An Investigation of the Relationship Between Complication and Comorbidity Clinical Codes and the Financial Health of a Hospital
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Date
2013-05
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The Ohio State University
Abstract
In 2008, the Centers for Medicare and Medicaid Services (CMS) revised the way it pays hospitals for Medicare inpatient admissions using a payment system called Medicare-Severity-adjusted Diagnostic Related Groups (MS-DRGs). The MS-DRG system uses “major complication/comorbidity” (MCC) and “complication/comorbidity” (CC) diagnosis codes to better identify the severity of inpatient cases. Payment rates for a hospital are established based on MS-DRGs which in turn are based on the diagnoses and procedure codes. MS-DRGs gave hospitals a financial incentive to improve coding of patient encounters. As a result CMS stated that a 2.9% coding offset would be implemented for all hospitals in 2011 to recoup potential overpayments resulting from changes in coding practices. The question of whether CMS’s decision to implement a 2.9% coding offset surfaced since the financial health of some hospitals may have been hurt by the offset. Thus, the purpose of this study was to: 1) investigate whether hospitals differ in capturing MCCs and CCs codes based on hospital setting, bed size, and regional location, and 2) determine if there was a relationship between hospital MCC and CC coding and the financial health of hospitals as defined by the hospital case mix index. Data was analyzed for 1685 hospitals using the Medicare Final Rule Impact File and the Healthcare Cost Report Information System File. A statistically significant difference was found for hospitals in the West South Central region of the country as compared with Mountain, New England, Pacific, and South Atlantic regions. Study results suggest that, regionally, an across the board offset may have hurt some hospitals, thus consideration should be given to re-examining a fairer method of payment based upon hospital demographics.
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Keywords
Case Mix Index, Centers for Medicare and Medicaid Services, Inpatient Prospective Payment System, Clinical Coding, MS-DRGs, FY 2011 CMS Coding Offset