State update will revise hospital Medicaid payments

A state agency is updating its hospital coding system for the Medicaid program to meet federal requirements next year.

The current “diagnosis related groups” (DRG) system used to reimburse Georgia hospitals is based on cost data derived from 2004 and 2005, and the new one will use 2011 and 2012 data, the Department of Community Health said this week.


Every state Medicaid program has to be compatible by October 2014 with a new coding system, said Tim Connell, chief financial officer of Community Health.

The update will, in effect, create winners and losers among 152 hospitals in the state, with some benefiting financially from the change and others losing some revenue.

Grady Memorial Hospital would lose the most under a preliminary calculation, but the state is exploring options that would reduce the loss to Atlanta’s biggest safety-net hospital, Connell told GHN.

Most hospitals would not see an effect of more than 10 percent on their current inpatient payments, Connell said.

The Georgia Hospital Association said these revisions are “a big deal’’ for its membership.

“A few of our members would be severely impacted by it,’’ Kevin Bloye, a GHA vice president, told GHN on Tuesday. “We’re trying to convey some of the concerns we’re hearing from our members.’’

Community Health officials must get approval from the federal Centers for Medicare and Medicaid Services for the coding changes.

Connell said the revisions must be budget-neutral.

The DRG system of classifying inpatient hospital services is based on a person’s medical diagnosis, any secondary diagnoses, surgical procedures, age, sex and presence of any complications.