Prospective Payment Changes for Fiscal Year (FY) 2003

20.3.3 – Prospective Payment Changes for Fiscal Year (FY) 2003 (Rev. 1, 10-01-03) A-02-084 The PPS changes for FY2003 were published in the Federal Register on August 1, 2002. All changes are effective for hospital discharges occurring on or after October 1, 2002, unless otherwise noted. ICD-9-CM coding changes are effective October 1, 2002. The new ICD-9-CM codes are listed, along with their diagnosis-related group (DRG) classifications in Tables 6a and 6b in the final rule for PPS changes for FY 2003. The ICD-9-CM codes that have been replaced by expanded codes or other codes, or have been deleted are included in Tables 6c and 6d. The revised code titles are in Tables 6e and 6f of the same final rule. GROUPER 20.0 assigns each case into a DRG on the basis of the diagnosis and procedure codes and demographic information (that is age, sex, and discharge status) and is effective with discharges occurring on or after October 1, 2002. Medicare Code Editor (MCE) 19.0 and Outpatient Code Editor (OCE) versions 18.0 and 3.20 use the new ICD-9-CM codes to validate coding for discharges and outpatient services effective October 1, 2002. Additional changes for FY 2003 are: • The standardized amount update factor is 2.95 percent for all hospitals. • The hospital specific update factor is 2.95 percent for all hospitals. • The common fixed loss cost outlier threshold in FY 2003 is equal to the PPS rate for the DRG, Indirect Medical Education (IME), and Disproportionate Share Hospital (DSH) plus $33,560. • The marginal cost factor for cost outliers remains 80 percent. • The 2003 Federal capital rate is $407.01 and the Puerto Rico capital rate is $198.29. • The FY 2003 outlier adjustment factor is 0.948999 for the operating standardized amount. • The FY 2003 outlier adjustment factor for Puerto Rico is 0.981651 for the operating standardized amount. Also new for FY 03, there is an outlier adjustment factor of 0.965325 for operating national/Puerto Rican blend. • Payments under the DSH provision are not reduced in FY 2003. • The IME formula is 1.35*[(1+ resident-to-bed ratio)**. 405-1] for FY 2003. • The revised hospital wage indexes and geographic adjustment factors are contained in Tables 4a (urban areas), 4b (rural areas) and 4c (redesignated hospitals) of section VI of the addendum to the PPS final rule. • Grouper 20.0 and MCE 19.0 for discharges occurring on or after October 1, 2002 replace earlier versions of the software. See Addendum: Hospital Reclassifications and Redesignations by Individual Hospital - FY2003.