Hospital Contract Modernization: Business Rules

Transcription

1 Hospital Contract Modernization: Business Rules May 11 th, 2011 BlueCross BlueShield of Tennessee, Inc., an Independent Licensee of the BlueCross BlueShield Association. This document has been classified as public Information.

2 Course Objectives By the end of this training, you should understand: How payment weights were developed under APR-DRGs How BCBST will pay for regular cases How BCBST will pay for non-regular cases outliers, transfers, and short stays How we calculate revenue-neutral base rates The APR-DRG conversion package your facility has received

3 Agenda Background Brief review of APR-DRGs Developing APR-DRG relative weights BCBST s APR-DRG payment methodology Calculating revenue-neutral base rates BCBST s APR-DRG V27 Conversion Package for Facilities Next steps Questions?

4 Background

5 Background BCBST Commercial NtWrks P & S will be implemented for contract as the come due after July 1 st VSHP is implementing the APR-DRG methodology for all facilities effective July 1 st, 2011.

6 Why modernize Facility Contracts? Outdated Contracts particularly VSHP Outdated Relative Weights (VSHP) Payment may no longer correlate to the service. CMS stated in the April 13 th, 2007 Federal Register, our primary focus in maintaining the CMS DRG is to serve the Medicare population. We do not have the data or the expertise to maintain the DRS in clinical areas that are not related to the Medicare population. Payments are better aligned with resources. 6

7 Why All Patient Refined-DRGs {APR-DRGs}? Better address children services Patient age is considered Birth weight is considered for newborns Updates to the APR-DRG are more current than the CMS MS- DRG 7 - Senior adult (66 +) 6 - Older adult (51-65) 5 - Mature adult (36-50) BCBST enrolled age by line of business FY Young adult (19-35) 3 - Growth years (6-18) 2 - Pre-school / secondary visits and immunizations (3-5) 1 - Initial visits and immunizations (0-2) Age Group Medicaid Comm

8 Brief Review of APR-DRGs

9 APR-DRGs represent a Clinical Model APR-DRGs are a clinical, rather than statistical model. Each case is classified based upon its own unique attributes. APR-DRGs expand upon DRGs and AP-DRGs by assigning to each case a severity of illness (SOI) subclass. The severity of illness represents the extend of physical decomposition and/or the loss of organ function.

10 APR-DRG/Severity Assignment APR-DRG Assignment, Two Distinct Clinical-Based Steps 1. A patient is first assigned to a base APR-DRG (e.g.: APR 139, Other Pneumonia) based upon the primary diagnosis. 2. The patient is then separately assigned two distinct subclasses: severity of illness and risk of mortality. Each subclass has four possible assignment levels: 1 = Minor 3 = Major 2 = Moderate 4 = Extreme 10

11 Each APR-DRG/Severity combination is assigned a relative weight representative of the level of effort and resource consumption required to take care of the classified patient (case). This relative weight is the basis for payment for approximately 95% of all cases. 11

12 Developing APR-DRG Relative Weights

13 Changes in Business Rules due to APR-DRG Implementation Outlier methodology changes to a cost based outlier. Transfer payments have been expanded to include more discharge status codes. Short Stays have been set at 20% of the Network APR-DRG Specific average length of stay for select APR-DRGs in the event of patient death. Mother and Baby claims will be required to be billed separately. 13

14 Weight Development: Data Sets Used Claims with admission dates between July 1, 2009 and June 30, 2010 BCBST commercial and VSHP claims, excluding: Coordination of Benefit (COB) claims Claims that grouped as errors Claims without final status (no interim bills) <$250 Allowed $ except neonate and delivery Discharges that were transfers to another facility

15 Weight Development: Costs Used costs rather than charges for weight development Costs per 2009 Medicare Cost Report (MCR) (using the most recently available MCR as of the October 2010 CMS filing) Followed CMS as closely as possible for inclusions and exclusions (Schedule C) Excluded: Schedule A-8-2 CMS excluded physician expenses Direct medical education A-8 adjustments to expenses Non-reimbursable cost centers 15

16 Weight Development: Cost Mapping Costs are derived from line-level charges. Charges are converted to costs using facility/departmentalspecific Ratio of Cost to Charges (RCC). These line-level costs are aggregated into case costs. Each case is then grouped and assigned into one APR- DRG/SEV combination by facility. These facility APR/SEV costs become the basis for computing relative weights.

17 Weight Development: HSRV Method (Hospital Specific Relative Values) BCBST developed one set of APR-DRG Relative weights for the entire network. In general, weights are developed based on the average relative weight for all facilities for each APR-DRG and severity level combination. These results are adjusted using a statistical method to ensure that the costliness of any one facility does not create over- or underrepresentation.

18 Relative Weight Equation Relative Weight = APR/SEV Average Cost APR/SEV Average Cost for All Services Cost based Used both Commercial and VSHP populations APR/SEV cells with no cases used relationships a benchmark database with 20 million BCBS covered lives APR/SEV cells with small numbers of cases were compared to the benchmark to assess validity of results

19 Payment Under the APR-DRG System How We Calculate Reimbursement Under the APR-DRG System Assign APR-DRG/SEV and Weight Assign Case Class Apply Appropriate Payment Methodology Transfers Short Stays Outliers Regular Cases (hierarchical order)

20 Assigning Case Class We needed to establish a hierarchy so cases would pay correctly. Each case is assigned to a class from the following hierarchy: Transfers: Inpatient cases transferred from your hospital to another acute care hospital. Payment is per diem based. Short Stays: In the event of mortality, inpatient cases with a length of stay that is less than or equal to 20% of the APR-specific network average length of stay (rounded down), provided that such network average length of stay is equal to or greater than five days. Policy may not apply in APR-DRGs where the network average cost of an implantable exceeds 30% of the average cost for the case. Payment is per diem based. Outliers: Inpatient cases with a Hospital Case Cost that exceeds the Network Outlier Cost Threshold. Payment includes facility cost above threshold. Standard Cases: Any inpatient case other than an Transfer, Short Stay, or Outlier case. 20

21 BCBST s APR-DRG Payment Methodology

22 Payment Methodology: Transfer Case Example (Illustrative: does not represent final weights or thresholds) APR-DRG Severity level 190 Myocardial Infarc 1 Minor Base Rate $7,500 Length of Stay 3 APR/SEV Weight Facility Charge $12,000 Transfer Allowed: Facility Per Diem ($1,874) x LOS (3) = $5,622 Regular APR-DRG Allowed: Case Weight (0.8768) x Facility Standard Rate ($7,500) = $6,576 Final Transfer Case Allowed: Lesser of: Regular APR-DRG Allowed ($6,576) OR Transfer Allowed ($5,622) OR Charge ($12,000)= $5,622

23 Payment Methodology: Short Stay Case Example (Illustrative: does not represent final weights or thresholds) APR-DRG Severity level 136 Respiratory Malignancy 1 Minor APR/SEV Weight Base Rate $7,500 Discharge Disposition 20 Actual Length of Stay 2 Network average length of 11 stay 20% Network LOS (Short Stay threshold) 2 Network APR per diem $1,205 Facility Charge $4,500 Short Stay Allowed: Facility Per Diem ($1,205) x LOS (2) = $2,410

24 Payment Methodology: Outlier Case Example (Illustrative: does not represent final weights or thresholds) Outliers: Inpatient cases with a Hospital Case Cost that exceeds the Network Outlier Cost Threshold APR-DRG Severity level APR/SEV Weight Network Outlier Cost Threshold Network Length of Stay (Short Stay Threshold) Network average length of stay $ 510, $ 510, $ 510, $ 510, $ 959, $ 959, $ 959, $ 959, Cost per case will be calculated using facility-specific RCC from Worksheet C of each hospital s MCR (calculated initially using FY2009 MCR)

25 Payment Methodology: Outlier Case Example (continued) APR-DRG 225 Appendectomy Base Rate $7,500 Severity level 4 Extreme APR/SEV Weight Facility Charges $124,968 Facility Applicable RCC 0.29 Network Outlier Cost Threshold $25,836 Case Cost: Facility Charges ($124,968) x Facility Applicable RCC (0.29) = $36,241 Outlier Allowed: Case Cost ($36,241) Outlier Cost Threshold ($25,836) = $10,405 Regular APR-DRG Allowed: Case Weight (3.8046) x Facility Standard Rate ($7,500) = $28,535 Final Outlier Case Allowed: Regular APR-DRG Allowed ($28,535) + Outlier Allowed ($10,405) = $38,940

26 Payment Methodology: Regular Case Example (Illustrative: does not represent final weights or thresholds) APR-DRG Severity level 225 Appendectomy 2 Moderate APR/SEV Weight Facility Standard Rate $7,500 Facility Charge $11,300 Regular APR-DRG Allowed: Facility Standard Rate ($7,500) x APR/SEV weight (1.0132) = $7,599 Final Standard Allowed: Lesser of: Regular APR-DRG Allowed ($7,599) OR Charge ($11,300) = $7,599

27 Calculating Revenue Neutral Base Rates

28 Concepts 1. Cases are classified into one of four case types based upon the following hierarchy: Transfer Short Stay Outlier Regular case 2. Allowed dollars and APR-DRG weights from regular cases and the regular case portion of outlier cases are used to determine a base rate. Trend is added for mid-period contract changes. 3. Transfers and short stays are priced at the network APR per diem rate.

29 4. Projected outlier add-on dollars are considered passthrough in this equation due to the random occurrence of these types of cases. 5. Differences in projected allowed due to a change in the methodology for short stays and transfers will be adjustments to the base rate. 6. Revenue neutrality is accomplished at the product level: Commercial Network P and S, combined. VSHP TennCare, BlueCare, CoverTn, separately.

30 Example Revenue Neutral Impact Report* *Displayed for commercial only but will be distributed by product.

31 Data Period Allowed Cases are displayed by case type. The amount of trended current allowed is displayed by case type. Networks S and P (commercial) are shown separately and in total. Networks S and P are combined for budget neutrality.

32 Adjustments Trended allowed is adjusted (reduced) by the amount of the outlier addon and allowed for short stay and transfer cases (per diem cases). The result is the regular case allowed. Weights for regular cases and the regular portion of outlier cases are aggregated and displayed.

33 Pure Base Rate Base Rate Analysis Pure Base Rate $5, The regular case allowed divided by the regular case weights is the pure base rate. This is the base rate prior to adjustments for differences between the current and future payments for transfer and short stay cases. Pure Base Rate = Regular Case Allowed* / Regular Case Weights* *including the regular case portion of outlier payments

34 Pure Projected Allowed Regular cases (including the regular case payment for outlier cases) are re-priced using the pure base rate. Projected per diem payments for transfers and short stays are added to the regular cases*. The pure projected allowed represents the amount of allowed that would have been paid without an adjustment for the differences in per diem cases. *Projected per diem payments are subject to the lesser of case payment or per diem when re-priced using the pure base rate.

35 Per Diem Adjustments The payment for transfers and short stay eligible cases will be a cost based per diem. Differences between the data period trended allowed and the projected transfer and short stay allowed will be adjustments to the base rate. In the revenue neutral calculation, the per diem payment will be capped at the lesser of calculated per diem or the regular case payment (derived by the APR/SEV assignment and pure base rate). Applying the final projected lesser of case payment or per diem decision cannot be part of the base rate formula due to the fact that this decision requires the final base rate. Because of this, projected individual case payments may deviate slightly from the budget neutral allowed (this deviation can calculate as more allowed or less allowed depending on the case attributes). Overall, BCBST projects.1% in allowed over revenue neutral.

36 The projected difference in the per diem payment and the data period allowed due to the change in methodology can be calculated and is credited in the base rate calculation: For Short Stays and Transfer Cases: Adjustment to base rate = [Trended Current Allowed Pure / Regular Case Weights Projected Allowed]

37 Final Base Rate Together, the pure base rate and the adjustment for per diem shortfalls equal the final base rate. Network P and S differential base rates are calculated based upon a weighted average of regular case weights and cases.

38 Revenue Neutrality After the final base rate is determined, all regular cases and regular case payments for outliers are re-priced. Per diem payments and the outlier add-on portion of outlier cases are added and budget neutrality is achieved for the revenue neutral data period.

39 Variance Variance in total dollars should be -0-. For commercial contracts, variance in total dollars is -0- for combined Networks S and P. Variance in total dollars is possible between case types.

40 Re-priced Claims with Final Base Rate Applying the final projected lesser of case payment or per diem decision may yield variation from budget neutral. In this example, the lesser of case payment or per diem yielded a $50 difference. Overall, BCBST projects.1% in allowed over revenue neutral.

41 BCBST s APR-DRG V27 Conversion Package for Facilities

42 The BCBST conversion package contains the following: Contract Amendment Deliver by the Field Reps Revenue Neutral Impact Report (RNI Report) In the process of being distribute by . RNI Report Supporting Documentation: Calculating Revenue Neutral Regular Base Rates Under the APR-DRG V27.0 System have already been distributed. Guide to Understanding the RNI Report Annotated Example of the RNI Report Weights, Thresholds, Per Diems Data Period Claims and File Description have already been distributed.

43 Next Steps

44 Questions?