes effective on June 28, 2007. Organ transplant
programs will have 180 days from the June 28, 2007 effective date of
the regulation to apply for participation in the Medicare program under
the new survey and certification process. After these programs apply,
we will survey and approve programs that meet the new Medicare
conditions of participation. Until transplant facilities are surveyed
and approved, kidney transplant facilities will continue to be
regulated under the ESRD conditions for coverage, and other types of
organ transplant facilities will continue to be regulated under the
NCDs.
In this proposed rule, we are proposing to add conforming Medicare
Part A payment edits to the MCE, consistent with the requirements of
the organ transplant regulation (CMS-3835-F), to ensure that Medicare
covers only those organ transplants performed in Medicare-approved
facilities. We are proposing to add the following procedure codes to
the existing list of limited coverage procedures under Edit 17:
55.69, Other kidney transplantation
52.80, Pancreatic transplant, not otherwise specified
52.82, Homotransplant of pancreas
7. Surgical Hierarchies
(If you choose to comment on issues in this section, please include
the caption ``Surgical Hierarchies'' at the beginning of your comment.)
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. Therefore, it is necessary to have a decision rule within the
GROUPER by which these cases are assigned to a single DRG. The surgical
hierarchy, an ordering of surgical classes from most resource-intensive
to least resource-intensive, performs that function. Application of
this hierarchy ensures that cases involving multiple surgical
procedures are assigned to the DRG associated with the most resource-
intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibrations, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications and recalibrations, to determine if the ordering of
classes coincides with the intensity of resource utilization.
A surgical class can be composed of one or more DRGs. For example,
in MDC 11, the surgical class ``kidney transplant'' consists of a
single DRG (DRG 302) and the class ``kidney, ureter and major bladder
procedures'' consists of three DRGs (DRGs 303, 304, and 305).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one DRG. The methodology for determining the most resource-
intensive surgical class involves weighting the average resources for
each
[[Page 24738]]
DRG by frequency to determine the weighted average resources for each
surgical class. For example, assume surgical class A includes DRGs 1
and 2 and surgical class B includes DRGs 3, 4, and 5. Assume also that
the average charge of DRG 1 is higher than that of DRG 3, but the
average charges of DRGs 4 and 5 are higher than the average charge of
DRG 2. To determine whether surgical class A should be higher or lower
than surgical class B in the surgical hierarchy, we would weight the
average charge of each DRG in the class by frequency (that is, by the
number of cases in the DRG) to determine average resource consumption
for the surgical class. The surgical classes would then be ordered from
the class with the highest average resource utilization to that with
the lowest, with the exception of ``other O.R. procedures'' as
discussed below.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average charge is
ordered above a surgical class with a higher average charge. For
example, the ``other O.R. procedures'' surgical class is uniformly
ordered last in the surgical hierarchy of each MDC in which it occurs,
regardless of the fact that the average charge for the DRG or DRGs in
that surgical class may be higher than that for other surgical classes
in the MDC. The ``other O.R. procedures'' class is a group of
procedures that are only infrequently related to the diagnoses in the
MDC, but are still occasionally performed on patients in the MDC with
these diagnoses. Therefore, assignment to these surgical classes should
only occur if no other surgical class more closely related to the
diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
charges for two surgical classes is very small. We have found that
small differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average charges are likely to shift such that the higher-
ordered surgical class has a lower average charge than the class
ordered below it.
For FY 2008, we are not proposing any revisions of the surgical
hierarchy for any MDC. In general, the MS-DRGs that are being proposed
for use in FY 2008 and discussed in section II.D. of the preamble of
this proposed rule follow the same hierarchical order as the CMS DRGs
they are to replace, except for DRGs that were deleted and
consolidated.
8. CC Exclusion List Proposed for FY 2008
(If you choose to comment on issues in this section, please include
the caption ``CC Exclusion List'' at the beginning of your comment.)
a. Background
As indicated earlier in this preamble, under the IPPS DRG
classification system, we have developed a standard list of diagnoses
that are considered complications or comorbidities (CCs). Historically,
we developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length of stay by at least 1
day in at least 75 percent of the patients. We refer readers to section
II.D.2. and 3. of the preamble of this proposed rule for a discussion
of the refinement of CCs in relation to the MS-DRGs we are proposing to
adopt for FY 2008.
b. Proposed CC Exclusions List for FY 2008
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair. As we indicated above, we
developed a list of diagnoses, using physician panels, to include those
diagnoses that, when present as a secondary condition, would be
considered a substantial complication or comorbidity. In previous
years, we have made changes to the list of CCs, either by adding new
CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another.
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another.
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another.
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a
CC.\14\
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\14\ See the FY 1989 final rule (53 FR 38485, September 30,
1988), for the revision made for the discharges occurring in FY
1989; the FY 1990 final rule (54 FR 36552, September 1, 1989), for
the FY 1990 revision; the FY 1991 final rule (55 FR 36126, September
4, 1990), for the FY 1991 revision; the FY 1992 final rule (56 FR
43209, August 30, 1991) for the FY 1992 revision; the FY 1993 final
rule (57 FR 39753), September 1, 1992), for the FY 1993 revision;
the FY 1994 final rule (58 FR 46278, September 1, 1993), for the FY
1994 revisions; the FY 1995 final rule (59 FR 45334, September 1,
1994), for the FY 1995 revisions; the FY 1996 final rule (60 FR
45782, September 1, 1995), for the FY 1996 revisions; the FY 1997
final rule (61 FR 46171, August 30, 1996), for the FY 1997
revisions; the FY 1998 final rule (62 FR 45966, August 29, 1997) for
the FY 1998 revisions; the FY 1999 final rule (63 FR 40954, July 31,
1998), for the FY 1999 revisions; the FY 2001 final rule (65 FR
47064, August 1, 2000), for the FY 2001 revisions; the FY 2002 final
rule (66 FR 39851, August 1, 2001), for the FY 2002 revisions; the
FY 2003 final rule (67 FR 49998, August 1, 2002), for the FY 2003
revisions; the FY 2004 final rule (68 FR 45364, August 1, 2003), for
the FY 2004 revisions; the FY 2005 final rule (69 FR 49848, August
11, 2004), for the FY 2005 revisions; the FY 2006 final rule (70 FR
47640, August 12, 2005), for the FY 2006 revisions; and the FY 2007
final rule (71 FR 47870) for the FY 2007 revisions. In the FY 2000
final rule (64 FR 41490, July 30, 1999), we did not modify the CC
Exclusions List because we did not make any changes to the ICD-9-CM
codes for FY 2000.
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For FY 2008, we are proposing to make limited revisions to the CC
Exclusions List to take into account the changes that will be made in
the ICD-
[[Page 24739]]
9-CM diagnosis coding system effective October 1, 2007. (See section
II.G.10. of this preamble for a discussion of ICD-9-CM changes.) We are
proposing to make these changes in accordance with the principles
established when we created the CC Exclusions List in 1987. In
addition, as discussed in section II.D.3. of the preamble of this
proposed rule, we are proposing to indicate on the CC Exclusion List
some updates to reflect the proposed exclusion of a few codes from
being an MCC under the MS-DRG system that we are proposing to adopt for
FY 2008.
Table 6I (which is available through the Internet on the CMS Web
site at: http://www.cms.hhs.gov/AcuteInpatientPPS) contains the
complete CC Exclusions List that will be effective for discharges
occurring on or after October 1, 2007. Table 6I shows the principal
diagnoses for which there is a CC exclusion. Each of these principal
diagnoses is shown with an asterisk, and the conditions that will not
count as a CC, are provided in an indented column immediately following
the affected principal diagnosis. Tables 6G and 6H, Additions to and
Deletions from the CC Exclusion List, respectively, are also available
through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS.
)
Beginning with discharges on or after October 1, 2007, the indented
diagnoses will not be recognized by the GROUPER as valid CCs for the
asterisked principal diagnosis.
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with CMS, is
responsible for updating and maintaining the GROUPER program. The
current DRG Definitions Manual, Version 24.0, is available for $225.00,
which includes $15.00 for shipping and handling. Version 25.0 of this
manual, which will include the final FY 2008 DRG changes, will be
available in hard copy for $250.00. Version 25.0 of the manual is also
available on a CD for $200.00; a combination hard copy and CD is
available for $400.00. These manuals may be obtained by writing 3M/HIS
at the following address: 100 Barnes Road, Wallingford, CT 06492; or by
calling (203) 949-0303. Please specify the revision or revisions
requested.
9. Review of Procedure Codes in CMS DRGs 468, 476, and 477
Each year, we review cases assigned to CMS DRG 468 (Extensive O.R.
Procedure Unrelated to Principal Diagnosis), CMS DRG 476 (Prostatic
O.R. Procedure Unrelated to Principal Diagnosis), and CMS DRG 477
(Nonextensive O.R. Procedure Unrelated to Principal Diagnosis) to
determine whether it would be appropriate to change the procedures
assigned among these CMS DRGs. Under the MS-DRGs that we are proposing
to adopt for FY 2008, discussed in section II.D. of the preamble of
this proposed rule, CMS DRG 468 would have a three-way split and would
become proposed MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/
MCC). CMS DRG 476 would become proposed MS-DRGs 984, 985, and 986
(Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and Without CC/MCC). CMS DRG 477 would become proposed MS-DRGs
987, 988, and 989 (Nonextensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC).
Proposed MS-DRGs 981 through 983, 984 through 986, and 987 through
989 (formerly CMS DRGs 468, 476, and 477, respectively) are reserved
for those cases in which none of the O.R. procedures performed are
related to the principal diagnosis. These CMS DRGs are intended to
capture atypical cases, that is, those cases not occurring with
sufficient frequency to represent a distinct, recognizable clinical
group. Proposed MS-DRGs 984 through 986 (previously CMS DRG 476) are
assigned to those discharges in which one or more of the following
prostatic procedures are performed and are unrelated to the principal
diagnosis:
60.0, Incision of prostate
60.12, Open biopsy of prostate
60.15, Biopsy of periprostatic tissue
60.18, Other diagnostic procedures on prostate and
periprostatic tissue
60.21, Transurethral prostatectomy
60.29, Other transurethral prostatectomy
60.61, Local excision of lesion of prostate
60.69, Prostatectomy, not elsewhere classified
60.81, Incision of periprostatic tissue
60.82, Excision of periprostatic tissue