Or. Admin. R. 410-125-0141 - DRG Rate Methodology
Current through Register Vol. 60, No. 12, December 1, 2021
(1)
Diagnosis Related Groups:
(a) Diagnosis
Related Groups (DRG) is a system of classification of diagnoses and procedures
based on the International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM);
(b) The
DRG classification methodology assigns a DRG category to each inpatient
service, based on the patient's diagnoses, age, procedures performed, length of
stay, and discharge status.
(2) Medicare Grouper: The Medicare Grouper is
the software used to assign an individual claim to a DRG category. Medicare
revises the Grouper program each year in October. The Division uses the
Medicare Grouper program in the assignment of inpatient hospital claims. The
most recent version of the Medicare grouper will be installed each year within
90 days of the date it is implemented by Medicare. Where better assignment of
claims is achieved through changes to the grouper logic, the Division may
modify the logic of the grouper program. The Division will work with
representatives of hospitals that may be affected by grouper logic changes in
reaching a cooperative decision regarding changes. The Division DRG weight
tables can be found on the Division web site:
(a) Acute Care Hospitals larger than fifty
beds are considered DRG hospitals and reimbursed using Medicare's MS-DRG
grouper;
(b) Hospitals enrolled as
long-term acute care (LTAC) are reimbursed using Medicare's MS-LTC DRG
grouper.
(3) DRG Relative
Weights:
(a) Relative weights are a measure
of the relative resources required in the treatment of the average case falling
within a specific DRG category;
(b)
For most DRGs, the Division establishes a relative weight based on federal
Medicare DRG weights. For state-specific Rehabilitation, Neonate, and
Adolescent Psychiatric DRGs, Oregon Title XIX fee-for-service claims history is
used. To determine whether enough claims exist to establish a reasonable weight
for each state-specific Rehabilitation, Neonate, and Adolescent Psychiatric
DRG, the Division uses the following methodology: Using the formula N = where Z
= 1.15 (a 75 percent confidence level), S is the standard deviation, and R = 10
percent of the mean. The Division determines the minimum number of claims
required to set a stable weight for each DRG (N must be at least 5). For
state-specific Rehabilitation, Neonate, and Adolescent Psychiatric DRGs lacking
sufficient volume, the Division sets a relative weight using:
(A) Division non-Title XIX claims data;
or
(B) Data from other sources
expected to reflect a population similar to the Division Title XIX
caseload;
(c) When a test
shows at the 90 percent confidence level that an externally derived weight is
not representative of the average cost of services provided to the Division
Title XIX population in that DRG, the weight derived from the Division Title
XIX claims history is used instead of the externally derived weight for that
DRG;
(d) Those relative weights
based on Federal Medicare DRG weights will be established when changes are made
to the DRG Grouper logic. State-specific relative weights shall be adjusted, as
needed, as determined by the Division. When relative weights are recalculated,
the overall Case Mix Index (CMI) will be kept constant. Reweighing of DRGs or
the addition or modification of the grouper logic will not result in a
reduction of overall payments or total relative weights.
(4) Case Mix Index: The hospital-specific
case mix index is the total of all relative weights for all services provided
by a hospital during a period, divided by the number of discharges.
(5) Unit Value: Hospitals larger than fifty
beds or enrolled as a long-term acute care (LTAC) hospital are reimbursed using
the Diagnosis Related Grouper (DRG) as described in section (2). Effective for
services on or after:
(a) August 15, 2005,
the operating unit payment is 100 percent of 2004 Medicare and related data
published in Federal Register/Vol. 68, No. 148, August 1, 2003. The unit value
is also referred to as the operating unit per discharge;
(b) May 1, 2009, the operating unit payment
is 108.5 percent of the 2004 Medicare and related data published in Federal
Register/Vol. 68, No. 148, August 1, 2003. The unit value is also referred to
as the operating unit per discharge;
(c) Effective October 1, 2009 the operating
unit payment is 100 percent of the most recent version of the Medicare base
payment rates. The Division will revise the base payment rates each year in
October when Medicare posts the rates.
(6) DRG Payment: The DRG payment to each
Oregon DRG hospital or LTAC hospital is calculated by adding the unit value to
the capital amount, then multiplied by the claim assigned DRG relative weight
(out-of-state hospitals do not receive the capital amount).
(7) DRG Hospital Cost Outlier Payments:
(a) Cost outlier payments are an additional
payment made to in-state and contiguous hospitals for exceptionally costly
services or exceptionally long lengths of stay provided to Title XIX and SF
(State Facility) clients;
(b) For
dates of service on and after March 1, 2004, the calculation to determine the
cost outlier payment for Oregon DRG hospitals is as follows:
(A) Non-covered services (such as ambulance
charges) are deducted from billed charges;
(B) The remaining billed charges are
converted to hospital-specific costs using the hospital's cost-to-charge ratio
derived from the most recent audited Medicare cost report and adjusted to the
Medicaid caseload;
(C) If the
hospital's net costs as determined above are greater than 270 percent of the
DRG payment for the admission and are greater than $25,000, an additional cost
outlier payment is made;
(D) Costs
which exceed the threshold ($25,000 or 270 percent of the DRG payment,
whichever is greater) are reimbursed using the following formula:
(i) Billed charges less non-covered charges,
multiplied by;
(ii)
Hospital-specific cost-to-charge ratio equals;
(iii) Net Costs, minus;
(iv) 270 percent of the DRG or $25,000
(whichever is greater), equals;
(v)
Outlier Costs, multiplied by;
(vi)
Cost Outlier Percentage, (cost outlier percentage is 50 percent),
equals;
(vii) Cost Outlier
Payment;
(E) Third party
reimbursements are deducted from the Division calculation of the payable
amount;
(F) When hospital cost
reports are audited during the cost settlement process, an adjustment will be
made to cost outlier payments to reflect the actual Medicaid hospital-specific
cost-to-charge ratio during the time cost outlier claims were incurred. The
cost-to-charge ratio in effect for that period of time will be determined from
the audited Medicare Cost Report and cost statement template, adjusted to
reflect the Medicaid mix of services.
(8) LTAC Short Stay Outliers: Occurs when a
covered length of stay is between one day and up to and including 5/6ths of the
average length of stay for the LTC-DRG grouping. The Short Stay Outlier payment
for the hospital will be the lesser of:
(a)
Per Diem for Short Stay Outlier Calculation:
(A) MS-LTC DRG payment, divided by;
(B) Geometric Length of Stay (GLOS,)
multiplied by;
(C) Actual length of
stay, multiplied by;
(D) 120
percent equals;
(E) Per Diem
payment;
(b) Full MS-LTC
DRG payment.
(9) LTAC
High Cost Outliers: Are an additional payment when the estimated cost of a
claim exceeds the outlier threshold (LTC DRG payment plus a fixed loss amount):
(a) The fixed loss amount is published
annually by Medicare;
(b) If the
estimated cost of a claim is greater than the outlier threshold, an additional
payment is added to the LTC DRG payment;
(c) The outlier payment is 80 percent of the
difference between the estimated cost of the claim and the outlier threshold
(LTC DRG payment plus the fixed loss amount);
(d) The estimated cost of the claim is
calculated by multiplying the Division's allowable charge on the claim by the
hospital's cost-to-charge ratio.
(10) Capital:
(a) The capital payment is a reimbursement to
in-state hospitals for capital costs associated with the delivery of services
to Title XIX, non-Medicare persons. The Division uses the Medicare definition
and calculation of capital costs. These costs are taken from the Hospital
Statement of Reimbursable Cost (Medicare Report);
(b) For the dates of service on and after
March 1, 2004, the Capital cost per discharge is 100 percent of the published
Medicare capital rate for fiscal year 2004, see section (5). The capital cost
is added to the Unit Value and paid per discharge;
(c) Effective October 1, 2009, the Capital
cost per discharge is one 100 percent of the current year Medicare capital rate
and updated every October thereafter, see section (5). The capital cost is
added to the Unit Value and paid per discharge.
(11) Direct Medical Education:
(a) The direct medical education payment is a
reimbursement to in-state hospitals for direct medical education costs
associated with the delivery of services to Title XIX eligible persons. The
Division uses the Medicare definition and calculation of direct medical
education costs. These costs are taken from the Hospital Statement of
Reimbursable Cost (Medicare Report);
(b) Direct medical education cost per
discharge is calculated as follows:
(A) The
direct medical education cost proportional to the number of Title XIX
non-Medicare discharges during the period from July 1, 1986, through June 30,
1987, are divided by the number of Title XIX non-Medicare discharges. This is
the Title XIX direct medical education cost per discharge;
(B) The Title XIX direct medical education
cost per discharge for this period is inflated forward to January 1, 1992,
using the compounded HCFA-DRI market basket adjustment;
(c) Direct medical education payment per
discharge:
(A) The number of Title XIX
non-Medicare discharges from each hospital for the quarterly period is
multiplied by the inflated Title XIX cost per discharge. This determines the
current quarter's Direct Medical Education costs. This amount is then
multiplied by 85 percent. Payment is made within thirty days of the end of the
quarter;
(B) The Direct Medical
Education Payment per Discharge will be adjusted at an inflation factor
determined by the Department in consideration of inflationary trends, hospital
productivity, and other relevant factors.
(C) Notwithstanding section (9) of this rule,
this subsection becomes effective for dates of service:
(i) On July 1, 2006, and thereafter direct
medical education payments will not be made to hospitals; and
(ii) On July 1, 2008, and thereafter direct
medical education payments will be made to hospitals, but will not be operative
as the basis for payments until the Division determines all necessary federal
approvals have been obtained.
(12) Indirect Medical Education:
(a) The indirect medical education payment is
a reimbursement made to in-state hospitals for indirect medical education costs
associated with the delivery of services to Title XIX non-Medicare
clients;
(b) Indirect medical
education costs are those indirect costs identified by Medicare as resulting
from the effect of teaching activity on operating costs;
(c) Indirect medical education payments are
made to in-state hospitals determined by Medicare to be eligible for such
payments. The indirect medical education factor in use by Medicare for each of
these eligible hospitals at the beginning of the state's fiscal year is the
Division indirect medical education factor. This factor is used for the entire
Oregon Fiscal Year;
(d) For dates of
service on and after March 1, 2004, the calculation for the Indirect Medical
Education quarterly payment is as follows: Total paid discharges during the
quarter multiplied by the Case Mix Index, multiplied by the hospital-specific
February 29, 2004, Unit Value, multiplied by the Indirect Factor, equals the
Indirect Medical Education Payment;
(e) Effective October 1, 2009, the
calculation of the Indirect Medical Education quarterly payment is as follows:
Total paid discharges during the quarter multiplied by the Case Mix Index,
multiplied by the hospital unit value, see (5)(c), multiplied by the indirect
factor, equals the Indirect Medical Education Payment;
(f) This determines the current quarter's
Indirect Medical Education Payment. Indirect medical education payments are
made quarterly to each eligible hospital. Payment for indirect medical
education costs will be made within thirty days of the end of the
quarter;
(g) Notwithstanding
section (10) of this rule, this subsection becomes effective for dates of
service:
(A) On July 1, 2006, and thereafter
Indirect Medical Education payment will not be made to hospitals; and
(B) On July 1, 2008, and thereafter Indirect
Medical Education payments will be made to hospitals, but will not be operative
as the basis for payments until the Division determines all necessary federal
approvals have been obtained.
Notes
Publications: Publications referenced are available from the agency.
Stat. Auth.: ORS 413.042
Stats. Implemented: ORS 414.065
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