Payment Modifications and DRG Impacts

Greg Dorn, President & Mark Johnson, SVP Product Management

July 19, 2023

A pen laying on a DRG document


Deeper Dive into The Pulse of Payment Integrity 

It is important for health plans and providers to stay updated with payment modifications and understand their implications in payment integrity. Keeping abreast of annual CMS IPPS rule changes, advancing Value Based Care and risk-sharing contracts, and updates to fee schedules are important payment modifications that require changes in DRG Validation. Understanding and implementing these changes is essential to ensure accurate coding, appropriate DRG assignment, and proper reimbursement for inpatient services.

At CERIS, we continually make significant investments in DRG audits, focusing on enhancing clinical and coding expertise. Modifying DRG Validation to keep up with payment modifications has become an important priority as healthcare payment models continue to undergo significant transformation in response to the evolving healthcare regulatory landscape.

The following article addresses three key payment modifications and their impacts:

  1. CMS FY 2024 Inpatient Prospective Payment System (IPPS) calls for a nearly 3% increase for general acute care hospitals successfully participating in the Hospital Inpatient Quality Reporting program that use meaningful electronic health records. The final rule has an anticipated effective date of October 1. This annual update continually impacts DRG Validation as final rulings are announced each year.
  2. Value-Based Care and Risk Based Contract Adjustments tie reimbursement to quality over quantity and involve performance metrics such as clinical outcomes, patient satisfaction, or adherence to quality measures. These evolving payment models can also involve shared savings or shared losses based on performance against predetermined targets. These factors impact DRG Validation as they require providers to demonstrate contract required performance criteria.
  3. Fee Schedule Updates can include changes to the Relative Value Units (RVUs) assigned to procedures, conversion factors, and other components that determine final payment amounts. Fee schedule updates may be influenced by inflation, changes in the cost of providing services, and updates to coding and documentation guidelines. While the focus of DRG Validation is primarily on the accuracy and appropriateness of DRG assignment, the review of fee-for-service (FFS) claims and documentation is an integral part of the audit process to ensure compliance with coding and billing guidelines.

CERIS remains committed to generating new ideas and improving solutions for DRG Validation and overall payment integrity. We are always here to discuss how to stay ahead of the payment accuracy curve.

Let's partner to a clear path to greater accuracy and cost savings.

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