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February 9, 2017

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2010 Inpatient PPS Final Rule Released

August 25, 2009:

Hospitals will receive a 2.1 percent payment increase rather than an anticipated 1.9 percent reduction under the inpatient prospective payment system (IPPS), according to the final rule for fiscal year (FY) 2010, which was released on July 31st. The final rule policy changes and payment rates will affect inpatient services in general acute care hospitals, as well as long-term care hospitals (LTCHs), beginning with discharges on October 1, 2009.

Hospitals also avoided a proposed documentation and coding adjustment that would account for increases in payments resulting from changes in hospital coding practices that are not considered representative of an increase in patient severity of illness. The Centers for Medicare & Medicaid Services’ (CMS) proposed adjustment would have penalized hospitals without a clinical documentation improvement (CDI) program.

Medicare severity diagnosis-related groups (MS-DRGs) were implemented in fiscal year 2008 to better account for patients’ severity of illness. Because hospitals were expected to change their coding practices as they implemented the new MS-DRGs, resulting in an increase in Medicare spending, CMS included adjustments to hospital rates through 2010 in the IPPS final rule for 2008.

Rate reductions in the proposed IPPS rule for 2010 were based on the anticipated increase in spending due to improved documentation and coding. Due to a lack of information on the documentation and coding effects for 2009 spending, CMS delayed implementation of the adjustment for 2010 until it has a full year of data and instead will consider phasing in adjustments beginning in fiscal 2011.

In response to the public comments, teaching hospitals will continue to receive the full capital indirect medical education (IME) adjustment in fiscal 2010. Based on updated analysis of hospital capital margins, as well as comments submitted in response to the proposed rule, CMS will not to go forward with full phase-out as previously planned.

The final rule also provides a 2.5 percent increase in payment rates for LTCHs, which treat patients who require a hospital inpatient level of care for an extended period of time, typically greater than 25 days. The LTCH update uses a special rate that reflects the different resources used by rehabilitation, psychiatric, and long-term care hospitals. As with acute care hospitals, there will be no adjustment to the LTCH rates in 2010 to account for the effect of changes in coding and documentation. CMS did, however, finalize the proposed 0.5 percent reduction to the 2010 LTCH rates to account for increased spending resulting from changes in documentation and coding that occurred in fiscal 2007 under the previous DRG classification system.

Continuing CMS’s efforts for improved quality, the final rule adds four new quality measures that hospitals must report in 2010 to receive a full market basket update in 2011. Currently, hospitals that do not participate in the quality reporting program receive two percentage points less; so in FY 2010 nonreporting hospitals will receive only a 0.1 percent update. The new quality measurements involve postoperative urinary catheter infections and surgical patients with perioperative temperature management in addition to participation in two systematic clinical database registries: nursing sensitive care and stroke care.

The final rule is on display at the Federal Register under “Special Filings” at:
www.archives.gov/federal-register/public-inspection/index.html. It will be published in the August 27, 2009, Federal Register. Additional information can also be found at www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp.

Sarah A. Serling, CPC, CPC-H, CPC-I, CCS-P, CCS
Clinical/Technical Editor



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