As we documented in our Managed Care E-newsletter in April 2020, the CARES Act passed by Congress very last year supplies for a 20% maximize to the DRG weights in the Medicare Inpatient Prospective Payment program (“IPPS”) for clients identified with COVID-19. Congress’ final decision to improve the relative pounds for individuals who are diagnosed with COVID-19 is regular with the actuality that the ordinary methods desired to supply products and services to a COVID-19 individual can and have been bigger relative to the means necessary to supply services to other people who have the very same DRG with out COVID-19. The DRG weighting process accounts for cost variations between various styles of remedies, with far more expensive circumstances staying assigned larger DRG weights, as directed by Congress and applied by CMS.
The federal governing administration instantly executed this transform at the time for Medicare individuals. Furthermore, most well being ideas did so past year for their Medicare Benefit contracts that offer for payment making use of DRGs, from time to time expressed as payment based mostly on IPPS or Medicare Allowable. Some well being strategies also identified that the improve required them to put into action the 20% enhance for Business contracts that are compensated primarily based on a Medicare methodology. However, not all health and fitness programs have regarded this obligation. Consequently, suppliers who have any Business contracts that pay back centered on these Medicare methods may possibly gain from reviewing how they are getting paid out for products and services delivered to clients with COVID-19 diagnosis to make certain that they are getting the 20% improve.
When payers and suppliers negotiate to use a distinct Medicare payment methodology for Industrial merchandise, that demonstrates a choice by each sides to adjust the payments when the methodology is changed. The authorities usually make improvements to a variety of Medicare methodologies each and every yr, which wellness plans put into practice in contracts that incorporate people methodologies. Often the government decreases what is paid underneath a certain Medicare methodology, which normally the ideas are satisfied to settle for. Other periods there are boosts, which designs generally employ without dilemma, given that they realize that the discount struck in between the payer and supplier is that the payment methodology will “float” with modifications to the methodology imposed by the government. There is almost nothing different about the 20% raise for COVID-19 that would exempt it from use by non-Medicare payers that use the Medicare DRG payment methodology in their contracts with suppliers.
The Medicare DRG weight assigned to every DRG is an integral element of the IPPS system. The way Congress executed the 20% improve was to change the DRG weighting for sufferers with a COVID-19 analysis. Specially, Portion 3710 of the CARES Act enhanced the IPPS excess weight for clients diagnosed with COVID-19. The statute states:
For discharges taking place throughout the emergency period of time described in portion 1135(g)(1)(B), in the situation of a discharge of an unique diagnosed with COVID–19, the Secretary shall maximize the weighting variable that would if not use to the analysis-relevant team to which the discharge is assigned by 20 percent. The Secretary shall identify a discharge of these kinds of an person through the use of analysis codes, issue codes, or other this kind of means as may be important.
The DRG methodology’s origin getting in the Medicare application does not signify that it only applies to Medicare Gain products and solutions. To the contrary, functions are permitted to concur to use the DRG methodology for non-Medicare merchandise, just as they are permitted to negotiate not to use the DRG methodology for Medicare Gain merchandise. In truth, quite a few Medicare Advantage contracts have non-DRG parts, such as situation fees, per diems, capitation, carve-outs, etc. In these cases, the health ideas may well not spend the 20% maximize for COVID-19 sufferers given that the contracts did not include the DRG methodology. Conversely, when Professional contracts do use a DRG methodology, the plans have contractually agreed to pay back what that methodology demands. Congress decreed that the DRG methodology involves a 20% improve for individuals diagnosed with COVID-19.
The exact same 20% maximize ought to utilize to other solutions as properly that use the DRG methodology, whether or not people are Managed Medicaid, and regardless of whether or not they are contracted. For case in point, if a well being plan’s payment methodology for non-contracted Industrial solutions works by using the DRG methodology, irrespective of whether that is portion of a patient’s proof of protection, the plan’s interior coverage, or normally, then the approach demands to incorporate the 20% maximize for patients diagnosed with COVID-19.
The steps by health and fitness options that applied 2% sequestration reductions in April 2013 also undercuts any arguments by them now towards spending the 20% improve for COVID-19 clients. The 2% sequestration reductions have been passed via by health designs even while sequestration essentially transpired individual from and outside the house of the Medicare DRG methodology contained inside of the IPPS system. At the time, having said that, overall health plans that handed the sequestration reductions by means of to vendors asserted that contracts utilizing terms like DRG, IPPS, or Medicare Allowable, meant that costs to be paid ended up what ever Authentic Medicare would shell out. By equating the DRG methodology with what ever First Medicare paid out for reasons of sequestration reductions, these well being designs are in no posture to argue now against spending that the 20% boost for COVID-19 analysis sufferers. This 20% is each inside the DRG methodology and some thing Initial Medicare pays.
Ultimately, it bears considering for this issue that most payers, like practically all of the greater types, use automated computer systems that are developed to track the Medicare DRG formulation for calculating what is owed beneath the DRG methodology. Thus, wellness options who try out to stay away from shelling out the 20% improve for COVID-19 clients have to just take additional methods to convert off the weighting modifications that Congress dictated for the DRG calculations when sufferers are diagnosed with COVID-19.