Introduction:
I have been inspired recently by various comments on the DRG subject ranging from "I don't believe in DRG's" to "I don't know what MedPar is therefore it is not scientific…" The information in this post is just a high level and NOT a literature review – just sufficient to get the conversation going – also any volunteers in writing please reach out to me – especially those who want to go after the FIALCP designation – contributing the literature is on the list of criteria and I am happy to work with anyone. Co presentations as well.
Three background references:
A nice summary of more current DRG discussion: https://www.cms.gov/icd10m/version37-fullcode-cms/fullcode_cms/Design_and_development_of_the_Diagnosis_Related_Group_(DRGs).pdf
Another reference point on the history of DRG's used as a price setting mechanism for inpatient hospitals: https://www.researchgate.net/publication/286656118_Origins_of_DRGs_in_the_United_States_A_technical_political_and_cultural_story
A handy non academic history of coding just for appreciation: http://www.mb-guide.org/history-of-medical-coding.html especially the history of diagnosis codes – just to appreciate that the concept of coding has been around for a while.
MedPar – Medicare Provider Analysis and Review
What is it? Effective October 1, 1983, Medicare implemented a prospective payment system (PPS) for reimbursing inpatient hospital operating costs. The PPS system is referred to as DRG's – Diagnostic Related Groups. My simple explanation is that a DRG is a list of diagnoses with associated procedures, that are related to each other, and then assigned to a group. A complex process is involved is the $ associated with each DRG group – because of how it is collected it is reliable.
Why is MedPar data reliable: it is collected by 837i claims data (facility claim forms) see post on routing of charge capture data. It is contained in box 71 "PPS code" on the claim form.
What does the raw data contain?
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareFeeforSvcPartsAB/Downloads/DRG16.pdf
The following data points: For headers directly from the CMS Medpar Data for the US : DRG group number; Total Charges; Covered Charges; Medicare Reimbursement; Total Days; Number of Discharges and Average Total Days
I take that data in excel and add a few columns that allow me to take a deeper dive.
DRG group number: the year of the data; Total Charges; Covered Charges; Medicare Reimbursement; Total Days; Charge Per Diem; Paid Per Diem; Number Of Discharges; Ave Per Case Charges; Ave Contracted Payment; Average total Days; Description of DRG group.
I have attached a table in word to show how I extrapolate it. (this is similar to what sources like find a code do etc.)
Please note the following:
Data repositories that reference inpatient cost data are getting the information from the MedPar files. Take note the original source IS NOT BY ZIP CODE. It is not relevant – the $ is reconciled against many factors including the providers cost report. That aside, Fair health, many workers comp schedules, VA data if you dig deep or just ask someone "Do you use MedPar data" they will say yes. Therefore, MedPar is the original source of inpatient charge data. That being said, some of these providers of data have you plug in a zip code and they apply some formula on top of the MedPar raw data.
How to use?
When analyzing a prior bill it is a benchmark, when creating a LCP isolate the appropriate DRG group to get to the price. It is simple.
See the attached illustrative worksheet
Most DRG groups can be isolated to three categories without complications; with complications; with major complications. Yes the most recent data is from 2016 – just document it and let an economist bring it forward.
Where to land? NO CC, CC, Major CC selections
A subject for another post.
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Rebecca Busch
CEO
rebecca@mbaaudit.comWestmont, IL United States
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