Good morning. This will be my last podcast for
this semester. I'm going to talk about
the reimbursement for medical care under
the Prospective Payment System (PPS). I really
can't do a better job than the
publishers did for Appendix A and
Appendix B so I would encourage you that
you really need to review those along
with what I'm doing. I want to talk about
things that they didn't talk about that
I hope ties everything together so that
there's no disconnect so students
understand the connection between coding
and reimbursement. This is why it's so
important. It is also why coders are, for
the most part, paid better than a lot of
HIM people. Their jobs are
directly tied to reimbursement. What I
want you to get from this PowerPoint in
this lecture is that (1st bullet point) there are certain code sets
used for specific health care settings. I
want to review the importance of correct
code assignment for diagnosis, procedure
and POA indicators because those three
things then drive the MS-DRG assignment (2nd bullet point).
(3rd bullet point) I want you to understand the importance
of correct diagnosis coding of a major
complication/comorbidity or a
complication/comorbidity because those
additions can affect reimbursement.
There are symbols in your ICD-10-CM code
book that tell the coder if a specific
diagnosis is a "CC" or an "MCC".
4th bullet point-understand the importance of the correct assignment of
the POA indicator and last of all, the 5th bullet point,
understand how the MS-DRG system drives
payment. Providers and Payers use
ICD-10-CM for diagnosis reporting in all
healthcare settings. Procedure reporting
varies on the setting. For hospital
inpatient, ICD-10-PCS is the standard (code set) and
for hospital outpatient or any ambulatory
surgery centers, physicians or
non-hospital providers, CPT and HCPCS (code sets)
are going to be those two things that
you are doing for procedures or for
supplies. HCPCS are mostly for supplies.
Here's a table that gives you in detail how
each one is set up. Today I'm going to be
focusing on the Prospective Payment
System for Hospital (acute) Inpatient but
as you can see,
each type of setting has its own
classification but in each one of these
settings, the diagnosis reporting is what
drives the payment under the Inpatient
Prospective Payment System (IPPS). Each
inpatient admission is categorized into
a diagnosis related group or DRG.
DRGs are now called MS-DRGs, Medicare
severity DRG. It's the same
definition, just a different name. The
payment weight is assigned based on
average resources used to treat a
Medicare patient. Each inpatient
admission is grouped into one DRG. In the
outpatient environment, you can have more
than one APC (Ambulatory Payment Classification) for each encounter but for the
inpatient, (there will be only) one DRG. The principal
diagnosis, along with the presence or
absence of a complication or comorbidity,
may affect the DRG classification and
secondary diagnoses can also affect the
classification, if they are an "MCC" or "CC".
That's why it's important when you're
looking at your codebook and you have those
little symbols over on the right for the
CC or MCC, that you can tell if you
capture something that the patient has,
that's going to affect the DRG. You want
to be sure and do that. More on DRGs-when
the DRG system was introduced hospitals
began looking not only at the number of
services provided or the days of care
but the case mix or the type of care and
that was going to be classified based
upon how many of the hospital's resources
were used to care for that patient. So, by
definition, a case mix is a set of
categories of patients, both type and
volume, that's treated by an organization
and represents the complexity of the
organization's caseload. For example, when
I was a (hospital) case manager, we would have our
morning meeting. We would begin by saying
the volume or what number of each type
of patient that uses a lot of resources
did we have (in the census for that day.) We would classify by spinal
cord injury, brain injury, ventilator-dependent
were our three big ones and then,
as we got into more stroke rehab, we
would talk about stroke rehab patients
and we would talk about the number of
each one of those. That is going
to really pay for many things in our
hospital, especially the admissions
that are there for only a couple of days.
They don't have a lot of money attached
to them. Yes, you need those to be captured
accurately but for these high dollar cases (like the spinal cord and brain injured),
you really need to be capturing
accurately because they're so much
more money. So a high case mix, the
reason why I bring this up and for you to
understand it, is that these high case
mixes represent the high complexity of
those patients. They typically have
longer lengths of stay. They consume more
resources. They have larger medical
records and take longer to code but they
are going to often get pushed to the top
of the coding queue and be coded during
the patient's stay and not held until
discharge. This is because of the amount of
dollars that the hospital can recoup
from this type of patient. Prospective
Payment System- each hospital's
prospective payment system is a PPS rate,
which is a dollar amount based on that
hospital's cost of operating. There are so
many factors. I looked at some of these
formulas online and they're available, if
you want to look at them, but it's so
complicated. Really, the only thing you
need to know is that each hospital has
been assigned a PPS rate based on a lot
of factors. So you're going to multiply
whatever that rate is by the DRG's
relative weight and that's going to tell
you what the hospital is going to be
paid for that admission. Remember you
can only have one DRG per admission.
That DRG relative weight is assigned and
published in the Federal Register.
It's a multiplier that's used to determine
our reimbursement. So just to remind you,
the case mix value, with a relative
weight, is assigned to each DRG and there
were in Fiscal Year 2015, there were 753
DRGs. I couldn't put my hand on a 2016
table, but what it tells you is each DRG
weight represents the average resources
required to care for cases in that
particular DRG relative to the average
resources to treat cases in all DRGs.
The hospital is going to have a PPS rate
that's a constant. That doesn't change.
Your DRG value is going to change
because it's going to be driven by the
diagnosis that you've assigned to that
patient. Also, the value of your DRG is
going to depend on many things, one of
which is location. For example, a hospital
in rural North Carolina would have a
different PPS rate than a hospital in
metro Denver for the same DRG. Here's an
example where we bring all this together.
Patient A is a 16 year old admitted for
surgery to repair an umbilical hernia
with no obstruction or gangrene. She has
no contributing MCC or CC conditions.
This is very straightforward. The
appropriate diagnosis for her is going
to be K42.9. Your coding software is
going to take that K42.9 and from it, is
going to go into the selection of your
DRG assignment, which is called a grouper.
Your DRG is going to be picked up, it is
going to be DRG 144 and that DRG
is for hernia procedures, age 0 to 17 and
it has a relative weight of 0.9098.
Remember the hospital's PPS rate is a
constant, no matter what the DRG is so
in our example here, the hospital's PPS
rate is $4000 for 1.0 value of service
so to calculate the
hospital's reimbursement, you're going to
multiply the DRG's relative weight 0.9098 times
the hospital's PPS rate which
is $4000 and that's
going to give you $3,639.20,
$3639.20.
That is what the hospital
is going to receive as payment for the
entire hospital stay for this young
woman coming in for hernia repair. Note
in our math there, the DRG value is a
direct multiplier so it's very important
that that number is correct when you
start crunching the numbers. Let's talk
about "Present on Admission (POA) indicators"
and how they fit into reimbursement. By
definition, a POA indicator is a condition
that is present at the time the order
for inpatient admission
occurs. Any conditions that would develop
during an outpatient encounter, including
the emergency department, observation, or
outpatient surgery are considered
"present on admission: when the patient
comes into the hospital as an inpatient.
So the key time frame, in this definition,
is "at the time the order for inpatient
admission occurs". Why is this important?
Because if a condition
develops during hospitalization, it's
now called a "hospital-acquired condition"
or HAC or an H-A-C. Reiimbursement is going
to be affected by that. If a condition
occurred prior to inpatient admission it
would be considered to be present on
admission including adverse effects. I wanted
to be sure that I put that in there
because if a patient is having a
reaction to a medication that's been
appropriately prescribed and taken, that
is considered "present on admission". The
hospital is not going to be penalized
for that. When you're assigning your POA
indicators it is dependent upon the
physician's documentation. You cannot
accept nurses or any other allied health
professionals' documentation when
determining whether or not a POA
indicator exists. A select number of
hospital-acquired conditions are not
recognized by Medicare so that you could
put them into this higher severity DRG.
That's why the existence of a HAC
can affect reimbursement. One example
that's given here- if the only CC or MCC
reported on this patient's case is one
of those HACs, the case is not going to
be assigned to a higher weighted DRG.
In conclusion, coders have a legal and a
fiscal responsibility to the facility
and to physicians to code accurately.
Becoming a professional coder requires
lifelong learning, not only to stay on
top of medical developments as well
as any changes to coding guidelines but
changes to our federal laws as well or
federal regulations for how we would
code something. It is really a great
profession for someone who wants to be a
lifelong learner. If you have any
questions. please post them in discussion
board or contact me. I hope you have
a good day. Thank you.