AHA: Proposed Hospital Pay Cuts Are Not Justified

For example, three states with the largest Medicare population (New York, Florida, and California) were entrenched in the Recovery Audit Contractor demonstration program during this time frame, Hoy says. "Many people in those states were moving patients to outpatient status out of fear of denials for one day stays," she adds. "Some of those patients may have been a low level inpatient in the past, but moving them out of inpatient status to outpatient status would cause the case mix to drift upward as the sicker patients remain inpatients."

The AHA states the following: "The Recovery Audit Contractor program is encouraging hospitals to carefully scrutinize patients and shift care to the outpatient setting to avoid retrospective denial of short-stay admissions. This change in practice will increase the average acuity within each base DRG of patients that remain in the inpatient setting."

The AHA also cites several other policy changes that could have caused increases in real CMI:

• Implementation of the present on admission indicator that leads hospitals to assess patients for a broader array of conditions, likely resulting in the identification, treatment, and coding of additional secondary diagnoses.


• Acceleration of beneficiaries enrolling in Medicare Advantage programs due to The Medicare Prescription Drug, Improvement, and Modernization Act of 2003.


• Dramatic changes in the criteria for procedures that providers can perform in an ambulatory surgery center. These changes that took effect in calendar year 2008 likely resulted in increased acuity in the inpatient setting.

The AHA advocates for an alternative approach of comparing the overall CMI growth of 1.9% with the historical average for real CMI of 1.2% to 1.3% because this would put the increase in a larger context.

The bad news for hospitals is that this is an across-the-board cut, Hoy says. "In my view, every hospital will see similar negative effects," she adds. "And unfortunately it took congressional action to change their prior proposals related to the documentation and coding adjustments, so I am not hopeful they will change this proposal significantly in the final rule."

The AHA strongly urges hospitals to submit comments on the proposed rule before CMS' June 30 deadline.