Knowledge Base Article

As we continue our review of the FY 2015 Inpatient Prospective Payment System (IPPS) Final Rule, this week’s article focuses on MS-DRG changes and the resulting changes to the Post-Acute Transfer DRGs.

MS-DRG Classification Changes in the Final Rule

Endovascular Cardiac Valve Replacement

Request

There was a request to create a new MS-DRG specific for various types of cardiac valve replacements performed by an endovascular or transcatheter technique.

CMS Data Analysis

The ICD-9-CM procedure codes (35.05, 35.06, 35.07, 35.08 and 35.09) are currently assigned to MS-DRGs 216, 217, 218, 219, 220 and 221. FY 2013 MedPar data revealed the following number of cases:

CMS established five criteria in the FY 2008 IPPS final rule (72 CFR 47169) to determine if subgroups of base MS-DRG cases should be created. In 2008 the criteria was based on average charges that was later converted to average costs. Criteria warranting a creation of a CC or MCC subgroup within a base MS-DRG must meet all of the following:

1. A reduction in variance of costs of at least 3 percent.
2. At least 5 percent of the patients in the MS-DRG fall within the CC or MCC subgroup.
3. At least 500 cases are in the CC or MCC subgroup.
4. There is at least a 20-percent difference in average costs between subgroups.
5. There is a $2000 difference in average costs between subgroups.

Data analysis supported the creation of a new base MS-DRG subdivided into two severity levels. CMS’s advisors noted that patients undergoing endovascular cardiac valve replacements are significantly different than the population undergoing an open chest cardiac valve replacement. They also noted that grouping these procedures separately “provides greater clinical cohesion for this subset of high risk patients.”

FY 2013 MedPar data for the two proposed MS-DRGs as provided in the final rule:

Final Rule

Two new MS-DRGs were created for endovascular cardiac valve replacements.

• MS-DRG 266 (Endovascular Cardiac Valve Replacement with MCC); and
• MS-DRG 267 (Endovascular Cardiac Valve Replacement without MCC).

Shoulder Replacement Procedures

Request

A request was made to change the MS-DRG assignment for the following two shoulder replacement procedure codes:

• 81.88 (Reverse total shoulder replacement); and
• 81.97 (Revision of joint replacement of upper extremity).

For procedure code 81.88 the request was made to reassign this procedure from MS-DRGs 483 and 484 (Major Joint/Limb Reattachment Procedure of Upper Extremities with CC/MCC and without CC/MCC respectively) to MS-DRG 483 only.

For procedure code 81.97 the request was made to reassign this procedure code from MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), to MS-DRG 483.

Based on the five criteria to determine if subclasses should be created for a base MS-DRG the claims data no longer supported the two severity level MS-DRGs 483 and 484. In the proposed rule CMS “proposed to collapse MS-DRGs 483 and 484 into a single MS-DRG by deleting MS-DRG 484 and revising the title of MS-DRG 483 to read “Major Joint/Limb Reattachment Procedure of Upper Extremities”.”

Final Rule

• Procedure code 81.97 will continue to be assigned to MS-DRGs 515, 516 and 517.
• MS-DRGs 483 and 484 have been collapsed into MS-DRG 483 (Major Joint/Limb Reattachment Procedure of Upper Extremities).

Back and Neck Procedures

Request

A request was made to reassign cases with a complication or comorbidity (CC) in MS-DRG 490 (Back & Neck Procedures Except Spinal Fusion with CC/MCC or Disc Device/Neurostimulator) to MS-DRG 491 (Back & Neck Procedures Except Spinal Fusion without CC/MCC or Disc Device/Neurostimulator). The suggestion was made to create a new MS-DRG subdivided based solely on the “with MCC or Disc Device/Neurostimulator” and the “without MCC” (and no device) criteria.

CMS Data Analysis

FY 2013 MedPar data was evaluated using a three-way severity level split with the three subgroups in the following table:

Final Rule

CMS adopted the proposed new MS-DRG grouping of:

• MS-DRG 518 (Back & Neck Procedures Except Spinal Fusion with MCC or Disc Device/Neurostimulator);
• MS-DRG 519 (Back & Neck Procedure Except Spinal Fusion with CC); and
• MS-DRG 520 (Back & Neck Procedure Except Spinal Fusion without CC/MCC).

MDC 15: Newborns & Other Neonates with Conditions Originating in the Perinatal Period

Request

A request was made to evaluate the MS-DRG assignment of seven ICD-9-CM diagnosis codes in MS-DRG 794 (Neonate with Other Significant Problems). The requestor noted that the codes in question had no bearing on the neonate and do not represent a neonate with a significant problem. It was recommended that MS-DRG logic change so that the codes would not lead to assignment of MS-DRG 794.

The recommendation was to add these seven codes to the “only secondary diagnosis” list under MS-DRG 795 (Normal newborn) so the case would be assigned to MS-DRG 795 (Normal newborn).

Final Ruling

The proposal was adopted as final to reassign the following seven diagnoses to the “only secondary diagnosis list” under MS-DRG 795 (Normal newborn) so that the case would be assigned to MS-DRG 795 (Normal newborn):

• V17.0 (Family history of psychiatric condition),
• V172 (Family history of other neurological diseases),
• V17.49 (Family history of other endocrine and metabolic diseases),
• V18.0 (Family history of diabetes mellitus),
• V18.19 (Family history of other endocrine and metabolic diseases),
• V18.8 (Family history of infectious and parasitic diseases); and
• V50.3 (Ear piercing).

MS-DRG Surgical Hierarchy Changes

Background

The MS-DRG Surgical Hierarchy is “an ordering of surgical classes from most resource-intensive to least resource-intensive.” “Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS-DRG associated with the most resource-intensive surgical class.”

Hierarchy Changes in the Final Rule

MDC 5: Diseases and Disorders of the Circulatory System

• New MS-DRG 266 (Endovascular Cardiac Valve Replacement with MCC) and new MS-DRG 267 (Endovascular Cardiac Valve Replacement without MCC) will be sequenced above MS-DRG 222 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock with MCC).

MDC 8: Diseases and Disorders of the Musculoskeletal System and Connective Tissue

• MS-DRGs 490 and 491 (Back & Neck Procedures Except Spinal Fusion with CC/MCC or Disc Device/Neurostimulator and without CC/MCC or Disc Device/Neurostimulator respectively) are being removed from the hierarchy.
• New MS-DRG 518 (Back & Neck Procedure Except Spinal Fusion with MCC or Disc Device/Neurostimulator), new MS-DRG 519 (Back & Neck Procedure Except Spinal Fusion with CC), and new MS-DRG 520 (Back & Neck procedure Except Spinal Fusion without CC/MCC) are being sequenced above MS-DRG 492 (Lower Extremity and Humerus Procedure Except Hip, Foot, Femur with MCC).

Partial Code Freeze

The Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-9) was signed into law on April 1, 2014. PAMA specified that the Secretary may not adopt ICD-10 prior to October 1, 2015. On August 1st CMS issued a rule finalizing October 1, 2015 as the new ICD-10 Compliance Date. Changes in the final rule to the schedule for the partial code freeze include:

• On October 1, 2012, October 1, 2013 and October 1, 2014, there will be only limited code updates to both the ICD-9-CM and ICD-10 codes sets to capture new technologies and diseases as required by section 1886(d)(5)(K) of the Act.
• On October 1, 2015, there will be only limited code updates to ICD-10 code sets to capture new technologies and diagnoses as required by section 1886(d)(5)(K) of the Act. There will be no updates to ICD-9-CM, as it will no longer be used for reporting.
• On October 1, 2016 (1 year after implementation of ICD-10), regular updates to ICD-10 will begin.

MS-DRGs Subject to the Post-acute Care Transfer Policy (§412.4)

Background

§412.4(a) defines a discharge under the IPPS as when “a patient is formally released from an acute care hospital or dies in the hospital.”

§414.4(f) “provides that when a patient is transferred and his or her length of stay is less than the geometric mean length of stay for the MS-DRG to which the case is assigned, the transferring hospital is generally paid based on a graduated per diem rate for each day of stay, not to exceed the full MS-DRG payment that would have been made if the patient had been discharged without being transferred.”

MLN® Acute Care Hospital Inpatient Prospective Payment System Fact Sheet (ICN 006815 April 2013) indicates that under the Transfer Policy DRG payments are reduced when:

• The beneficiary’s LOS is at least 1 day less than the geometric mean LOS for the MS-DRG;
• The beneficiary is transferred to another IPPS acute care hospital or, for certain MS-DRGs, discharged to a post-acute setting;
• The beneficiary is transferred to a hospital that does not participate in Medicare (effective October 1, 2010); and
• The beneficiary is transferred to a CAH (effective October 1, 2010).

Post-acute care settings subject to the transfer policy include:

• Long-term care hospitals;
• Rehabilitation facilities;
• Psychiatric facilities;,
• Skilled nursing facilities (SNFs);
• Home Health Care (HHC) when the beneficiary receives clinically related care within 3 days after a hospital stay;
• Rehabilitation distinct part (DP) units located in an acute care hospital or CAH;
• Psychiatric DP units located in an acute care hospital or CAH;
• Cancer hospitals; and
• Children’s hospitals.

How CMS calculates the Per Diem Rate for the transferring hospital:

• Full MS-DRG payment ÷ geometric mean length of stay (GMLOS) = Per Diem Rate

CMS’s policy for Post-acute Care Transfer MS-DRGs payment calculation:

• The transferring hospital will receive 2x the Per Diem Rate on the first day of the hospitalization.
• The hospital will receive the Per Diem Rate for subsequent days up to the full MS-DRG payment (§412.4(f)(1)
• Note: Transfer cases are also eligible for outlier payments

CMS’s policy for Post-Acute Special Payment MS-DRGs:

• Hospital will receive 50% of the full MS-DRG payment + the single day Per Diem Rate on the first day of the hospitalization.
• The hospital will receive 50% the Per Diem Rate for subsequent days up to the full MS-DRG payment (§412.4(f)(6)).

In the FY 2015 final rule the MS-DRG changes were evaluated against the post-acute care transfer policy criteria as well as the special payment methodology criteria. The following table is a breakdown of the new MS-DRGs and whether or not they qualify as a Transfer MS-DRG and if yes did it also qualify for a Special Payment MS-DRG:

For more information:

• Additional details regarding MS-DRG changes can be found in the pre-published https://www.federalregister.gov/articles/2014/08/22/2014-18545/hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the-long-term-care">Final Rule (pages 93 - 592).
• The Final Rule has a scheduled publication date of 08/22/2014 and will be available online at: http://ofr.gov/(S(pcl2zalo5cz115uiw2as4qqr))/inspection.aspx.

• MLN Matters® Number: SE0459 Clarification of Medicare’s Transfer Policy Under the Inpatient Prospective Payment System (IPPS) at: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE0459.pdf