The Economics and Reimbursement of Congestive Heart Failure

Abstract

Healthcare in the USA hospital setting has undergone immense evolution over the last two decades. Spiraling healthcare costs led to efforts by payers to rein in charges by providers and facilities. Managed care became the mantra for managing costs through the use of guidelines, evidence-based best practices, and contractual negotiations and the utilization management review process. Perhaps the most challenging financial change for the acute care facility was the development of the DRG-based payment system for Medicare recipients. No longer able to benefit from long hospital stays filled with a litany of billable tests and procedures, the hospital was faced with an urgent need to become efficient.

The acute decompensated heart failure (ADHF) patient poses additional challenges for the hospital facility. Such patients are resource-intense utilizers of hospital services and can often result in a net fiscal loss for the average hospital stay. Using evidence-based treatment approaches for appropriately selected heart failure patients in an observation unit can result in improved clinical outcomes, enhanced quality of care, and a positive impact on financial margins.

As payers shift to value-based reimbursement, an already challenged hospital delivery system will be forced to alter the care delivery model. Hospitals will have to merge quality and financial objectives into a viable operational plan in order to survive the upcoming external forces in the evolving healthcare environment.

Appendix

What Is MS-DRG? Medicare Severity Diagnosis-Related Group

Under the inpatient prospective payment system, each case is categorized into a diagnosis-related group depending on the patient’s diagnosis, the procedures performed, complicating conditions, age, and discharge status. Each DRG has a payment weight assigned to it based on the average resources used to treat Medicare patients in that DRG compared to the cost of cases in other DRGs. The weights are calibrated annually.

On October 1, 2008, CMS replaced its 538 DRGs with 745 new, severity-adjusted DRGs. The new DRG system requires a greater level of documentation and related coding specificity (identification of complications and comorbidities) in order for hospitals to be reimbursed properly for critically ill patients.

What Are MCC and CC Specific?

In the FY 2008 hospital inpatient prospective payment system final rule, CMS revised the existing complication/comorbidity (CC) listing and established three different levels of severity into which diagnosis codes would be divided. The three levels are MCC (major CC), CC, and non-CCs. while non-CCs reflect the lowest. It was noticed that non-CC diagnosis codes do not significantly affect severity of illness or resource use.

Per the hospital IPPS final rule, the overall statistics by CC group are as follows:

• MCC: 22.2% of patients

• CC: 36.6% of patients

• Non-CC: 41.1% of patients

A complication is defined as a condition that arises during the hospital stay, and a comorbid condition is a preexisting condition. Both of these conditions have been identified as potentially extending the length of hospital stay by at least 1 day in 75% of the cases.

MCC: Major Complication or Comorbidity

• MCCs reflect the highest level of severity

CC: Complication or Comorbidity and CMI

• Complication (medicine) is an infrequent and unfavorable evolution of a disease, a health condition, or a medical treatment.

• Comorbidity is either the presence of one or more disorders (or diseases) in addition to a primary disease or disorder or the effect of such additional disorders or diseases.

• Case mix index (CMI) is the average diagnosis-related group weight for all of a hospital’s Medicare volume. A mix of cases in a hospital reflects the diversity, clinical complexity, and the needs for resources in the population of patients in a hospital.

What Is HCPCS?

• HCPCS stands for Healthcare Common Procedure Coding System. (est. 1978; Centers for Medicare and Medicaid Services).

• For Medicare and other health insurance programs to ensure healthcare claims are processed in an orderly and consistent manner, standardized coding systems are essential. The HCPCS level II code set is one of the standard code sets used by medical coders and billers for this purpose.

Separate Reimbursement May Be Made for All Services with an S Indicator and X Ancillary Services

Table 6 What is an S indicator, and what are X ancillary services?