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The changes to the Medicare inpatient prospective payment system
(IPPS), announced by the Centers for Medicare and Medicaid Services (CMS) on Aug. 1, will redistribute payments among different types of inpatient cases. Overall payments are expected to increase by $3.8 billion in FY08, according to CMS. How-and how much-this redistribution will affect hospitals will depend not only on case mix and coding practices, but also on a provider's ability to analyze its data and take proactive steps to prepare for the changes.
Assessing the Overall Impact
CMS's move from diagnosis-related groups (DRGs) to Medicare severity DRGs (MS-DRGs) took effect on Oct. 1, changing the payment landscape for providers nationwide. At a high level, the impact can be estimated by looking at the change in a hospital's case mix index when inpatient cases are reclassif ied from CMS DRG v24 (version 24-the previous DRG system) to the new MS-DRGs. (Changes to capital payments within the blended rates and market basket updates will also influence hospital payment and should be analyzed in addition to case mix changes.) These changes to the case mix index will result...