WASHINGTON STATE
HEALTH CARE AUTHORITY
WSHA Rebasing Task Force Meeting
July 15, 2013
TABLE OF CONTENTS
Section 1 »
Updates to Inpatient Models
Section 2 »
Inpatient Specialty Service Per Diems
Section 3 »
Outpatient Model Results
Section 4 »
Next Steps
Page 2
UPDATES TO INPATIENT MODELS
UPDATES TO INPATIENT MODELS
Inpatient Model Changes
»
»
Models use 3M APR-DRG “standard” national weights
All Transplant/CUP/Bariatric services and psychiatric/LTAC provider
claims with acute DRGs carved out of the DRG system
» Direct Medical Education portion of Medical Education adjustments
revised to match the current HCA outpatient GME adjustments
› Inpatient DME adjustments have not changed since 2007
› HCA regularly updates the outpatient GME adjustment (based on direct medical
education costs as a percent of total costs) using the most recently available
Medicare cost report
› Inpatient DME adjustments follow the same methodology as the outpatient GME
adjustment
Page 4
UPDATES TO INPATIENT MODELS
Pros and Cons of “Standard” versus “HSRV” National Weights
Approach
Standard
Pros
Cons
•
Slightly better correlation to Washington specific
weights
•
Method relies on provider submitted
charges, and does not account for
differences in individual hospital charge
master values, which may distort weights if
individual provider services tend to dominate
few DRG classifications
•
Method for calculating more consistent with
historical HCA method
•
Easier to understand, explain and replicate
•
Does not rely on additional statistical assumptions
•
Not materially different than HSRV method
•
Recommended by 3M
•
Difficult to understand, explain and replicate
•
High correlation to Washington specific weights
•
•
Weights have been adjusted to remove impact of
hospitals with significant differences in charge
master values – to more closely approximate results
had they been based on average costs
If charges within hospitals are not
proportionately related to their costs, the
methodology may not improve the
correlation of weights to costs of services
when compared to the Standard method
•
Not materially different than Standard method
HSRV
Page 5
UPDATES TO INPATIENT MODELS
Inpatient Model Changes – Outlier Assumptions
»
Outlier fixed loss threshold set to $50,000 to achieve approximately
11-12% outlier payments as a percent of total
»
Handout 1: Outlier marginal cost factor of 95% applied to patients
age 17 and under (80% for all other services)
»
Handout 2: Outlier marginal cost factor of 95% applied to claims
with severity of illness (SOI) level of 3 or 4 (80% for all other
services)
Page 6
UPDATES TO INPATIENT MODELS
Pros and Cons of “SOI-Tiered” versus “Service-Tiered” MCF
Approach
SOI-Tiered
Marginal Cost
Factor (95% for
SOI 3&4, 80%
for SOI 1&2)
Service-Tiered
Marginal Cost
Factor (95% for
Peds, 90% for
Burns, 80% for
all other)
Pros
Cons
•
Generally increases outlier payments to hospitals that
experience higher outliers
•
Better consideration of higher variation in the costs of
services that group to higher SOI classifications
•
Partially mitigates financial risk associated with caring for
highly complex cases to all hospitals – consistent with
creating appropriate incentives for maintaining or improving
access to care
•
Does not attribute opportunity to specific provider types –
any hospital with highly complex cases may be eligible for
enhanced MCF
•
Consistent with enhancing payment for pediatric and
neonatal services – and maintaining or improving access to
care
•
Partially mitigates financial risk associated with caring for
complex burn cases, and for hospitals that specialize in
pediatric or neonatal service lines
Page 7
•
Relies on 3M SOI determination
•
Does not target enhanced outlier
payments to the most complex cases,
which tend to be less homogeneous
relative to resource requirements –
when compared to the SOI-tiered
approach
UPDATES TO INPATIENT MODELS
Inpatient Model Changes – Inlier Assumptions
»
Charge cap on claim payments (modeled payments limited to billed
charges, inflated to SFY 2014)
»
Latest models (along with prior model versions) include an “inlier”
adjustment, which is like an inverse outlier payment:
Inlier threshold = claim costs + $50,000
If the claim payment exceeds the Inlier threshold, then the inlier reduction =
(Claim payment – Inlier threshold) * Marginal cost factor
Page 8
INPATIENT SPECIALTY SERVICE
PER DIEMS
Page 9
INPATIENT SPECIALTY SERVICE PER DIEMS
Current System Inpatient Specialty Service Per Diems
»
Under the current system, psychiatric per diem rates are based on the
greater of provider specific per diem rate and the statewide average
cost per day
› Provider specific rates for freestanding/DPU psych hospitals and non-DPU
hospitals with at least 200 days based on the provider-specific average Medicaid
cost per day, adjusted for wage index, IME and DME
› Rates for non-DPU hospitals with less than 200 days based on the weighted
average Medicaid cost per day for the providers listed above, adjusted for wage
index, IME and DME
»
Under the current system, rehabilitation and substance abuse per
diem rates are based on statewide standardized amounts, adjusted for
wage index, IME and DME
Page 10
INPATIENT SPECIALTY SERVICE PER DIEMS
Inpatient Model Specialty Service Per Diems
»
Inpatient models currently contain a baseline approach for psychiatric,
rehabilitation and substance abuse services using standardized per
diem rates adjusted for wage index (without further adjustments)
› For evaluation purposes only – not HCA’s recommended approach
»
Options for additional adjustments:
› Medical education
› Provider costs
› Tiers for freestanding vs. DPU vs. non-DPU providers
Page 11
OUTPATIENT MODEL RESULTS
Page 12
OUTPATIENT MODEL
Potential Outpatient Model Adjustments
»
Model currently does not contain adjustments except for teaching
and wage index
»
Potential service level policy adjusters include:
› Drug EAPG or high cost drug/chemotherapy adjustment
› Ancillary packaging adjustments
Page 13
NEXT STEPS
Page 14
NEXT STEPS
»
Inpatient model:
› Specialty per diem rates
› Out-of-state hospital approach
› Coding and documentation
improvement
»
Page 15
Outpatient model:
› Potential policy adjusters
› DME/therapy approach
› Excluded services