[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[Extensions of Remarks]
[Page 6550]
[From the U.S. Government Publishing Office, www.gpo.gov]




      MEDICARE ANTI-FRAUD EFFORTS: HOSPITALS BACKING OFF UP-CODING

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Wednesday, April 14, 1999

  Mr. STARK. Mr. Speaker, for the past 14 years, hospitals have been 
up-coding their Medicare bills. Each year, the ``complexity'' of the 
cases that hospitals treat is said to increase. Like grade creep in a 
school, the way patients' illnesses are graded in a hospital gradually 
creeps upwards, and the taxpayer and Medicare pay more and more.
  Last year, for the first time, the ``complexity'' of the cases 
declined.
  As the following memo makes clear, this has something to do with the 
Administration's fight against waste, fraud, and abuse in Medicare and 
in the well-publicized case against Columbia-HCA.
  Taxpayers and Medicare beneficiaries should congratulate HCFA, the 
HHS Inspector General, and Justice for their efforts. Vigilance against 
fraud is a major reason that the life of the Medicare hospital trust 
fund has just been extended from 2008 to 2015.

     Date: November 19, 1998
     From: Office of the Actuary
     Subject: Analysis of PPS Hospital Case-Mix Change between 
         1997 and 1998
       The prospective payment system, PPS, uses diagnosis related 
     groups, DRG's, as the basis of payment. Each DRG is assigned 
     a relative weight which is used in the payment formula. 
     Average case-mix is the discharge-weighted mean of all the 
     DRG relative weights. We have monitored changes in case-mix 
     since the beginning of PPS in FY 1984. From FY 1983 through 
     FY 1997, case-mix increased every year. FY 1998 is the first 
     year we have measured a decrease in case-mix.
       Based on information available through October 1998, we 
     have measured a change in PPS hospital case-mix in FY 1998 of 
     -0.74 percent. When we receive further updates for FY 1998, 
     we estimate that the final measure of the FY 1998 case-mix 
     increase will be in the neighborhood of -0.5 percent. Since 
     FY 1998 is the first year that case-mix has decreased under 
     PPS, I have undertaken a study of the reasons for this 
     decrease. My study found the following:
       As is usually the case, some DRG's contributed to an 
     increase in case-mix while others contributed to a decrease.
       The new DRG's for back and neck procedures increased case-
     mix 0.05 percent.
       The redefinition of DRG 116 in combination with DRG 112 
     increased case-mix 0.59 percent.
       The change in coding of pneumonia cases decreased case-mix 
     0.23 percent.
       DRG's in complex-noncomplex pairs decreased case-mix 0.82 
     percent.
       Non-pair DRG's decreased case-mix 0.27 percent.
       While assessing cause-and-effect is always difficult, I 
     believe that some of the decrease in case-mix is likely to be 
     attributable to certain efforts to combat fraud and abuse. 
     The Department of Justice investigation of the Hospital 
     Corporation of America, subsequent indictments, and the 
     possibility of triple damages may have prompted hospitals to 
     code diagnoses less aggressively--resulting in fewer complex 
     cases. Similarly, the inspector general's investigation of 
     pneumonia cases may have caused the significant shift of 
     admissions from the more expensive respiratory infections 
     DRG's to the simple pneumonia DRG's. HIPAA provides 
     continuing funding for fraud investigations, which may have a 
     continuing impact on increases in case-mix.

     

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