AHA: Proposed Hospital Pay Cuts Are Not Justified

The American Hospital Association's criticism of CMS' proposed -1.9% documentation and coding adjustment came through loud and clear in the comments it submitted to the agency June 15. The association disagrees with the methodology CMS used to draw the conclusion that there was a decline in real case mix between fiscal years 2007 and 2008, stating the agency's findings were "incorrect and overstated."

The proposed pay cut would reduce hospital payments over the next 10 years by $23 billion—not a particularly easy number to swallow given today's economic climate.

To analyze documentation and coding-related increases in FY 2008, CMS, as outlined in the FY 2010 IPPS proposed rule, ran FY 2008 claims data through the FY 2008 GROUPER to obtain a case-mix index (CMI). It then ran these same claims through the FY 2007 GROUPER to obtain a second CMI. It divided the former CMI by the latter to obtain an increase of 2.8%, which it attributed to documentation and coding changes as well as GROUPER changes.

It performed a similar analysis to determine the effect of GROUPER changes (0.3%) and found there was a documentation and coding-related increase of 2.5% in FY 2008.

The agency attempted to use Clinical Data Abstraction Center (CDAC) medical records data to corroborate its findings and to distinguish documentation and coding changes from real case mix changes; however, it was unable to do so because of what it termed "aberrations and significant variation in the data," according to the proposed rule.

CMS said the methodology it used is sound because only one set of claims (i.e., one set of patients) were factored into the analysis. This means that increases to CMI couldn't possibly reflect actual increases in patient severity, according to CMS.

It's a self-fulfilling prophecy, says Kimberly Hoy, JD, CPC, regulatory specialist for HCPro, Inc. in Marblehead, MA. "CMS decided there would be a documentation and coding effect based on data from the skilled nursing facility and home health PPS implementations, so it's no surprise they used data that supports that assumption," she adds. "What is a surprise is that they didn't seem to account for any rise in the real case mix index at all."

In fact, CMS indicated in the proposed rule that its data showed a decline in the real CMI, implying that inpatients have lower acuity in 2008 than in 2007. Hoy adds. "To say that inpatients are less sick than they used to be just doesn't make any sense in an environment that is encouraging more and more outpatient procedures and observation services."