Chapter 5: Medicare Hospital Acute Inpatient Payment System
Complication
(1) A medical condition that arises during an inpatient hospitalization (for example, a postoperative wound infection). (2) A condition that arises during the hospital stay that prolongs the length of stay at least one day in approximately 75 percent of the cases (as in complication and comorbidity [CC]).
Withhold amount
(1) Portion of primary care providers' prospective payments that managed care organizations deduct and hold to create an incentive for efficient or reduced use of healthcare services. (2) Portion of facility payments that are held back and then redistributed based on a facility's performance for the designated quality measures.
Base payment rate
(1) Rater per discharge for operating and capital-related components for an acute-care hospital. (2) Prospectively set payment rate made for services that Medicare beneficiaries receive in healthcare settings. The base rate is adjusted for geographic location, inflation, case mix, and other factors.
Measure (indicator)
(1) The quantifiable data about a function or process. (2) An activity, event, occurrence, or outcome that is to be monitored and evaluated to determine whether it conforms to standards; commonly relates to the structure, process, or outcome of an important aspect of care; also called criterion. (3) A measure used to determine an organization's performance over time. (4) Activity that affects an outcome (types include process measures and quality measures). (5) Compliance with treatment guidelines or standards of care.
One of the two domains in the HAC reduction program tracks healthcare-associated infections (HAI). Name two measures used in this domain?
1. CMS Recalibrated Patient Safety Indicator 90 (CMS PSI 90) 2. Central line-associated bloodstream infection (CLABSI)
Quality reporting program
A federal program in which the action of reporting data in the proper format within the given time frame is what allows facilities to receive full reimbursement.
MS-DRG family
A group of MS-DRGs that have the same base set of principal diagnoses with or without operating room procedures, which are divided into levels to represent severity of illness (SOI). There may be one, two, or three SOI levels in an MS-DRG family.
Cost report
A report is required from institutional providers on an annual basis for the Medicare program to make a proper determination of amounts payable to providers under its provisions in various prospective payment systems.
Case-mix index (CMI)
A single number that compares the overall complexity of the healthcare organization's mix of patients with the complexity of the average of all hospitals. Typically, the CMI is for a specific period and is derived from the sum of all diagnosis-related group (DRG) weights divided by the number of cases.
What are the four domains used in the Hospital VBP program?
A. Clinical outcomes B. Person and Community engagement C. Safety D. Efficiency and cost reduction
List a focus area of the Hospital Readmission Reduction Program (HRRP)?
Acute Myocardial Infarction (AMI).
New technology
Advance in medical technology that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Applicants for the status in new technology must submit a formal request, including a full description of the clinical applications of the technology and the results of any clinical evaluations demonstrating that the new technology represents a substantial clinical improvement, together with data to demonstrate that the technology meets the high-cost threshold.
Cost-of-living adjustment (COLA)
Alteration that reflects a change in the consumer price index (CPI), which measures purchasing power between time periods. The CPI is based on a market basket of goods and services that a typical consumer buys.
Relative weight (RW)
Assigned weight that reflects the relative resource consumption associated with a payment classification or group. Higher payments are associated with higher relative weights.
Which SOI level is reflected by CC codes? Which SOI level is reflected by MCC codes?
CC codes have a moderate SOI. MCC codes have a major or extensive SOI.
Outlier
Cases in prospective payment systems with unusually long lengths of stay or exceptionally high costs; day outlier or cost outlier, respectively.
Present on admission (POA) indicator
Code used to indicate if the condition or disease was present before the admission or developed during the hospital admission. Required data element for designed diagnosis codes for claims submission.
Performance improvement
Comparison of a facility's current performance with the facility's baseline performance.
Performance achievement
Comparison of a facility's performance with all other facilities' performance.
Grouper
Computer program using specific data elements to assign patients, clients, or residents to groups, categories, or classes.
Hospital-acquired condition (HAC)
Condition that developed during the hospital admission.
Medicare administrative contractor (MAC)
Contracting authority to administer Medicare Part A and Part B as required by section 911 of the Medicare Modernization Act of 2003. MACs process and manage Part A and Part B claims.
Eli is calculating the MS-DRG for an inpatient admission. He is determining if the encounter is medical or surgical. Which of the following should he do?
Determine if any procedure reported, principal or secondary, is an OR procedure in the MS-DRG Definitions Manual.
Fatima is calculating the MS-DRG for an inpatient admission. She has determined that the encounter does not quality for pre-MDC assignment. What is the next step in the MS-DRG assignment process?
Determining the MDC for the principal diagnosis.
Complication and Comorbidities (CCs)
Diagnosis codes that when reported as a secondary diagnosis have the potential to impact the MS-DRG assignment by increasing the MS-DRG up one level. CC codes represent an increase in resource intensity for the admission.
Major complication and comorbidity (MCC)
Diagnosis codes that when reported as a secondary diagnosis have the potential to impact the MS-DRG assignment by increasing the MS-DRG up one or two levels. MCCs represent the highest level of resource intensity.
Transfer
Discharge of a patient from a hospital and re-admission to a post-acute-care or another acute-care hospital on the same day.
List two examples of refinement questions used in the fourth step of MS-DRG assignment?
Examples include: Is an MCC present? Is a CC present? Did the patient have a certain disease or condition? Was the procedure performed for a neoplasm? What was the length of the coma? What is the patient's sex? What is the patient's discharge status code?
Nonlabor share
Facilities' operating costs not related to labor (typically 25 to 30 percent).
Disproportionate share hospital (DSH)
Healthcare organizations meeting governmental criteria for percentages of indigent patients. Hospital with an unequally (disproportionately) large share of low-income patients. Federal payments to these hospitals are increased to adjust for the financial burden.
Which reimbursement methodology is used in IPPS?
IPPS is a PPS that uses a case-rate methodology for reimbursement.
Discuss the importance of the present on admission (POA) data element in the HAC POA program?
It helps identify if the condition or disease was present before the admission or developed during the hospital admission. If the condition did develop during the hospital admission, it's considered hospital-acquired condition (HAC). Hospitals are required to submit a POA indicator for reportable diagnosis unless it is on the exclusion list. The HAC POA provision applies only when the selected conditions are the only MCC or CC present on the claims. If addition MCC or CC conditions are present on the claim along with the HAC diagnosis, then the case will continue to be assigned to the higher paying MS-DRG.
What is the formula for the basic IPPS payment calculation?
MS-DRG relative weight times the facility's fully adjusted hospital-specific base rate.
Total performance score (TPS)
Measure of a facility's overall performance for the clinical domain measures and other required included in a value-based purchasing program.
Resource intensity
Measure of the amount of resources required to treat a patient. The resource intensity of a classification group is represented by the relative weight and is utilized to determine the final payment amount.
Medicare severity diagnosis-related group (MS-DRG)
Medicare refinement to the diagnosis-related group (DRG) classification system, which allows for payment to be more closely aligned with resource intensity.
Value-based purchasing (VBP)
Payment model that holds healthcare providers accountable for both the cost and quality of care they provide.
Indirect medical education (IME)
Percentage increase in Medicare reimbursement to offset the costs of medical education that a teaching hospital incurs.
List the steps of MS-DRG assignment?
Pre-MDC Assignment; MDC Determination; Medical/Surgical Determination; Refinement.
Comorbidity
Pre-existing condition that, because of its presence with a specific diagnosis, causes an increase in length of stay by at least one day in approximately 75 percent of the cases (as in complication and comorbidity [CC]).
Wage index
Ratio that represents the relationship between the average wages in a healthcare setting's geographic area and the national average for that healthcare setting. Wage indexes are adjusted annually and published in the Federal Register.
Principal diagnosis
Reason established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.
Proposed rule
Regulation published by a federal department or agency in the Federal Register for the Public's review and comment prior to its adoption. Does not have the force of law.
Final rule
Regulation published by an agency, commented on by the public, and published in its official form in the Federal Register. Has the force of law on its effective date.
Case mix
Set of categories of patients (type and volume) treated by a healthcare organization and representing the complexity of the organization's caseload.
CC/MCC exclusion list
Set of principal diagnosis codes that is closely related to a CC or MCC code that takes away the refinement power of the CC or MCC code for an encounter.
Arithmetic mean length of stay (AMLOS)
Sum of all lengths of stay in a set of cases divided by the number of cases.
Labor-related share
Sum of facilities' relative proportion of wages and salaries, employee benefits, professional fees, postal services, other labor-intensive services, and the labor-related share of capital costs from the appropriate market basket. The labor-related share is typically 70 to 75 percent of healthcare facilities' costs. It is adjusted annually and published in the Federal Register.
Federal Register
The daily publication of the US Government Printing Office that reports all regulations (rules); legal notices of federal administrative agencies, of departments of the executive branch, and of the president; and federally mandated standards, including Healthcare Common Procedure Coding System (HCPCS) and International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) codes.
Severity of illness (SOI)
The degree of illness and extent of physiological decompensation or organ system loss of function.
Major diagnostic category (MDC)
The highest level in the hierarchical structure of the federal inpatient prospective payment system (IPPS). The 25 MDCs are primarily based on body system involvement, such as MDC No. 06, Diseases and Disorders of the Digestive System. However, a few categories are based on disease etiology--for example, Human Immunodeficiency Virus Infections.
What does the labor-related share of standardized amount represent?
The labor portion represents the facilities' relative proportion of wages and salaries, employee benefits, professional fees, and other labor-intensive services.
Geometric mean length of stay (GMLOS)
The nth root of a series of n length of stay observations.
Which provision provides additional reimbursement for new technologies that enhance beneficiary outcomes?
The prospective payment system or PPS.
Describe the CMS's quality reporting program?
The quality reporting program requires healthcare facilities to report data for quality measures. Successful completion of this VBP program is based on participation, not on the quality of care. Payment rates are decreased for facilities that do not participate as required by the program.
Why does the IME adjustment add reimbursement for teaching facilities?
To help offset the costs of providing education to new physicians.
Post-acute-care transfer (PACT)
Under IPPS, a transfer to a nonacute-care setting for designated MS-DRGs is treated as an IPPS-to-IPPS transfer when established criteria are met.
