Massachusetts study suggests maximized coding may be driving increased inpatient hospital spending

Preliminary findings released by the Massachusetts Health Policy Commission (HPC) show that maximized coding may have increased statewide commercial spending for inpatient services by nearly 11% between 2013 and 2018.

The HPC, an independent state agency that monitors healthcare spending and provides recommendations for policy reform, holds board meetings every six weeks to discuss significant changes in the healthcare market. At their most recent meeting held September 11, researchers presented on trends in commercial inpatient hospital volume and spending in Massachusetts.

Upon review of Hospital Inpatient Discharge Data from the Center for Health Information and Analysis, researchers found that commercial inpatient spending grew 10.7% between 2013 and 2018, while inpatient volume decreased by 12.8%. They determined that this significant increase in spending was driven by both increased prices for hospital stays and increased acuity of inpatient stays. Researchers presented the following findings to support this claim:

• From 2013 to 2018, all major hospital systems in Massachusetts reported increasing patient acuity
• Statewide commercial risk scores rose 3% per year from 2013 to 2017
• The average price for inpatient hospital stays rose 5.2% between 2013 and 2017

The data, however, do not support the notion that Massachusetts residents are becoming sicker. According to the report, diagnostic-related group weights grew more than 10% between 2013 and 2018, while other indicators of clinical severity (e.g., length of stay [LOS], days spent in the intensive care unit [ICU]) did not increase.

For example, the average number of days commercially insured chronic obstructive pulmonary disorder (COPD) patients stayed in the ICU decreased 7% between 2013 and 2017. However, the average LOS stayed the same despite a 20% increase in DRG weight.

Overall, the data indicates that hospitals are maximizing coding rather than seeking sicker patients, said David Auerbach, director for research and cost trends at HPC, at the meeting.

The HPC’s preliminary findings, scheduled for publication next year, could have significant implications for healthcare spending and care delivery.