Grouper Models and Development of DRGs, DCGS, ETGs

Question 1

Reasons for using commercially-available grouper models (3)

Answer 1

Why these models may be preferred over building your own algorithm:

1. Building algorithms from scratch requires a considerable amount of work.
2. Models must be maintaied to accomadate new codes, which requires even more work.
3. Commercially-available models are accessible to many users. Providers and plans often require that payments be based on a model that is available for review and validation.

Question 2

Common feature of Medicare prospective payment systems (7)

Answer 2

1. A system of averages - providers cannot expect to make a profit on each case, but efficient providers can make a reasonable return on average.
2. Increase complexity - DRFs are more complicated than a system based on per diem payments.
3. Relative weights - associated with each patient group to reflect the average resources used by efficient providers.
   - weights based on estiamted admissions cost
4. Conversion factor (base price) - the dollar amount for a unit of services. Is multiplied by the relative weight to determine payment.
   
   • Provider payment = base price x relative weight
5. Outliers - unusual cases that require above-average resouces and receive extra payments
6. Updates - the conversion factor and relative weights are adjusted annually to reflect new thecnologies and changing practice patterns.
7. Access and quality - policymakers monitor PPSs and survey patients to ensure that beneficiaries have adquate access to high quality care and that providers are compensated adquately.

Question 3

Challenges with patient classification systems based on coding systems (4)

Answer 3

1. Need for new DRG - due to new diseases and new procedures
2. ICD coding - some codes may not be sufficiently precise as diseases and procedures are refined.
3. Upcoding - providers may be tempted to exaggerate a patient’s secondary diagnoses to get paid more.
4. New coding systems - adoptin the new ICD-10 systems will be a major challenge for hosptials and CMS.

Question 4

Private Insurer Payment Systems (2)

Answer 4

1. Generally, hospital payment is based on discounted charges. Hybrid DRG systems - outlier payments based on a discounted FFS schedule.
2. DRGs are used for provider negotiation

Question 5

Development of relative risk scores in the DxCG model (4)

Answer 5

1. Weights (i.e coefficients) represent the resouce utilization of the member are assigned to the HCCs.
2. Weights are convered to a relative risk score (expected cost for each condition category/expected cost of poulation)
3. Weights are added to calculate the total resouce utilization (risk score)
4. Less severe condition categories (CC) are given 0 risk score (0 coefficient) if a member has more than one CC within the diesease hierarchy.

Question 6

DxCG model formula

Answer 6

C = a + sum of (B x K)

a = intercept
B  = Coefficients of the ind variables
K = independent explanatory variables (Age/gender, HCC)
C = Dependent variable (expected claim cost)

Question 7

Types of DxCG models (2)

Answer 7

1. Concurrent - normalizes cost based on services and conditions for the current period.
2. Prospective - preducts future costs based on conditions from a prior period.

Question 8

Forms of Episode Risk Groups (ERG) Model

Answer 8

ERG method mapts ETG based classes and severity into ERG markers. ERGs include similar conditions with similar risk based on Major Practice Categories (MPC)

Prospective RS = Age/Sex + sum of (weight x ERG)
Retrospective RX = sum of (weight x ERG)

Question 9

Episode Treatment Groups (ETGs) Methodology (4)

Answer 9

1. ETG is assigned to and episode of care (i.e. depression).
2. All services related to that episode are grouped ino the ETG.
3. Anchor record based on service type is established for the episode.
   
   • service type includes clinician record (E&M, surger)
   • ancillary records (i.e. drugs, labs) are grouped with another ancor record via clinical guildines
4. ETGs reflect co-morbities and severity