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AHCCCS Transition to Inpatient DRG Payment Methodology

AHCCCS Transition to Inpatient DRG Payment Methodology. Authority. Arizona Revised Statutes Section 1. 36-2903.01.G.12 :

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AHCCCS Transition to Inpatient DRG Payment Methodology

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  1. AHCCCS Transition to Inpatient DRG Payment Methodology

  2. Authority • Arizona Revised Statutes Section 1. 36-2903.01.G.12: • “The administration shall obtain legislative approval before adopting a hospital reimbursement methodology consistent with title XIX of the social security act for inpatient dates of service on and after October 1, 2013.” • AHCCCS will present a summary report recommending a new hospital reimbursement methodology to the Arizona Legislature early in 2013.

  3. Model Selection to Implementation

  4. Guiding Principles

  5. Design Considerations

  6. Benefits of APR-DRGs Enhances Homogeneity of Classifications – Superior Measurement of Resources Enhances Recognition of Resources Necessary for High Severity Patients Enhances Recognition of Acuity Related to Specialty Hospitals and Children’s Hospitals Incorporates Age into Classification Process – Critical for Neonatal Cases Facilitates Measurement of Potentially Preventable Readmissions and Complications Reduces Occurrences of Outlier Cases

  7. Workgroup Purpose • Workgroup is to Provide AHCCCS with technical assistance and input on designing a new inpatient hospital payment methodology for Medicaid system as a whole • Workgroup can communicate questions/concerns from the provider community and inform community of project status • Please note: • Ultimately AHCCCS, as the single state Medicaid agency, has responsibility for all rate methodology decisions within the context of legislative mandates • Decisions related to overall system funding levels are outside of the scope of this Workgroup

  8. Project Overview Stakeholder Input is Key to Successful Design Process

  9. Pricing Considerations

  10. Pricing Considerations

  11. Pricing Considerations

  12. Implementation Considerations

  13. Typical Pricing Formula Claim Payment APR-DRG Base Payment Outlier Payment (If claim qualifies) = + APR-DRG Base Payment APR-DRG Base Rate Hospital Relative Weight Optional Policy Adjustment Factors = X X Note: DRG base payment is sometimes reduced on transfer and partial eligibility claims.

  14. Typical Pricing Formula Claim Payment APR-DRG Base Payment Outlier Payment (If claim qualifies) = + ( ) Outlier Payment (if claim qualifies) Loss Threshold Estimated Hospital Loss Marginal Cost Factor - x = Note: Outlier payments are only applied if hospital loss (or potentially hospital gain) is greater than the outlier threshold. Page 14

  15. Questions? Questions and comments may be addressed to Jean Ellen Schulik at JeanEllen.Schulik@azahcccs.gov (602) 417-4335 DRG Project Website: http://www.azahcccs.gov/commercial/ ProviderBilling/DRGBasedPayments.aspx

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