FY 2019 IPPS Final Rule: A Closer Look at MSDRG Changes

Version 36 incorporates changes to our MSDRG list as well as associated relative weights.  From FY 2018 to FY 2019, 742MSDRGs are present in both versions.

Does FY 2019 (MSDRG V36) involve any new or deleted MSDRG?

It sure does! Eleven (11) MSDRGs are removed for FY 2019 and eighteen (18) MSDRGs have been created.

To what extent is Relative Weight changing from FY 2018 to FY 2019?

 

*Data Source: CMS, FY 2018 & 2019 Table 5

*Data Source: CMS, FY 2018 & 2019 Table 5

Based on the data presented, the clear majority of MSDRG relative weights are experiencing an increase or decrease less than 5% or no change at all (76%).

What are the top 10 MSDRGs experiencing Relative Weight change?

 

*Data Source: CMS, FY 2018 & 2019 Table 5

Why should hospitals be aware?

MSDRG relative weight (RW) is assigned to each MSDRG indicating a relative costliness or average resources required to care for cases assigned to that diagnosis related group compared to the average Medicare case costliness.  MSDRG relative weights are recalibrated annually, intended to not affect overall payments.  However, MSDRG relative weight changes could mean significant payment differences based on a hospital’s unique mix of services and volumes.

Case Hospital Example: Urban Ohio Hospital

Reviewing the top 5 MSDRGs for increase in payment and the top 5 MSDRGs for decreases in payment for FY 2018 to FY 2019 for an example hospital illustrates impact of payment due to changing MSDRG relative weights.  In this example, the volumes by MSDRG remain static, with the assumption volumes will remain the same or similar in subsequent years.

OHIO Hospital: Top 5 MSDRG Increases in Payment FY 2018 to FY 20191

*Data Source: CMS, FY 2018 & 2019 Table 5, FY 2019 IPPS Final Rule, 2017 MedPAR 1

Payment Differences due to RW Changes:FY 2019 Operating base rate and FY 2019 Wage Index to isolate Relative Weight impact with static volumes

In review of the top 5 increases and decreases in payment isolated by MSDRG relative weight for an individual hospital, the overall related payment differences for all MSDRGs could be vastly different when compared to the National payments – again due to Hospital specific volumes.

*Data Source: CMS, FY 2018 & 2019 Table 5, FY 2019 IPPS Final Rule, 2017 MedPAR

1Payment Differences due to RW Changes: FY 2019 Operating base rate and FY 2019 Wage Index to isolate Relative Weight impact with static volumes

 

OHIO Hospital: Top 5 MSDRG Decreases in Payment FY 2018 to FY 20191

*Data Source: CMS, FY 2018 & 2019 Table 5, FY 2019 IPPS Final Rule, 2017 MedPAR

1Payment Differences due to RW Changes: FY 2019 Operating base rate and FY 2019 Wage Index to isolate Relative Weight impact with static volumes

 

*Data Source: CMS, FY 2018 & 2019 Table 5, FY 2019 IPPS Final Rule, 2017 MedPAR

1Payment Differences due to RW Changes: FY 2019 Operating base rate and FY 2019 Wage Index to isolate Relative Weight impact with static volumes

 

What is the Impact to my Hospital?

Assessing the impact to Prospective Payment Rule polices is essential is understanding future Medicare payments. Identifying driving factors could assist the hospital in offering feedback to CMS and/or budgetary purposes at the facility and departmental levels.

Interested to comment to CMS on MSDRG Classification concerns?

The deadline to request updates to the MS-DRGs is now November 1 of each year. Interested parties needed to submit any comments and suggestions for FY 2019 by November 1, 2017. CMS encourages comments and suggestions for FY 2020 by November 1, 2018 via the CMS MS-DRG Classification Change Request Mailbox located at:MSDRGClassificationChange@cms.hhs.gov

CMS’s Acute Care Hospital Inpatient Prospective Payment System FACT SHEET: www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/acutepaymtsysfctsht.pdf

 

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