Potential for Decreased Case Mix Index in 2018 Fiscal Year

There is good news and bad tucked away in the details of the 2018 proposed Inpatient Prospective Payment System (IPPS) Final Rule released last week by the Centers for Medicare & Medicaid Services (CMS).

Some acute-care hospitals could see a decrease in their case mix index (CMI), as a number of previously reported surgical DRGs are at risk of becoming medical DRGs – which, with their lower relative weights, have lower reimbursement.

The anticipated lower CMI is being driven by changes in the Medicare Severity Diagnosis Related Groups (MS-DRGs) methodology that will shift a large number of procedure codes from DRG operating room to non-operating room procedures. In addition to the large number of MS-DRG changes, other factors appear to be poised to contribute to a potential decrease in CMI for any given hospital; these include quality initiatives, electronic health record meaningful use incentives, and market basket changes.

On the other hand, the proposed rule carries with it a potential increase of 1.75 percent for acute-care facilities that are not paid on a hospital-specific basis. This increase is contingent on the facility being an electronic health record (EHR) meaningful use provider that has submitted quality data. The proposed increase, however, has not been calculated for each facility. Not every hospital will see the increase, and to understand how the proposed rule could impact your facility, specific information can be found beginning on page 1,687 and 1,831 of the 1,832-page proposed IPPS rule.

This proposed rule also deletes MS-DRGs of 984, 985, 986 (Prostatic ORs with unrelated principal diagnosis with CC, MCC, and without CC/MCC), which results in the number of MS-DRGs decreasing to 754. The overall relative weight changes nets to a +3.7105 when the deleted MS-DRGs are excluded.   

The largest negative change is for MS-DRG 215 (Other heart assistance implant), at -5.6093, and the largest positive increase is +2.5534 for MS-DRG 927 (Extensive burns or full thickness burns w/MV > 96 hours and skin graft). There are 264 MS-DRGs that have a negative adjustment and 488 MS-DRGs with a positive adjustment.

There were 20 topics of possible changes to the 2018 MS-DRGs based on CMS’s analysis of the December 2016 update to the MedPAR database. Some examples of shifting among the MS-DRGs include the following:

• Percutaneous mitral/tricuspid valve replacement from MS-DRG 216-221 (Cardiac valve and other major cardiovascular procedures with and without cardiac catheterization w/MCC, w/CC, and w/o MCC/CC) to MS-DRG 266-267 (Endovascular cardiac valve replacement with MCC, without MCC).
• Total ankle arthroplasties will group to MS-DRG 469, which will be renamed (Major hip and knee joint replacement or reattachment of lower extremity w/MCC, or total ankle replacement) only. The total ankle arthroplasties will no longer require an MCC to group into MS-DRG 469. The cost and complexity of this procedure supports the change to this DRG.
• Pre-cerebral occlusions or transient ischemic attack with thrombolytic treatment will be shifted from MS-DRGs 67-69 to MS-DRG 61-63 (Ischemic stroke, precerebral occlusion or transient Ischemia with thrombolytic agent w/MCC, w/CC, and w/o MCC/CC).

The one area where CMS continues to make no changes is MS-DRGs 945-946 (Rehabilitation w/MCC/CC and w/o MCC/CC). The main reason for this is the lack of a diagnosis code, which indicates admission for rehabilitation. This code was discussed at the Coordination & Maintenance Committee Meeting in March 2017.

Another big change for the 2018 fiscal year is the number of procedure codes that will have their designation of OR changed to non-OR. There are just under 800 ICD-10-PCS codes that will undergo this change in designation, and they have the potential to be responsible for numerous MS-DRG shifts. By volume, the largest changes are in the Medical and Surgical Section of Respiratory, Subcutaneous Tissue and Fascia, Upper/Lower Bones or Joints, and Upper/Lower Arteries/Veins. 

The 2018 ICD-10-CM code set will have 286 more codes, while the procedure code set will be expanded by 2,510 codes. The Medicare code edits (MCEs) will also undergo change in the pediatric, males only, females only diagnosis lists, non-covered procedures, and unacceptable principal diagnoses.

The quality initiatives also will be impacted, with CMS reporting that 2,591 acute-care hospitals will have their base rate reduced in the Hospital Readmission Reduction Program. The projected savings is $564 million. There is also a proposal for the elimination of the patient safety indicator (PSI) 90 for the Value-Based Purchasing Program for the 2019 fiscal year. There is also a proposal for an update to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey, adjustment to stroke mortality measures, and proposed voluntary reporting for all unplanned readmissions for the 2018 fiscal year, requested to be required by the 2020 calendar year.   

There are also proposed modifications to the IQR electronic clinical quality measures (eCQM), which include an alignment with the Merit-Based Incentive Payment System (MIPS). There is a consistent request throughout the quality programs for the public to comment regarding social risk factors. 

The goal of this proposed rule was to simplify the regulatory burden. This legislation also included a change regarding the deadline for submitting changes to the MS-DRG methodology. That deadline is now Nov. 1 for any suggestion to be included in proposed rule. Suggestions can be emailed to MSDRGClassificationChange@cms.hhs.gov.  

Some of the issues with the MS-DRG methodology have been mitigated since the ICD-10-CM/PCS implementation has been resolved with the suggested changes. The large number of changes to the DRG OR designation will create shifting, but the significance has yet to be determined.    

CMS has requested that comments be submitted by 5 p.m. EST on June 13. The final rule is scheduled for publication on Aug. 1, 2017.

Offer electronic comments: https://www.regulations.gov/
Read the proposed rule: https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-07800.pdf