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Risk Adjusted Data. South Carolina Association of Health Care Quality. What is Risk Adjustment. Can Risk be Managed? Going beyond your best guess. Some Examples of Risk Management. Project Management Any Insurance Public Relations Investing The event causing the risk.
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Risk Adjusted Data South Carolina Association of Health Care Quality
What is Risk Adjustment • Can Risk be Managed? • Going beyond your best guess
Some Examples of Risk Management • Project Management • Any Insurance • Public Relations • Investing • The event causing the risk. • The likelihood of the event happening. • The impact on the plan if the event occurs
Why Medicine? Doctor – You have higher X when compared to Y • My patient’s are more complex and sicker • Question is this really true • Enter Risk Adjusted Data • Used to compare one provider to another
Process of Risk Adjustment • Must have an adequate risk assessment tool. • Must segment populations in meaningful ways. • Develop a system to normalize the population. • Reward or dissuade risky behavior.
Hx of DRG • Developed in 1967 • Introduction of Medicare • Hospitals required to implement Utilization Review • Also implement Quality Assurance Programs • Intentions • Inclusion of all hospital services • Incorporate thousands of diagnoses and procedures • Account for multiple diseases and treatment of individual patients • Differentiate between high and low cost care • Create clinically meaningful catagories • Followed ICD-9 Methodology • Developed 23 Major Diagnostic Categories • Identified patient clusters based on secondary dx, procedures, sex age, discharge status, complications comorbidities to sort out similar LOS and resource consumption
Advent of HCFA-DRG • Original DRG system flawed • Found to be highly variable • Did not capture severity of illness • Relative weights based on unreliable data • Too slow to keep pace with rapid change • HCFA adopted DRG system as payment for hospitals in 1983 • Took ownership of ensuring annual updates • Reimbursement for hospitalization based on the reason for hospital stay. • Split out procedure codes to be maintained separately
Refined DRG • Soon became evident the presence or absence of complications and comorbities (CC) resulted in assignment of different DRG for certain patients • Defined a CC as a secondary diagnosis that specifically increases hospital resource use. • System modified to account for four levels of CC • Non, Moderate, Major, Catastrophic • Ran pilot studies, but never adopted this modification • Only utilized one CC to modify DRG to Highest level
All Patients DRG • Adopted by New York State as the payment system for all non-Medicare patients in 1987 • Found DRG system was inadequate to classify resource consumption for: • Neonates • HIV infected patients • NY state contracted 3M to modify DRG system • Added Pediatric modified DRGs • MDC 24 for HIV infection • CC List modified gave rise to MDC 25 • Transplants • Long term vents • Cystic Fibrosis • Nutritional Disorders • High risk OB • Acute Leukemia • Sickle Cell Anemia
All Patient Refined DRG • Widely used in US, Europe, parts of Asia • Uses Base of AP-DRG system • Developed by 3M in 1990 • Added four subgroups attempting to describe Severity of Illness • Resulted in significant change to group logic • All age and CC distinctions are removed • Replaced by two groups • Severity of illness 1-4 • Risk of Mortality 1-4 • Subgroup assignment is based on the interaction between: • Secondary diagnosis • Age • Principle diagnosis • Presence of certain non-operative procedures
Intent of APR-DRG From 3M • Compare hospitals across wide range of resources and outcome measures • Evaluate the differences in inpatient mortality rate • Implement and support critical pathways • Identify continuous quality improvement projects • Form the basis of internal management and planning
APR DRG Classification Data Elements MDC Major Diagnostic Category APR DRG Assignment • Four Severity of Illness Subclasses • Minor • Moderate • Major • Extreme • Four Risk of Mortality Subclasses • Minor • Moderate • Major • Extreme
Age Oncology with Surgery NICU Babies Pre term PSYCH & GI Procedure PSYCH
Refine the Search 117 125 132 552
Get to the Details • DRG 117 Revision of Pacer (Few Patients) • 2 docs in SI Moderate • 1. avg cost $3,500 • 2 avg cost $12,300 – Higher utilization of resources Xrays, Labs LOS 5 days vs 3 • DRG 125 Heart Dz w/o MI & wCath • 7 docs in Group 3 • Avg Cost $4500 • 1 pt with cost $15,000 complication of Malignant Htn • DRG 132 Atherosclerosis with CC • Group 3 - 1 pt expired with long LOS and MR 4 • Group 2 – One physician Avg cost $12,500 vs, $3,000 • Medication profile • DRG 552 pacer w/o other major CV dx. • Group 2 two main physicians one uses more expensive device • Group 3 1 pt longer LOS
Refinement of the Relative WeightCalculation • Pattern of increasing Medical weights and lowering Surgical weights remains • Transition period mitigates swings in payment • Process: 1. Standardized charges were broken into 13 cost buckets 2. National Cost-to-Charge Ratio was used to convert charges into costs 3. Standard methodology to create the weights was used • Hospital Specific Relative Value (HSRV) methodology will NOT be used in FY 2007 • Independent contractor will evaluate charge compression with HSRV
Refinement of the Relative WeightCalculation Implementation of a cost-based weight methodology over a 3 year transition period • Year 1 – Weights based on a blend of: – 33% cost based weights – 67% charge based weights • Year 2 – Weights based on a blend of: – 67% cost based weights – 33% charge based weights • Year 3 – Weights based on 100% costs
Application of Final Rule DRG 148 (Major small and large bowel procedures w/cc) – CMS medical advisors felt the presence of major gastrointestinal diagnoses identifies patients with a higher level of severity.
