HOSPITAL PAYMENT MODERNIZATION CONNECTICUT’S OPPORTUNITY FOR CHANGE November 2013.
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Transcript of HOSPITAL PAYMENT MODERNIZATION CONNECTICUT’S OPPORTUNITY FOR CHANGE November 2013.
HOSPITAL PAYMENT MODERNIZATIONCONNECTICUT’S OPPORTUNITY FOR CHANGENovember 2013
MERCER 2April 18, 2023 2MERCER
Discussion Agenda
• Project Goals
• Overview of Conceptual Underpinnings of DRG and APC
• Suggested Evaluation Criteria
• Current Project Direction
2
MERCER 3April 18, 2023 3MERCER
Project Goals
• Design, develop and implement a complete rebuild of both hospital payment systems
• Implement new prospective payment systems that are ICD-10 capable
• Systems that are more precise in the recognition of acuity for both IP and OP hospital services
• Provide payment structures that promote proper delivery of health care in the most appropriate setting
• Promote more predictable and transparent payment processes for hospitals
• Revenue neutrality at the hospital level will be a primary goal
• Over time, migration to more equitable payment systems will likely not result in revenue neutrality at the hospital level.
• Implement payment methods that can support quality health outcomes and efficiency
• Create systems that establish a sound financial basis for the changing environment including state and federal policy goals
3
MERCER 4April 18, 2023
Conceptual Underpinnings – Inpatient DRG Systems
• Each DRG to contain patients with a similar pattern of resource intensity
• Each DRG to contain patients who are similar from a clinical perspective (i.e., each group should be clinically coherent)
• DRGs based on routinely collected information from hospital abstract systems
• A manageable number of DRGs, which encompass all patients seen on an inpatient basis
• Based on age, principal diagnosis, secondary diagnoses and the surgical procedures performed
MERCER 5April 18, 2023 5MERCER
Conceptual Underpinnings: Some Examples of DRG Pricing
5
• Hospital Specific (or Peer Group, or Statewide) Base Rate $4,000
– Knee Replacement / Severity 1 Relative Weight 2.0347
Hospital Payment $8,139
– Knee Replacement / Severity 4 Relative Weight 5.3662
Hospital Payment $21,465
– Normal Delivery / Severity 1 / Relative Weight 0.4672
Hospital Payment $1,869
MERCER 6
Conceptual Underpinnings: APR-DRG versus Medicare
PDX: 56211 Diverticulitis of colon
Proc: 4571 Multiple segmental resection of large intestine
Case 1 Case2 Case 3 Case 4 Description
Secondary Diagnoses
56941 56941
5609
56941
5609
4299
4260
56941
5609
4299
4260
5849
Ulcer of anus & rectum
Unspecified intestinal obstruction
Acute myocarditis
Atrioventricular block, complete
Acute renal failure, unspecified
Medicare DRG
APR-DRG
149 wo CC
221 SOI 1
148 w CC
221 SOI 2
148 w CC
221 SOI 3
148 w CC
221 SOI 4
Major small and large bowel
Medicare DRG
APR-DRG
25,14725,988
59,51938,209
59,51966,597
59,519
130,750
Table 1 Example claims assigned to the DRG systems
6
MERCER 7April 18, 2023 7MERCER
Conceptual Underpinnings – Outpatient APC Systems
• Ambulatory Payment Classifications (APCs) classify hospital outpatient services (some services, such as Laboratory, are excluded)
• APCs are conceptually similar and to DRGs in terms of the resources required to provide each service
• Will support ICD-10
• Payment amounts for each APC are based on estimates of the costs associated with providing any of the services assigned to an APC
• Hospitals continue line item billing using HCPCS/CPT codes and claims administrator receives the claims and applies the appropriate APC payment rates to the HCPCS codes
7
MERCER 88
Conceptual Underpinnings: Some Examples of Fee Schedule APCs
APC Group TitleRelative Weight
Payment Rate
0006 Level I Incision & Drainage 1.4194 $99.38
0008 Level III Incision and Drainage 20.5466 $1,438.59
0041 Level I Arthroscopy 29.6307 $2,074.62
0048 Level I Arthroplasty or Implantation with Prosthesis 60.6006 $4,243.01
0083Coronary Angioplasty, Valvuloplasty, and Level I Endovascular Revascularization of the Lower Extremity 65.9825 $4,619.83
0108Insertion/Replacement/Repair of AICD Leads, Generator, and Pacing Electrodes 424.7747 $29,741.03
0227 Implantation of Drug Infusion Device 192.8554 $13,502.96
0341 Skin Tests 0.0814 $5.70
0604 Level 1 Hospital Clinic Visits 0.7682 $53.79
0608 Level 5 Hospital Clinic Visits 2.5210 $176.51
0609 Level 1 Type A Emergency Visits 0.7174 $50.23
0630 Level 5 Type B Emergency Visits 3.7599 $263.25
MERCER 9April 18, 2023 9MERCER
Suggested Evaluation Criteria
• Systems should:
– Align payments to the services provided, including differences in acuity
– Enable Incentives to provide efficient care in the most appropriate settings
– Enhance payment predictability for providers and the State
– Maintain access to high quality services
– Provide transparent methodologies that are easy to understand and replicate
– Be designed to be periodically updated
– Accommodate future models and policies, including shared savings, health neighborhoods, incentive pools and episode bundling
• In the end, systems should promote high value, quality-driven health care services
MERCER 10April 18, 2023 10MERCER
Options Considered
• Inpatient
– Current Method (no change, keep recent Meld approach)
– Current Method with Case Mix Adjustment added
– DRG Method
• Outpatient
– Current Method (fee schedule and cost to charge ratios)
– Fee Schedule APC
– Enhanced APG
10MERCER
MERCER 11April 18, 2023 11MERCER
Project Direction: Move to DRG and APC Models
• Incentives clear and aligned
– Acuity considered
• Better able to link to policy initiatives
– Can adjust payment levels easily (i.e. <100% to develop incentive pool)
– Able to implement P4P
• Multi-payer initiatives possible
• Easier to administer for state and hospitals
• Easier to update
• Stakeholders are supportive
11
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