The final rule regarding fiscal year (FY) 2008 revisions to the Medicare hospital inpatient prospective payment system (IPPS) was published in the August 22, 2007 issue of the Federal Register and became effective on October 1, 2007.  Because of changes made to the system, now, more than ever before, physicians are required to accurately document patient encounters. 

The Deficit Reduction Act of 2006 (DRA) required The Centers for Medicare and Medicaid Services (CMS) to identify at least two hospital-acquired conditions that result in higher DRG payments.  By October 1, 2007, hospitals will have to document that these conditions were present on admission.  By FY 2008, 13 different hospital-acquired conditions were described by CMS.  Effective October 1, 2007, six of these conditions will be implemented per THIS DRA provision.  The result is this, Diagnosis Related Group (DRG) payments cannot be increased if these conditions occurred after admission. They are:

• Catheter-associated urinary tract infections
• Pressure ulcers
• Objects left in surgery
• Air embolism
• Blood incompatibility
• Staphylococcus aureus septicemia

Again, if there is no documentation that any of these conditions existed at the time of admission, then the hospital will bear the additional costs associated with the treatment of these hospital-acquired conditions.  CMS will no longer authorize the additional payments.

In addition to the above, the new Medicare severity DRGs (MS-DRG) increases the current 538 DRGs with 745 DRGs.  First, current DRGs are being consolidated to 335 base MS-DRGs.  Of these, 106 would be split into two subgroups and 152 would be split into three subgroups, which is how they have arrived at 745 total MS-DRGs.  The subgroups are determined based on the presence of complications or comorbidities (CCs) or major CCs (MCCs).

According to the Illinois Hospital Association:

MS-DRG Major Changes.While the MS-DRG changes effect payment only for inpatient PPS hospitals, other hospitals are also trying to better understand the MS-DRG assignments as the old DRG system (Version 24) will not be updated by CMS and is being totally replaced by the MS-DRG system.

Some of the major changes that have occurred with the MS-DRG system include:

• Movement from 538 DRGs to 745 MS-DRGs
• Total reorganization of numbering system – nothing remains the same
• Review and reassignment of all diagnostic codes into one of three severity categories:

• S-DRG Without Complication or Comorbidity (w/o CC or no CC)
• MS-DRG with Complication or Comorbidity (CC)
• MS-DRG with Major Complication or Comorbidity (MCC)

With the DRG payment system, only the first two severity assignments were utilized and the MCC is a new feature of the MS-DRG system.

• Nearly a thousand diagnostic codes are no longer considered a CC or MCC under the MS-DRG system resulting in assignments to MS-DRGs with no CC
• Reliance upon procedure codes for select MS-DRGs for higher payments
• Some diagnostic codes that have a CC or MCC assignment will not result in higher payment if they are similar or related condition to the principal diagnosis - such as principal diagnosis of CHF with a secondary diagnosis of primary cardiomyopathy (diagnosis code 425.4)

Higher payment for patients that survive during hospital stay than those that died for conditions such as respiratory arrest, cardiogenic shock, cardiac arrest, etc.

While the overall impact is intended to be budget neutral, CMS estimates urban hospitals will experience a 0.25 increase in payments because of the MS-DRG system and the transition to cost-based DRG weights, with a 1.8% decrease expected for rural hospitals.

In their review and assessment of the changes being implements by CMS, the American Health Information Management Association (AHIMA) made the following observations, "As part of the process of revising the CC list, CMS removed chronic diseases without a significant acute manifestation, as long as there are IDC-9-CM codes available that allow the acute manifestation of the disease to be coded separately.  Exceptions were made 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 revised CC list is essentially comprised of significant acute disease, acute exacerbations of significant chronic disease, advanced or end stage chronic disease, and chronic diseases associated with extensive debility.

The revisions to the CC list resulted in 40.34% of patients having at least 1 CC present, compared to 77.66% previously.  The revised CC list increased the difference in average charges between patients with and without a CC by 56% ($15,236 vs. $9,743)."

The increased payments are the results of two factors:  1)  Many CCs and MCCs were placed into existing DRGs, which eliminated the need to add these CCs or MCCs to the base DRGs, and 2) CMS implemented a 3.3% market basket inflation update to operating DRG rates.

In the absence of documentation of the existence of these complications and comorbidities or major complications and comorbidities, coders will be left to select the DRG which offers the least amount of reimbursement.  Therefore, the burden is placed on the physician to accurately dictate his findings at the time of admission.

The final rule can be reviewed in its entirety by going to the following link:  http://www.access.gpo.gov/su_docs/fedreg/a070822c.html.

To read AHIMA's summary of the new changes, go to the following link:  http://www.ahima.org/dc/documents/MicrosoftWord-IP-PPSanalysis-FY08_000.pdf

We have included the following table to help you identify the changes that were made to the MS-DRGs:

MS-DRG Summary Table

Intestinal Transplant
Proposed titles:
MS-DRG 005 Liver transplant and/or intestinal transplant w MCC
MS-DRG 006 Liver transplant and/or intestinal transplant w/o MCC

Final Titles:
MS-DRG 005 Liver transplant w MCC or intestinal transplant
MS-DRG 006 Liver transplant w/o MCC
1.  Reassign cases with procedure code 46.97, Transplant of intestine, from MSDRG
     006 to MS-DRG 005.

MDC 1 DISEASES AND DISORDERS OF THE NERVOUS SYSTEM

Implantation of chemotherapeutic agent
Intracranial stents

Proposed titles:

• MS-DRG 23 Craniotomy w major device implant or acute complex central nervous system principal diagnosis w MCC
• MS-DRG 24 Craniotomy w major device implant or acute complex central nervous system principal diagnosis w/o MCC

Final titles:

• MS-DRG 023 Cranio w major dev impl/acute complex CNS PDX w MCC or chemo implant
• MS-DRG 024 Cranio w major dev impl/acute complex CNS PDX w/o MCC

1. Reassign cases with procedure code 00.10, Implantation of chemotherapeutic
    agent, from MS-DRG 24 to MS-DRG 23.
2. Reassign cases with procedure code 00.62, Percutaneous angioplasty or
    atherectomy of intracranial vessel(s), from MS-DRGs 37-39 to MS-DRGs 23-24.

Intracranial stents

• MS-DRG 025 Craniotomy & endovascular intracranial procedures w MCC
• MS-DRG 026 Craniotomy & endovascular intracranial procedures w CC
• MS-DRG 027 Craniotomy & endovascular intracranial procedures w/o CC/MCC

1. Reassign cases with procedure code 00.62, Percutaneous angioplasty or
    atherectomy of intracranial vessel(s), from MS-DRGs 37-39 to MS-DRGs 25-27.

Spinal Neurostimulators

Proposed Titles:

• MS-DRG 028 Spinal procedures w MCC
• MS-DRG 029 Spinal procedures w CC
• MS-DRG 030 Spinal procedures w/o CC/MCC

Final Titles:

• MS-DRG 028 Spinal procedures w MCC
• MS-DRG 029 Spinal procedures w CC or spinal neurostimulators
• MS-DRG 030 Spinal procedures w/o CC/MCC

1.Reassign full system spinal cord non-rechargeable and rechargeable neurostimulator cases in MS-DRG 30 to MS-DRG 29 in MDC 1. ICD-9-CM procedure codes 03.93, Implantation or replacement of spinal neurostimulator lead(s) and 86.94, Insertion or replacement of single array neurostimulator pulse generator, not specified as rechargeable or 86.95, Insertion or replacement of dual array neurostimulator pulse generator, not specified as rechargeable, or 86.97, Insertion or replacement of single array rechargeable neurostimulator pulse generator or 86.98, Insertion or replacement of dual array rechargeable neurostimulator pulse generator, must be reported in order for the spinal neurostimulator cases to be assigned to MS-DRG 29.

Intracranial stents

• MS-DRG 037 Extracranial procedures w MCC
• MS-DRG 038 Extracranial procedures w CC
• MS-DRG 039 Extracranial procedures w/o CC/MCC

1.Reassign cases with procedure code 00.62, Percutaneous angioplasty or atherectomy of intracranial vessel(s), from MS-DRGs 037-039 to MS-DRG 023-027.

Peripheral Neurostimulators

Proposed Titles:

• MS-DRG 40 Periph & cranial nerve & other nerv syst proc w MCC
• MS-DRG 41 Periph/cranial nerve & other nerv syst proc w CC
• MS-DRG 42 Periph/cranial nerve & other nerv syst proc w/o CC/MCC

Final Titles:

• MS-DRG 40 Periph & cranial nerve & other nerv syst proc w MCC
• MS-DRG 41 Periph/cranial nerve & other nerv syst proc w CC or periph neurostim
• MS-DRG 42 Periph/cranial nerve & other nerv syst proc w/o CC/MCC

1.Reassign full system peripheral non-rechargeable and rechargeable neurostimulator cases in MS-DRG 42 to MS-DRG 41. ICD-9-CM procedure codes 04.92, Implantation or replacement of  peripheral neurostimulator lead(s) and 86.94, Insertion or replacement of single array neurostimulator pulse generator, not specified as rechargeable or 86.95, Insertion or replacement of dual array neurostimulator pulse generator, not specified as rechargeable, or 86.97, Insertion or replacement of single array rechargeable neurostimulator pulse generator or 86.98, Insertion or replacement of dual array rechargeable neurostimulator pulse generator, must be reported in order for the peripheral neurostimulator cases to be assigned to MS-DRG 41.

Pain Codes

• MS-DRG 091 Other disorders of nervous system w MCC
• MS-DRG 092 Other disorders of nervous system w CC
• MS-DRG 093 Other disorders of nervous system w/o CC/MCC

1.Reassign cases with a principal diagnosis of code 338.0, Central pain syndrome, or 338.21, Chronic pain due to trauma, or code 338.22, Chronic post-thoracotomy pain, or code 338.28, Other chronic postoperative pain, or code 338.29, Other chronic pain, or code 338.4, Chronic pain syndrome from MDC 23, MS-DRGs 947-948 to MS-DRGs 091-093.

MDC 3 DISEASE AND DISORDERS OF THE EAR, NOSE, MOUTH AND
THROAT

Cochlear Implants

Proposed Titles:

• MS-DRG 129 Major head & neck procedures w CC/MCC
• MS-DRG 130 Major head & neck procedures w/o CC/MCC

Final Titles:

• MS-DRG 129 Major head & neck procedures w CC/MCC or major device
• MS-DRG 130 Major head & neck procedures w/o CC/MCC

1.Reassign cochlear implant cases from MS-DRG 130 to MS-DRG 129. The ICD-9-CM procedure codes for cochlear implants are: 20.96, Implantation or replacement of cochlear prosthetic device, not otherwise specified, or 20.97, Implantation or replacement of cochlear prosthetic device, single channel or 20.98, Implantation or replacement of cochlear prosthetic device, multiple channel.

MDC 5 DISEASE AND DISORDERS OF THE CIRCULATORY SYSTEM

Endovascular implantation of graft in thoracic aorta

Proposed Titles:

• MS-DRG 237 Major Cardiovascular Procedures w MCC
• MS-DRG 238 Major Cardiovascular Procedures w/o MCC

Final Titles:

• MS-DRG 237 Major cardiovasc procedures w MCC or thoracic aortic aneurysm repair
• MS-DRG 238 Major cardiovasc procedures w/o MCC

1.Reassign cases with procedure code 39.73, Endovascular implantation of graft in thoracic aorta, from MS-DRG 238 to MS-DRG 237.

Multiple Vessels, Multiple Coronary Stents

Proposed Titles:

• MS-DRG 246 Percutaneous cardiovascular proc w drug-eluting stent w MCC
• MS-DRG 247 Percutaneous cardiovascular proc w drug-eluting stent w/o MCC

Final Titles:

• MS-DRG 246 Perc cardiovasc proc w drug-eluting stent w MCC or 4+ vessels/stents
• MS-DRG 247 Perc cardiovasc proc w drug-eluting stent w/o MCC

1.Reassign cases in MS-DRG 247 with procedure codes 00.66, Percutaneous transluminal coronary angioplasty [PTCA] or coronary atherectomy and code 36.07, Insertion of drug-eluting coronary artery stent(s) and code 00.43, Procedure on four or more vessels or code 00.48, Insertion of four or more vascular stents, to MS-DRG 246.

Proposed Titles:

• MS-DRG 248 Percutaneous cardiovascular proc w non-drug-eluting stent w MCC
• MS-DRG 249 Percutaneous cardiovascular proc w non-drug-eluting stent w/o MCC

Final Titles:

• MS-DRG 248 Perc cardiovasc proc w non-drug-eluting stent w MCC or 4+ ves/stents
• MS-DRG 249 Perc cardiovasc proc w non-drug-eluting stent w/o MCC

1.Reassign cases in MS-DRG 249 with procedure codes 00.66, Percutaneous transluminal coronary angioplasty [PTCA] or coronary atherectomy and code 36.06, Insertion of non-drug-eluting coronary artery stent(s) and code 00.43, Procedure on four or more vessels or code 00.48, Insertion of four or more vascular stents, to MS-DRG 248.

MDC 8 DISEASES AND DISORDERS OF THE MUSCULOSKELETAL SYSTEM
AND CONNECTIVE TISSUE

Spinal Fusions

Proposed Titles:

• MS-DRG 456 Spinal fusion exc cerv w spinal curv, malig or 9+ fusions w MCC
• MS-DRG 457 Spinal fusion exc cerv w spinal curv, malig or 9+ fusions w CC
• MS-DRG 458 Spinal fusion exc cerv w spinal curv, malig or 9+ fusions w/o CC/MCC

Final Titles:

• MS-DRG 456 Spinal fusion exc cerv w spinal curv/malig/infec or 9+ fusions w MCC
• MS-DRG 457 Spinal fusion exc cerv w spinal curv/malig/infec or 9+ fusions w CC
• MS-DRG 458 Spinal fusion exc cerv w spinal curv/malign/infec or 9+ fusions w/o

CC/MCC
1. Add the following diagnoses to the principal diagnosis list for MS-DRGs 456-458:

• 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
• 730.18, Chronic osteomyelitis of other specified sites
• 730.28, Unspecified osteomyelitis of other specified sites
• Add procedure code 81.64, Fusion or refusion of 9 or more vertebrae, to the list of procedures for MS-DRGs 456-458.

Hip and Knee Replacements

• MS-DRG 466 Revision of hip or knee replacement w MCC
• MS-DRG 467 Revision of hip or knee replacement w CC
• MS-DRG 468 Revision of hip or knee replacement w/o CC/MCC
• MS-DRG 485 Knee procedures w pdx of infection w MCC
• MS-DRG 486 Knee procedures w pdx of infection w CC
• MS-DRG 487 Knee procedures w pdx of infection w/o CC/MCC
• MS-DRG 488 Knee procedures w/o pdx of infection w CC/MCC
• MS-DRG 489 Knee procedures w/o pdx of infection w/o CC/MCC

1.Reassign cases with procedure code 00.83, Revision of knee replacement, patellar component, or code 00.84, Revision of total knee replacement, tibial insert (liner), from MS-DRGs 466-468 to MS-DRGs 485-489.

Spinal Procedures
Spinal Neurostimulators

Proposed Titles:

• MS-DRG 490 Back & neck procedures except spinal fusion w CC/MCC or disc devices
• MS-DRG 491 Back & neck procedures except spinal fusion w/o CC/MCC

Final Titles:

• MS-DRG 490 Back & neck proc exc spinal fusion w CC/MCC or disc device/neurostim
• MS-DRG 491 Back & neck proc exc spinal fusion w/o CC/MCC

1.Reassign cases with procedure codes 84.59, Insertion of other spinal devices, or code 84.62, Insertion of total spinal disc prosthesis, cervical or code 84.65, Insertion of total spinal disc prosthesis, lumbosacral, or code 84.80, Insertion or replacement of interspinous process device(s) or code 84.82, Insertion or replacement of pedicle-based dynamic stabilization device(s) or code 84.84, Insertion or replacement of facet replacement devices, from MS-DRG 491 to MS –DRG 490.

2.Reassign full system spinal cord non-rechargeable and rechargeable neurostimulator cases in MS-DRG 491 to MS-DRG 490 in MDC 8. ICD-9-CM procedure codes 03.93, Implantation or replacement of spinal neurostimulator lead(s) and 86.94, Insertion or replacement of single array neurostimulator pulse generator, not specified as rechargeable or 86.95, Insertion or replacement of dual array neurostimulator pulse generator, not specified as rechargeable, or 86.97, Insertion or replacement of single array rechargeable neurostimulator pulse generator or 86.98, Insertion or replacement of dual array rechargeable neurostimulator pulse generator, must be reported in order for the spinal neurostimulator cases to be assigned to MS-DRG 490.

MDC 17 MYELOPROLIFERATIVE DISEASES AND DISORDERS, POORLY DIFFERENTIATED NEOPLASM

High-dose infusion interleukin-2 [IL-2]

Proposed DRG Titles:

• MS-DRG 837 Chemo w acute leukemia as sdx or w high dose chemo agent w MCC
• MS-DRG 838 Chemo w acute leukemia as sdx or w high dose chemo agent w CC
• MS-DRG 839 Chemo w acute leukemia as sdx or w high dose chemo agent w/o

CC/MCC

Final DRG Titles:

• MS-DRG 837 Chemo w acute leukemia as sdx or w high dose chemo agent w MCC
• MS-DRG 838 Chemo w acute leukemia as sdx w CC or high dose chemo agent
• MS-DRG 839 Chemo w acute leukemia as sdx w/o CC/MCC

1.Reassign cases with procedure code 00.15, High-dose infusion interleukin-2 [IL-2] from MS-DRG 839 to MS-DRG 838.

MDC 23 FACTORS INFLUENCING HEALTH STATUS AND OTHER CONTACTS WITH HEALTH STATUS

Pain codes

• MS-DRG 947 Signs & symptoms w MCC
• MS-DRG 948 Signs & symptoms w/o MCC

1.Reassign cases with a principal diagnosis of code 338.0, Central pain syndrome, or 338.21, Chronic pain due to trauma, or code 338.22, Chronic post-thoracotomy pain, or code 338.28, Other chronic postoperative pain, or code 338.29, Other chronic pain, or code 338.4, Chronic pain syndrome from MDC 23, MS-DRGs 947-948 to MS-DRGs 091-093 in MDC 1.