Risk Adjusted Data South Carolina Association of Health Care Quality.

Risk Adjusted Data

South Carolina

Association of Health Care Quality

What is Risk Adjustment

• Can Risk be Managed?– Going beyond your best guess

Some Examples of Risk Management

• Project Management

• Any Insurance

• Public Relations

• Investing

– The event causing the risk. – The likelihood of the event happening. – The impact on the plan if the event occurs

Why Medicine?

Doctor – You have higher X when compared to Y

• My patient’s are more complex and sicker

• Question is this really true– Enter Risk Adjusted Data

• Used to compare one provider to another

Process of Risk Adjustment

• Must have an adequate risk assessment tool.

• Must segment populations in meaningful ways.

• Develop a system to normalize the population.

• Reward or dissuade risky behavior.

Criteria for assessing

Risk Adjustment

tools

Mechanism of Risk Adjustment

Going National

The Basic ToolDRG -> Risk Adjusted DRG

Hx of DRG• Developed in 1967

– Introduction of Medicare• Hospitals required to implement Utilization Review• Also implement Quality Assurance Programs

• Intentions– Inclusion of all hospital services– Incorporate thousands of diagnoses and procedures– Account for multiple diseases and treatment of individual

patients– Differentiate between high and low cost care– Create clinically meaningful catagories

• Followed ICD-9 Methodology– Developed 23 Major Diagnostic Categories– Identified patient clusters based on secondary dx, procedures,

sex age, discharge status, complications comorbidities to sort out similar LOS and resource consumption

Advent of HCFA-DRG

• Original DRG system flawed– Found to be highly variable– Did not capture severity of illness– Relative weights based on unreliable data– Too slow to keep pace with rapid change

• HCFA adopted DRG system as payment for hospitals in 1983– Took ownership of ensuring annual updates– Reimbursement for hospitalization based on the

reason for hospital stay.– Split out procedure codes to be maintained separately

Refined DRG

• Soon became evident the presence or absence of complications and comorbities (CC) resulted in assignment of different DRG for certain patients– Defined a CC as a secondary diagnosis that

specifically increases hospital resource use.– System modified to account for four levels of CC

• Non, Moderate, Major, Catastrophic

– Ran pilot studies, but never adopted this modification• Only utilized one CC to modify DRG to Highest level

All Patients DRG

• Adopted by New York State as the payment system for all non-Medicare patients in 1987– Found DRG system was inadequate to classify

resource consumption for:• Neonates• HIV infected patients

– NY state contracted 3M to modify DRG system• Added Pediatric modified DRGs• MDC 24 for HIV infection• CC List modified gave rise to MDC 25

– Transplants– Long term vents– Cystic Fibrosis– Nutritional Disorders– High risk OB– Acute Leukemia– Sickle Cell Anemia

All Patient Refined DRG• Widely used in US, Europe, parts of Asia• Uses Base of AP-DRG system• Developed by 3M in 1990• Added four subgroups attempting to describe Severity of

Illness• Resulted in significant change to group logic

– All age and CC distinctions are removed– Replaced by two groups

• Severity of illness 1-4• Risk of Mortality 1-4

• Subgroup assignment is based on the interaction between:– Secondary diagnosis– Age– Principle diagnosis– Presence of certain non-operative procedures

Intent of APR-DRG

• Compare hospitals across wide range of resources and outcome measures

• Evaluate the differences in inpatient mortality rate

• Implement and support critical pathways

• Identify continuous quality improvement projects

• Form the basis of internal management and planning

From 3M

APR DRG Classification Data Elements

MDC Major Diagnostic Category

APR DRG Assignment

Four Severity of Illness Subclasses

1. Minor2. Moderate3. Major4. Extreme

Four Risk of Mortality Subclasses

1. Minor2. Moderate3. Major4. Extreme

Does Severity Adjustment really make a difference

Mortality in Severity of Illness -- SRHS

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120

Minor SI Moderate SI Severe SI Extreme SI

Mortality in Mortality Risk -- SRHS

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120

Minor MR Moderate MR Severe MR Extreme MR

LOS in Severity Adjusted-- SRHS

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45

Minor SI Moderate SI Major SI Extreme SI

LOS in Mortality Risk -- SRHS

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45

Minor MR Moderate MR Major MR Extreme MR

Pattern in Most Hospitals

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SRHS Severity of Illness – All Patients

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SRHS Mortality Risk – All Patients

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Big Deal, What can I do with this Knowledge

Case Management Perspective

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45


Discharge Planning

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35%

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45%


Home DC

Home Health

SNF

Disposition is not an Issue

HOMEDISCHARGE

HOME HEALTHAGENCY/HOSP

ICE

SNF-SKILLEDNURSINGFACILITY

Other

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Age0.

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16.2

24.3

32.4

40.5

48.6

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72.9

81.0

S1

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14

NICU BabiesPre term

PSYCH

Oncology with Surgery

PSYCH &GI Procedure

56% of Outliers in 4 Units100%

17%

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45%

32%

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PSYCH-3SOUTH-EAST

4 TOWER NURSERY-INTERMEDIATE

8 TOWER Other

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But I Admit more then others100%99%

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SHAH,AMISHI GRAVELY,VONDA MEMON,MOHAMMED A CASTON,CHRIS POWELL,W S

Attending Physician

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100%92%

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69%

54%

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SHAH,AMISHI GRAVELY,VONDA MEMON,MOHAMMED A CASTON,CHRIS POWELL,W S

Attending Physician

0%

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37%

54%

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86%

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NELSON,ERIC CHARLES BEARDEN,JAMES D CURRAN,COLIN PATI,ASIM R CORSO,STEVEN W Other

Attending Physician

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CURRAN,COLIN BEARDEN,JAMES D NELSON,ERIC CHARLES

Attending Physician

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Patient Mix

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CHERRY,STEPHEN R EICKMAN,F MICHAEL GALLAGHER,JOHN HUEY,BARRY L IKE,DAVID LITTLEFIELD,RONALD H LOPEZ,ALEJANDRO N MACDONALD,ROBERT G MOBLEY,JOSEPH RODAK,DAVID J SRIVASTAVA,NALIN K STORY,JAMES R

Costs

CHERRY,STEPHEN R

EICKMAN,F MICHAEL

GALLAGHER,JOHN

HUEY,BARRY L

IKE,DAVID

LITTLEFIELD,RONALD H

LOPEZ,ALEJANDRO N

MACDONALD,ROBERT G

MOBLEY,JOSEPH

RODAK,DAVID J

SRIVASTAVA,NALIN K

STORY,JAMES R

Minor SI

Moderate SI

Major SI

Extreme SI0

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DRG Specific Cost Comparison

CHERRY,STEPHEN R

EICKMAN,F MICHAEL

GALLAGHER,JOHN

HUEY,BARRY L

IKE,DAVID

MOBLEY,JOSEPH

RODAK,DAVID J

SRIVASTAVA,NALIN K

STORY,JAMES R

Minor SI

Moderate SI

Major SI

Extreme SI0

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Compare Your Processes

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Refine the Search

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117125132552

Get to the Details• DRG 117 Revision of Pacer (Few Patients)

– 2 docs in SI Moderate• 1. avg cost $3,500• 2 avg cost $12,300 – Higher utilization of resources Xrays, Labs LOS 5 days vs

3• DRG 125 Heart Dz w/o MI & wCath

– 7 docs in Group 3• Avg Cost $4500• 1 pt with cost $15,000 complication of Malignant Htn

• DRG 132 Atherosclerosis with CC– Group 3 - 1 pt expired with long LOS and MR 4– Group 2 – One physician Avg cost $12,500 vs, $3,000

• Medication profile• DRG 552 pacer w/o other major CV dx.

– Group 2 two main physicians one uses more expensive device– Group 3 1 pt longer LOS

Really Why should I careCMS Is Changing the Rules

Refinement of the Relative WeightCalculation

• Pattern of increasing Medical weights and lowering Surgical weights remains• Transition period mitigates swings in payment• Process: 1. Standardized charges were broken into 13 cost buckets 2. National Cost-to-Charge Ratio was used to convert charges into costs 3. Standard methodology to create the weights was used• Hospital Specific Relative Value (HSRV) methodology will

NOT be used in FY 2007• Independent contractor will evaluate charge compression

with HSRV

Refinement of the Relative WeightCalculation

Implementation of a cost-based weight methodology over

a 3 year transition period

• Year 1 – Weights based on a blend of:

– 33% cost based weights

– 67% charge based weights

• Year 2 – Weights based on a blend of:

– 67% cost based weights

– 33% charge based weights

• Year 3 – Weights based on 100% costs

Do Severity and Risk Adjustment Make a Difference?

Application of Final Rule

DRG 148 (Major small and large bowel procedures w/cc)

– CMS medical advisors felt the presence of major gastrointestinal diagnoses identifies patients with a higher level of severity.

Pattern in Most Hospitals

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Follow the Money

Severity Adjusted DRGs – On Hold

What Questions Does your Organization Need to ask

Present on Admission

• Deficit Reduction Act of 2005 (DEFRA)– Requires Present on Admission (POA) indicators to

be collected for all Medicare patients beginning this Oct.

– Requires CMS to select 2 or more infectious that are high cost/High volume to focus on.

– Require CMS to begin excluding those infections when the are identified as not present on admission from the calculation of the DRG beginning Oct 1 2008

Case Example

No ComplicationCurrent Payment with Complication

Simulated Payment Hosp Acquied Infection

Principle Diagnosis Atrial Fibrillation Atrial Fibrillation Atrial Fibrillation (POA)

Secondary Diagnosis Pneumonia

Pneumonia

(Not POA)

Procedures Temp Pacemaker Temp Pacemaker Temp Pacemaker

Mechanical Ventilator

Mechanical Ventilator

Medicare DRGCardiac Arrhythmia W/O CC

Cardiac Arrhythmia W/O CC

Cardiac Arrhythmia W/O CC

Medicare Weight 0.5227 0.8287 0.5227

Reimbursement $3,839 $6,086 $3,839

Risk Adjustment for Quality Indicators

• Agency for Healthcare research and Quality released comprehensive set of quality indicators intended to flag potential quality problems.

• UCSF - Stanford Evidence based Practice center developed these indicators using APR-DRGs as the basis for risk adjustment

Preparing for Report Cards

Hospitals must:

• Be proactive in evaluating data– Prevent surprises: Anticipate your performance ratings– Prepare well-planned responses to negative ratings– Develop improvement programs to correct any identified

problem areas

• Invest in the quality of medical records, documentation, and information systems– Severity-of-illness and risk-of-mortality adjustments require a

thorough reporting of patients’ diagnoses– Incomplete coding can negatively affect the evaluation of the

institution on the report cards

Step One

Public Reporting of Data

Change Pattern -- Volumes

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2005

2006

Yes Education Is a Good thingChange in percent of total

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0.35

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2006

Change Mortality Pattern

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2006

Total vs. Ratio (Act/Exp)

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Apr 2

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Medicare Mortality

Risk Adj Medicare Mortality

Ratio of actual to expected

0.9

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Oct 20

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Dec 2

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Feb 2

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Apr 2

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Jun

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Oct 20

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Feb 2

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Apr 2

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Jun

2005

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Oct 20

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Dec 2

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Feb 2

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Apr 2

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Aug 2

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Oct 20

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Dec 2

006

Risk Adjustment Length of Stay

5

5.2

5.4

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5.8

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6.2

6.4

Jan-Mar2004

Apr-Jun2004

Jul-Sep2004

Oct-Dec2004

Jan-Mar2005

Apr-Jun2005

Jul-Sep2005

Oct-Dec2005

Jan-Mar2006

Apr-Jun2006

Jul-Sep2006

Oct-Dec2006

Remember Newton’s Third Law

"For every action, there is an equal and opposite reaction."

Coded Complications

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1

1.5

2

2.5

3

3.5

Jan-Mar2004

Apr-Jun2004

Jul-Sep2004

Oct-Dec2004

Jan-Mar2005

Apr-Jun2005

Jul-Sep2005

Oct-Dec2005

Jan-Mar2006

Apr-Jun2006

Jul-Sep2006

Oct-Dec2006

Nervous System Complications 4.5

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Jan-Mar2004

Apr-Jun2004

Jul-Sep2004

Oct-Dec2004

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Apr-Jun2006

Jul-Sep2006

Oct-Dec2006

Cardiac Complication 4.1

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Jan-Mar2004

Apr-Jun2004

Jul-Sep2004

Oct-Dec2004

Jan-Mar2005

Apr-Jun2005

Jul-Sep2005

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Jan-Mar2006

Apr-Jun2006

Jul-Sep2006

Oct-Dec2006

Peripheral Vascular Complications 4.4

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Jan-Mar2004

Apr-Jun2004

Jul-Sep2004

Oct-Dec2004

Jan-Mar2005

Apr-Jun2005

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Oct-Dec2005

Jan-Mar2006

Apr-Jun2006

Jul-Sep2006

Oct-Dec2006

Respiratory Complications

4.0

What Have We Learned

• My kids would say nothing.

Risk Adjusted Data South Carolina Association of Health Care Quality.

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