2014 DRG Workshop

Health Authority – Abu Dhabi

September 30, 2014

2014 DRG Workshop Meeting Minutes Date ID Agenda item Action/Comment

30 Sep 14 DRG Workshop Presented by Lina Jichi, Marwan Al Naoulsi, and Luis Perfetti from HAADa) Overviews of Published 2014 DRG Circular and documentsb) DRG Weight Update processc) HCPCs Add-On Tool worksheet and documentFull presentation including all the changes effective Sep 15th, 2014 is available under: http://www.shafafiya.org/Dictionary/Workshops/2014_DRGWeightUpdateWorkshop.pptx

30 Sep 14 001 1) Confirmed attendees awareness that the outlier payment threshold (Basic Gap) has been reduced from 50,000 AED to 25,000 AED effective on Sep 15, 2014 for the Basic product, and for other products it is effective on the agreed date per Standard Provider Contract or January 1st, 2015 whichever comes first. Gap and marginal can be negotiated per DRG code per agreed Standard Provider Contract as well.

30 Sep 14 002 2) A discussion on HCPCS add on payment took place during the meeting on whether the price of HCPCS is the invoice cost only or it includes provider markup + handling cost as mentioned in the "fee for service" billing under the Claims and Adjudication rules. HAAD clarified to use the invoice cost for HCPCS in DRG claims billing and this will be clarified in the HCPCs methodology document.

30 Sep 14 003 3) Reiterated that the HCPCS add on payment is only for the listed items on published Table A and only when they cost at least 5000AED, this HCPCS add on payment was effective as of encounter start date September 15, 2014 along with the DRG updated weights as per HAAD Circular No. DG 37/14

30 Sep 14 004 4) Provider and payers confirmed their readiness to implement HAAD Circular No. DG 37/14

2014 DRG Workshop Meeting Minutes 30 Sep 14 005 5) Providers and payers were equally concerned with requiring a second pre-authorization of consumables/devices if

additional consumables are needed during the inpatient stay. An agreement was reached that a notification is OPTIONAL between providers and payers with no basis for claim rejection.

30 Sep 14 006 6) To avoid rejections due to calculation discrepancies, payers and providers recommended to change the number of digits in the HCPCS add on tool to produce a rounded number to two decimal places throughout the calculation tool. The HCPCs document and tool reflecting the change are updated on Shafafiya effective October 1st.

30 Sep 14 007 7) It was presented how to submit claims using the new Routine Reporting Requirements as mentioned in the published 20140901_HCPCS_Reimbursement_DRG_Update.docx document: - Three observations can be used for each High cost HCPCS submitted: cost, description and invoice file attachment - Although the method of sending files through observations has been available since the KEH system's beginning, providers raised a concern that their own system is not ready to send this invoice file as an observation- HAAD explained that the file attachment is currently an optional observation and will leave it as per payer and provider agreement. If the invoice file will be sent thru KEH, it has to be done as described in the Routine Reporting Requirements

30 Sep 14 008 8) It was explained that, as part of the Information Security requirements, HAAD has integrated shafafiya to the main HAAD platform for the management of the users. New users have now a screen to add their data and a process to get authorized, using the PRO of the organization to approve electronically. Also they can change the password any time. The systems will impose password complexity and will have an expiry: after password expiry shafafiya will not allow more transactions for the expired user. The expiry of a password will happen every 90 days. Manually the providers will have to change the password. A circular and guidelines will be issued shortly about the same.

Background Abu Dhabi implemented DRGs successfully starting in August 2010. All inpatients (except

long term care and dental) for all products are paid under DRGs since January 2013. Weights have been updated for the first time in April 2011, the second time in October 2012 and the third time now in September 2014.

In general, worldwide uses DRG weight updates to ensure that payments reflect evolving treatment patterns in a timely fashion. US Medicare updates DRG weights annually while Scandinavia only updates its weights every two years due to technical and volume challenges

The most significant technical challenge to the DRGs in Abu Dhabi has been poor provider data quality, where not all services provided are documented on the claim. This leads to distort the weights, which leads some DRGs to be too high, and others too low.

What are DRG weights ?

What are they used for?

Childbirth Cesarean Delivery

DRG code 146101

Room & Board: 4 days $$$Complex Procedures(CPT) $$$Drugs $HCPCS $$

Avg Basic fee for service = 7,457 AED

146101 DRG Weight ~0.9500

DRG Payment = Base Rate X0.9500 +outlier

Childbirth Normal Delivery

DRG code 146131

Room & Board: 2 days $$$Simple Procedures(CPT) $$Drugs 0-$HCPCS 0-$

Avg Basic fee for service = 4,646 AED

146131 DRG Weight ~0.600

DRG Payment = Base Rate X0.600 +outlier

Weights update consultation steps with Providers and Payers

DRG Panel Workshop - February 4, 2014 • a workshop to explain the DRG weight process and related changes and to listen to concerns

and questions from the industry

Consultation Template Feb 5, 2014• Following the workshop, we distributed standardized data template to the industry to assess

impact in a quantitative, data driven and standardized manner – see Appendix• As of March 4, 2014, of the total of 32 hospitals in ABU Dhabi, we have received responses

from 21 hospitals with a total market share of 93% based on revenue

Individual Provider Meetings with HAAD April – June, 2014• Following receipt of the standardized templates, we set up individual meetings with key

hospitals and payers to further assess and understand the impact of the DRG changes on their facilities

We concluded there is an urgent need for a reimbursement adjustment for the high cost devices and consumables to accompany the 2014 DRG weight update.

2014 HCPCS Prices Template2014 Consumables Committee - HCPCs Prices Template Facility ID: Experience Period From?/?/2013

Experience Period To ?/?/2013HCPCs Code

Code Description Facility Reported Average Price (AED)

Facility Reported Average quantity per inpatient

encounter

Total Average Price per Inpatient Encounter (AED)

Number of encounters

Assigned DRG code (if available)

Comments (new technology, rarely used, ..)

0000000000000000000

1- Choose a specified period in 2013 or 2014 (month, several months, ..) where you will count (estimate)how many the facility used in that period and enter that period in Cells H2 & J22- In column C (Facility Reported Price), fill out the price (cost to the facility)of the consumable per HCPCs coded item, and in column D (Facility Reported Average quantity per inpatient encounter)3- For each consumable that has multiple prices (depending on brand, size, modifier, ..etc), calculate the weighted average price per the HCPCs code

2014 DRG Enhancements 2014 DRG Enhancements

Step 1 Step 2 Step 3 Step 4 Step 5Reduce Outlier payment threshold (‘basic Gap’) by 50%, and incentivize providers to bill for outlier payments (at least 20M AED annually do not get claimed) Now Basic Gap = 25,000AED (Down from 50,000AED)

Update DRG weights using fresh market data. Smooth weight changes actuarially.

Allowing variable gap and marginal per DRG code to be negotiated between payers and providers as agreed which can reimburse agreed DRG codes at cost for cases with high consumables for example.

Improve high HCPCS implants and Consumables related DRGs weights based on directly collecting HCPCS prices from providers. Plus, implementing limited list of High Cost Technology Add-on payment program

Revise Mandatory Tariff prices both outpatient and inpatient by qualified international organization using patient utilization pattern, market feedback, and reference pricing

Create Native to Abu Dhabi DRG grouper to customize the DRG classification to Abu Dhabi needs.

15-Sep-2014 15-Sep-2014 15-Sep-2014 2015? 2015?

DRG Payment = Base Rate x DRG Weight + Outlier payment + HCPCS Add on payment

Outlier payment = (Cost – Base Rate x DRG Weight – Gap) x Marginal

Published Circular on DRG weight update and enhancements

Published Methodology of High Cost Devices (HCPCS) Reimbursement (1/3)

High Cost HCPCS Add On Reimbursement for the DRG Update Effective September 15th, 2014HAAD developed DRG weights update and presented them to the market in February 2014. One of the major recommendations of the market was to address high cost devices (HCPCS). In response, HAAD decided to implement the weight update as presented along with addressing the issue of high cost HCPCS as below.For a short period of time, specific high cost devices will be entitled for add-on payment in addition to DRG payment. Following input from hospitals and the collection of specific high cost devices, HAAD has developed the following approach for reimbursing certain, approved devices on top of the normal DRG payment. Keep in mind the goal was to reimburse a limited number of high cost and/or new technology devices that are not fully recognized in the DRG weights. With the collection of actual cost data from the policy outlined below, ultimately these device costs can be more accurately reflected in future updates, as approach advised by both 3M and observed in the US Medicare program

Published Methodology of High Cost Devices (HCPCS) Reimbursement (2/3)

The following (Table A) identifies the devices that are eligible for add-on payment, High Cost Listed HCPCS. Generally, the list is based upon the data provided by the hospitals and the criteria that they are “high cost” thus our threshold for inclusion was AED 5,000 for market price average. The DRG claim is eligible for the Add-on payment when the total cost of these specified HCPCS in the claim is 5,000 AED or more.

For listed devices, the provider will be eligible for an add-on payment of 75% of the difference between the price and the HCPCS portion amount built into the DRG as listed on the spreadsheet. http://www.shafafiya.org/Dictionary/Prices/20140901_DRG_WeightUpdateMethodology.xlsx? Add-on Payment = 75% X (Total Price for High Cost Listed HCPCS in a DRG claim - DRG HCPCS portion AED)Where Total Price for High Cost Listed HCPCS in a DRG claim = Sum(ActivityCost*Quantity)for all High Cost Listed HCPCS reported in a claim And DRG HCPCS portion AED = the DRG specific HCPCS portion % in (Table B) X DRG payment

Published Methodology of High Cost Devices (HCPCS) Reimbursement (3/3)

In case of outlier payment, it will account for the received add-on payment as below:Outlier payment = (Cost – Base Payment –HCPCS Add on Payment– Gap) x Marginal

Claiming rules:• The use of High Cost Listed HCPCS is subject to prior authorisation by the Payer• The Add-on Payment is claimed under the Service Code 98• For all High Cost Listed HCPCS activities in both PriortRequest and

ClaimSubmission transactions Provider reports the ActivityCost observation as per routine reporting requirements: www.haad.ae/DataDictionary/RoutineReporting

• Providers submit their original invoice for the HCPCS as attachment to the claim submission at the HCPCS activity level

• Provider must maintain the documentation supporting the reported ActivityCost readily available for audit

75% reimbursement amount was selected based on the experience of the US Medicare High Cost Devices programme http://www.gpo.gov/fdsys/pkg/FR-2013-08-19/pdf/2013-18956.pdf* handles similar add on payments and also a goal to support an efficient payment system.

Table A - High Cost ConsumablesHCPCS Code Description C1713 Anchor/screw for opposing bone-to-bone or soft tissue-to-bone (implantable)C1721 Cardioverter-defibrillator, dual chamber (implantable)C1722 Cardioverter-defibrillator, single chamber (implantable)C1731 Catheter, electrophysiology, diagnostic, other than 3D mapping (20 or more electrodes)C1732 Catheter, electrophysiology, diagnostic/ablation, 3D or vector mappingC1776 Joint device (implantable)C1781 Mesh (implantable)C1785 Pacemaker, dual chamber, rate-responsive (implantable)C1786 Pacemaker, single chamber, rate-responsive (implantable)C1817 Septal defect implant system, intracardiacC1874 Stent, coated/covered, with delivery systemC1875 Stent, coated/covered, without delivery systemC1882 Cardioverter-defibrillator, other than single or dual chamber (implantable)C1900 Lead, left ventricular coronary venous systemE0601 Continuous airway pressure (CPAP) deviceE0616 Implantable cardiac event recorder with memory, activator and programmerE0635 Patient lift, electric with seat or slingL8614 Cochlear device, includes all internal and external components

High Cost Consumables and Devices List

HCPCS Add-on payment toolAdd-On Calculation Tool: How to calculate the add-on payment for the specified high cost technology and consumables

Add on Payment = 75% X Diff (Cost for High Cost Listed HCPCS in a DRG claim - DRG HCPCS portion AED)

- And DRG HCPCS portion AED = the DRG specific HCPCS portion % in (Table B) X DRG payment- HCPCS Activity Cost for this Add on Payment in a DRG claim is defined to be the invoice cost amount

High Cost Technology Add-on Payment Tool

Fill out the values in the gray boxes only

DRG Code 061131 IP Appendiceal Procedures

Product DRG Base Rate 8,500

DRG Payment 5,908.37 rounded to 2 decimal places

Sum of listed high cost HCPCs prices 7,500

HCPCS Portion % 7.04% rounded to 4 decimal places

Add on Payment = 75% X Diff (Price for High Cost Listed HCPCS in a DRG claim - DRG HCPCs portion AED)

Add - on Payment = 75% X ( 7,500.00 - 415.95 )

Add - on Payment Amount = 5,313.04 rounded to 2 decimal places

Total payment 11,221.41 rounded to 2 decimal places

- Where Total Price for High Cost Listed HCPCs in a DRG claim = Sum(ActivityCost*Quantity) for all High Cost Listed HCPCS reported in a claim

Evaluation for the 2014 Proposed DRG Weight Update and Outlier Payment Changes. Due date Feb 11th, 2014

As requested in the Feb 4th, 2014 DRG Panel meeting, HAAD would appreciate receiving your view on modeling the impact of the DRG update by choosing the appropriate option and commenting on the grid below which will be kept confidential. In assessing the impact, please remember the base rate applied to the DRG is a separate issue, so we appreciate your keeping this analysis on the following:

1- New proposed 2014 DRG weights (see attached Excel file)

2. Changing the outlier gap payment from 50,000 AED to 25,000 AED for Basic, and 25,000 AED to be the max for Thiqa and Enhanced

3. Allowing to negotiate different outlier gap and marginal figures by DRG code for Enhanced and Thiqa claims.

Entity Name: License ID: Category Item Question Option 1 Option 2 Option 3 Comments

Overall annualized revenue impact on your hospital

1Using a one year distribution of inpatient claims and applying the new proposed DRG weights, what is the overall revenue impact on your hospital/group of hospitals? Please add the impact % in the Comments section

positive negative Neutral

Overall annualized revenue impact on your hospital

2Adding the two outlier payment proposed changes to new proposed DRG weights, what is the overall revenue impact on your hospital/group of hospitals? Please add the impact % in the Comments section

Positive Negative Neutral

Highlight specific DRG weight changes that solve existing problems

3 Will the proposed DRG weight /outlier changes that will increase revenue for specific specialty area encourage change of behavior or increase private investments? Please specify Agree Disagree Neutral

Highlight specific DRG weight changes that create a problem

4Will the proposed DRG weight /outlier changes that will decrease revenue for specific specialty area encourage change of behavior or decrease private investments? Please specify

Agree Disagree Neutral

Identify specific potential competitive issues that could arise from the update

5 Are there specific services and specialties where your hospital may be disadvantaged relative to other hospitals? If so, please identify and describe Agree Disagree Neutral

For Payers and Providers 6 Do you support the implementation for both DRG weights and outlier payment changes to be March 15th, 2014? Agree Disagree Neutral

For Payers and Providers 7 Do you support the implementation of only DRG outlier payment changes to be March 15th, 2014? Agree Disagree Neutral

For Payers and Providers 8 Do you see DRG weight /outlier changes will improve access for your members/patients to health care services in Abu Dhabi? Please specify Agree Disagree Neutral

For Payers and Providers 9 Do You have other comments you want to share?