Explain the steps in calculating total drg payment

Case Mix Management

CMI usage and calculations

By: Deborah Balentine M.Ed, RHIA, CCS-P

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What is a Case-Mix?

Age
Gender
Type of Insurance
Diagnosis
Risk Factors
Treatments received
Resources used
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The case mix of a patient population is a description of that population based on any number of the following characteristics:

Purposes

To determine reimbursement.
DRGs
APCS
MPFS
To describe a population being served.
To identify differences in practice patterns or coding complexity.
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Case-mix methodologies are used for a number of purposes with the most common usage being for reimbursement. Case-mix methodology is used to determine relative weights and base payments for DRGs and APCs. Case-mix methodology is used with the MPFS when calculating the Geographic Practice Cost Index (GCPI).

Case-mix methodology can be used for statistical purposes to describe or identify a particular patient population.

Case-mix methodology can also be used to identify differences in coding practice patterns and the complexity of the coding because surgical cases are generally more resource extensive than medical cases.

Severity of Illness Classifications

Extent of the disease
Risk of mortality
Need for intervention
Urgency of care
Intensity of resources
Difficulty of treatment
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The most common case mix methodology is to group cases by diagnoses and procedures. The major criticism to this type of grouping is that the diagnoses and procedures do not accurately measure the severity of an illness. The APR-DRG case-mix methodology was developed to address those concerns.

Severity of Illness Classfications

Adjusted Clinical Groups
National Association of Children’s Hospital and Related Institutions (NACHRI)
Medical Outcomes Study Short Form Health Survey
Atlas System
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Severity of Illness Classifications includes the following:

Adjusted Clinical Groups - classifies individuals into groups that are likely to have similar resource requirements.

National Association of Children’s Hospitals and Related Institutions (NACHRI) - classifies diseases based on the progression of the disease, the anticipated course of the disease, and treatment goals.

Medical Outcomes Study Short Form Health Survey - classifies by severity of the disease and health status measures. Also uses patient feedback to obtain a total picture of the disease process.

Atlas System - uses information abstracted from the medical record from all points of care including ancillary service data excluding diagnosis data.

Diagnostic/Procedural/Severity Classifications

Resource Utilization Groups (RUGs)
Functional Related Group System (IRFPPS)
Home Health Resource Grouping System (HHPPS)
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Some case mix classifications use a combination of diagnoses and procedures and severity of illness in their methodology. These systems are:

Resource Utilization Groups - used in the skilled nursing facility prospective payment system (SNFPPS). Includes clinical factors such as cognition, sensory deficits and psychological well-being

Functional Related Group System - used in the inpatient rehabilitation prospective payment system (IRFPPS). Includes clinical factors such as activities of daily living (ADLs) and spinal cord injury data.

Home Health Resource Grouping System - used in the home health prospective payment system (HHPPS). Includes measuring the extent of pain, respiratory status, and integrity of the Integumentary system. Also uses social factors such as residential and caregiver demographics.

Risk Adjustment

Age and gender adjustments
Clinical risk adjustments
Situation-specific adjustments
Adjustments for specific clinical conditions
Adjustments by specialty type
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Any method used to compare the severity of illness in one group of patients in comparison to the severity of illness in another group of patients. Used make a fair comparison of diverse populations and treatment patterns. Types of risk adjustments include:

Case-Mix Index

Classification by Disease Conditions and/or Procedures
Determines patterns of resource use
Used to determine anticipated reimbursement.
Comparison to other facilities
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The most commonly used case mix index uses disease staging as the basis for classifying patient with similar conditions to determine patterns of resource use. This type of case mix is also used by a facility to determine anticipated reimbursement and to compare the results to other facilities.

The case mix index is the average of the relative weights of all cases treated at a given facility. The theoretical average CMI is 1.000. CMI’s over 1.000 signify more complex cases and CMI’s less than 1.000 signify less complex cases. Surgical cases have a higher CMI than medical cases.

Factors that influence Case-Mix

Changes in Relative Weights
Changes in Services
Accuracy in Documentation and Coding
Accuracy in DRG/APC assignment
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Factors that influence a facility’s case mix index include:

Changes made in relative weight values

Changes in the type of services offered or provided by the facility

Accuracy of documentation and coding in DRG or APC assignment

Calculating Case-Mix Indexes

Calculating Total CMS Relative Weight
Calculating Case Mix Index
Calculating Medicare Payment
Determining the Highest Relative Weight
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Case Mix Analysis begins with the calculation of the Case Mix Index. The Case-Mix Index is the average of the relative weights of all cases treated at a given facility or by a given physician. The Case Mix index average is set at 1.0000.

Calculating Case-Mix Index

Services to be measured
Relative Weight
# of Cases
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When calculating the Case Mix Index for a group of procedures, you will need the following information:

Services to be measured – Most facilities calculate their case-mix index by using the most resource extensive procedures or by the reason for the admission (PDx).

Relative Weights are determined by Medicare or other third-party payers

# of Cases or Patients served for a particular service or procedure.

Case Mix Formulas

Calculating Total CMS Relative Weights
Calculating Medicare/Third-Party Payment
Calculating Case-Mix Index
Determining the Highest Relative Weight for a group of cases
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Calculating Total CMS Relative Weight – Multiply the “CMS Relative Weight” by the total number of cases (patients) in the DRG group.

Calculating Medicare Payment – Multiply the reimbursement per case by the number of cases performed

Calculating Case Mix Index - Add up the total number of CMS Relative Weights and divide by the total number of patients.

Determining the Highest Relative Weight – The highest relative weight is the DRG with the highest total relative weight.

Calculating Total CMS Relative Weight

Multiply the “CMS Relative Weight” by the total number of cases (patients) in the DRG group

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Example One

A facility has 29 Medicare cases that are assigned to DRG 69 which has a relative weight of 1.0005. What is the Total Relative Weight for the cases?

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Answer

29.0145

1.0005 x 29

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Example Two

A facility has 15 Medicare cases that are assigned to DRG 117 which has a relative weight of 0.7789. What is the Total Relative Weight for all of the cases?

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Answer

11.6835

0.7789 x 15

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Calculating Medicare Payment

Multiply the reimbursement per case by the number of cases performed

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Example Three

A facility has 22 Medicare cases which are reimbursed at $6,175 per case.

What is the total Medicare

reimbursement for all of the cases?

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Answer

$135,850.00

$6,175 x 22

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Example Four

A facility has 59 Medicare cases that are assigned to DRG 175 which has a relative weight of 0.9557.

If the hospital PPS rate is $4,200, what is the total reimbursement for all of the cases?

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This calculation sometimes requires a second step in which you must determine the DRG payment first

Answer

$236,822.46

Step One: Calculate the reimbursement per case

0.9557 x $4,200 (PPS rate) = $4,013.94

Step Two: Multiply by the number of cases

$4,013.94 x 59 = $236,822.46

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Calculating Case Mix Index

The total number of CMS Relative Weights divided by the total number of patients served.

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Example Five

The top ten DRG surgical procedures performed by a facility have a total CMS Relative Weight of 45.8775.

If the total number of patients served is 29, what is the Case-Mix Index for the facility?

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Answer

1.5819

44.8775 / 29 = 1.5819

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Example Six

The top ten DRG medical procedures performed by a facility have a total CMS Relative Weight of 23.6651

If the number of patients served is 55, what is the Case-Mix Index for the facility?

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Answer

0.4302

23.6651 / 55 = 0.43027 or 0.43028

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Surgical DRG Cases have higher CMI’s than DRG medical cases.

Recap

The case mix of a patient population is a description of that population based on any number of characteristics.
Case-Mix indexes are used to describe a population that is being served, to determine reimbursement, and to identify differences in practice patterns or coding complexity.
The most commonly used Case-Mix Index uses disease conditions and/or procedures to determine resource use.
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Recap (cont.)

Severity of Illness case-mix methodologies were developed to address concerns that traditional case-mix methodologies do not capture the severity of an illness.
Risk Adjustment is any method used to compare the severity of illness in one group of patients in comparison to the severity of illness in another group of patients. Used make a fair comparison of diverse populations and treatment patterns
*

*

*

The case mix of a patient population is a description of that population based on any number of the following characteristics:

*

Case-mix methodologies are used for a number of purposes with the most common usage being for reimbursement. Case-mix methodology is used to determine relative weights and base payments for DRGs and APCs. Case-mix methodology is used with the MPFS when calculating the Geographic Practice Cost Index (GCPI).

Case-mix methodology can be used for statistical purposes to describe or identify a particular patient population.

Case-mix methodology can also be used to identify differences in coding practice patterns and the complexity of the coding because surgical cases are generally more resource extensive than medical cases.

*

The most common case mix methodology is to group cases by diagnoses and procedures. The major criticism to this type of grouping is that the diagnoses and procedures do not accurately measure the severity of an illness. The APR-DRG case-mix methodology was developed to address those concerns.

*

Severity of Illness Classifications includes the following:

Adjusted Clinical Groups - classifies individuals into groups that are likely to have similar resource requirements.

National Association of Children’s Hospitals and Related Institutions (NACHRI) - classifies diseases based on the progression of the disease, the anticipated course of the disease, and treatment goals.

Medical Outcomes Study Short Form Health Survey - classifies by severity of the disease and health status measures. Also uses patient feedback to obtain a total picture of the disease process.

Atlas System - uses information abstracted from the medical record from all points of care including ancillary service data excluding diagnosis data.

*

Some case mix classifications use a combination of diagnoses and procedures and severity of illness in their methodology. These systems are:

Resource Utilization Groups - used in the skilled nursing facility prospective payment system (SNFPPS). Includes clinical factors such as cognition, sensory deficits and psychological well-being

Functional Related Group System - used in the inpatient rehabilitation prospective payment system (IRFPPS). Includes clinical factors such as activities of daily living (ADLs) and spinal cord injury data.

Home Health Resource Grouping System - used in the home health prospective payment system (HHPPS). Includes measuring the extent of pain, respiratory status, and integrity of the Integumentary system. Also uses social factors such as residential and caregiver demographics.

*

Any method used to compare the severity of illness in one group of patients in comparison to the severity of illness in another group of patients. Used make a fair comparison of diverse populations and treatment patterns. Types of risk adjustments include:

*

The most commonly used case mix index uses disease staging as the basis for classifying patient with similar conditions to determine patterns of resource use. This type of case mix is also used by a facility to determine anticipated reimbursement and to compare the results to other facilities.

The case mix index is the average of the relative weights of all cases treated at a given facility. The theoretical average CMI is 1.000. CMI’s over 1.000 signify more complex cases and CMI’s less than 1.000 signify less complex cases. Surgical cases have a higher CMI than medical cases.

*

Factors that influence a facility’s case mix index include:

Changes made in relative weight values

Changes in the type of services offered or provided by the facility

Accuracy of documentation and coding in DRG or APC assignment

*

Case Mix Analysis begins with the calculation of the Case Mix Index. The Case-Mix Index is the average of the relative weights of all cases treated at a given facility or by a given physician. The Case Mix index average is set at 1.0000.

*

When calculating the Case Mix Index for a group of procedures, you will need the following information:

Services to be measured – Most facilities calculate their case-mix index by using the most resource extensive procedures or by the reason for the admission (PDx).

Relative Weights are determined by Medicare or other third-party payers

# of Cases or Patients served for a particular service or procedure.

*

Calculating Total CMS Relative Weight – Multiply the “CMS Relative Weight” by the total number of cases (patients) in the DRG group.

Calculating Medicare Payment – Multiply the reimbursement per case by the number of cases performed

Calculating Case Mix Index - Add up the total number of CMS Relative Weights and divide by the total number of patients.

Determining the Highest Relative Weight – The highest relative weight is the DRG with the highest total relative weight.

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This calculation sometimes requires a second step in which you must determine the DRG payment first

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Surgical DRG Cases have higher CMI’s than DRG medical case