Date: 23 March 2010 Time: 1010–1200

1. Briefing: Using the M2 to Identify & Manage MTF Data Quality — Trends and Impacts of Changes in Coding and Grouping Date: 23 March 2010 Time: 1010–1200

2. Objectives • The attendee will be able to: • Describe changes in coding for FY10 • Characterize changes in RVU scales for CY10 • Explain the importance of practice expense in the use of RVUs • Describe the impact of the change from simple RVU to enhanced simple RVU • Describe the change from DRGs to MS-DRGs • Characterize the change in RWP weight scales for FY10 • Identify key coding impacts on RVUs and RWPs

3. FY10 Encounter Coding • Minimal changes in coding for FY10 published to date • Some items being discussed: • Consult coding changes driven by Medicare • TBI coding • Case Management Coding (new code for case management assessment) 3

4. CY10 Relative Value Units Commercial weights for some non-Medicare services Modifications for MHS Medicare weights + + • Annual weight table updates • Generally based on Medicare weights, with some modifications 4

5. CY10 Relative Value Units • Medicare weights include only those services covered by CMS • Commercial weights start with Medicare’s • But add values for some services not covered by Medicare • MHS Changes • Add values for items that are not covered commercially, but MHS wants to pay for (i.e., telephone consults, LASIK) • Reduction of weights for global procedures In purchased care, pre- and post-op care not recorded, included in global code, not so with direct care

6. The 10 RVUs from Medicare or commercial data are earned on one claim, but in direct care, earned on separate encounter records

7. CY10 Relative Value Units • Impacts of update in RVUs for CY09 to CY10 • CPT Codes: 2.3% increase in weights • HCPCS Codes: 2.1% decrease in weights • Some common codes and their work RVU changes

8. Use of Relative Value Units • Units of Service • Reported by MTFs since 2003 • Meaning depends on associated procedure code • Can indicate: • Number of times a procedure was performed • Number of time increments of a service • Number of visits • Etc… • Depends on reported code

9. Example CPTs and Units of Measure

10. Use of Relative Value Units • Historical emphasis on M2 “Simple RVU” • Work component only • Units of service not considered in Simple RVU • Led to 5% understatement of provider workload • Particularly a problem with codes that are commonly used with multiple units • Time increments, for example • “Enhanced Simple RVU” includes units of service

11. 3 hours of prosthetic training 3 hours of gait training Simple RVU = 0.85 Enhanced Simple = 10.20

12. Impacts of Incorporating Units of Service FY10, to date

13. Impacts of Incorporating Units of Service

14. Practice Expense RVUs • Work RVUs incorporate provider effort • Simple and Enhanced Simple RVU are types of work RVUs • Practice Expense incorporates all other expenses incurred by the provider in order to deliver care Work RVU Practitioner PE RVU Nurse(s) Technicians Supplies Billing Rent/Lights, etc…..

15. Example CPTs and RVUs PE intended to cover “all else” billed by practitioner

16. Incorporation of Practice Expense • PE RVU is usually more than half of the total RVU. Especially true for: • Technician dominated product lines, or • Care where expensive equipment is required • ER PE RVU is low because a facility bill is expected

17. Incorporation of Practice Expense • Two types of practice expense used in private sector: • Facility PE • Non-Facility PE • Provider will receive reimbursement for care based on location of care Out of Office In office Facility PE is low because a bill is expected from the facility where provider delivers care, to cover nurses, supplies, etc.

18. APCs and RVUs – Provider Delivery Model Care provided in own office Care provided in a facility Work + In Office PE Work + Out of Office PE AND APC or APG (or other)

19. Bill #1: Rx Bill #2: Doctor, payment for seeing patient at ER Bill #3: ER bill, from hospital

20. Bill #1: Rx Bill #2: Doctor, payment for seeing patient at ER (RVU) Bill #3: ER bill, from hospital (APC) 17% of the bill is paid via RVU

21. Use of RVUs in MHS PPS • Historical PPS: • Ambulatory Earnings based on MEPRS Code and Simple RVU • Simple RVU: Sum of work RVU weights associated with reported CPTs • Earnings Rates * Simple RVU = PPS Earnings • Rates based on private sector cost / work RVU • “Count” does not matter • No credit for multiple providers • No credit for unlisted provider specialty codes • MEPRS “B” Codes only 21

22. Use of RVUs in MHS PPS • Limitations of Historical PPS: • Work RVU represents provider effort only • Allowed & Work RVU doesn’t necessarily go together • Units of service not incorporated into work RVU • Not terribly consistent with payment methodologies (important because rates are private sector based) • MEPRS B Only encourages coding practice changes • Do More == More Money 22

23. PPS in FY10 • Many limitations have been addressed by new rules in PPS • Switch from simple RVU => enhanced simple RVU • Big impacts on PT/OT, mental health, nutrition • Addresses the units of service issue • Inclusion of practice expense as a basis for earnings • Allows product lines that are technician dominated or use expensive equipment to be properly resourced • More closely aligns with payment methodology • Big impacts in optometry and mental health • Results in exclusion of earnings for nurse-only care (covered under PE RVU) • Implementation of units of service limits to correct coding errors

24. PPS in FY10 • Separation of earnings into “institutional” and “non-institutional” for APV and ER • Institutional component earnings via APC weight • Non-institutional component earnings based on Enhanced Simple RVU + Out of Office Practice Expense • Better aligned with payment methodologies • Results in a lower ER earnings rate than previously. • Still not perfectly consistent with purchased care payment rules • But much closer than before • Discounting is applied in private sector for some codes • Treatment of multiple providers • Use of modifiers in RVU assignment (i.e., 55)

25. Inpatient Relative Weighted Product Changes

26. FY10 Coding Changes • New ICD-9 Code sets published in October 2009 • Minimal changes other than introduction of new codes • Major change in requirement to code “present on admission” indicator (POA) • Indicates whether the patient: • Presented with the problem represented by the diagnosis code, or • If the problem was acquired while patient in the hospital • A POA is required for every reported diagnosis code • Plays a key role in billing 26

27. DRG Grouping • Diagnosis Related Groups (DRG): • Coding system used to categorize similar stays into groups • Intent is to assign cases to the same group if clinically similar, and similar in terms of resource intensity. • Used to pay most acute care hospitals for inpatient care • DRG Grouping Software • Hospitals code records with ICD-9 CM diagnosis and procedure codes and other data (age, LOS, etc.) • Based on this, DRG software is run to add a DRG to the hospital record • Many different versions of DRG software – depends on the payor • CPT codes are not used in DRG assignment

28. DRG Examples • DRG Groupers assemble records based on the combination of reported diagnosis and procedure codes • Expert panels determine the groups • Improperly coded records get a DRG of “ungroupable” • The same diagnosis code can group to a number of different DRGs; • Depending on what comes along with the diagnosis code • Co-morbidities and complications are particularly important

29. Records with the Same Primary Diagnosis • Primary Diagnosis: Diabetes with Renal Manifestations (250.4)

30. Records with the Same Primary Diagnosis • Primary Diagnosis: Diabetes with Renal Manifestations • All 3 cases had diabetes as the primary DX • None grouped to the two Diabetes DRGs! • The “w renal manifestations” led the grouper to a DRG related specifically to the kidneys!

31. Medicare-Severity DRGs • Major change in the DRG system for TRICARE has just occurred • TRICARE must follow Medicare payment policy, per law • From “DRGs” to Medicare Severity DRGs (MS-DRG) • Reclassification of complications and co-morbidities • Definitions of ‘what is a complication or co-morbidity’ changed • From two levels of complication / co-morbidity to three in some cases • Introduction of payment reductions for hospital acquired conditions • TRICARE uses a modified version of CMS grouper (newborns, mental health) • But TRICARE specific relative weights are used, instead of Medicare’s

32. Example Changes in DRGs Separate category for “major complications and co-morbidities! Names the same but not necessarily the content!

33. Illustration of Change in “What is a Complication?”

34. FY10 Relative Weight Changes • Annual weight table update in October 2009 • Each MS-DRG gets: • Relative Weight • Average Length of Stay • Short and Long Stay Outlier Thresholds • Weights are based on average TRICARE billed amounts on acute care hospital claims received the prior year (July to July) 34

35. Relative Weights • Based on hospital costliness only (private sector) • Practitioners paid via RVU • Relative weights incorporate only those expenses incurred by the hospital in order to deliver care Work RVU + Out of Office PE Practitioner Billing Other minor $ Relative Weight Nurse(s) Technicians Supplies ICU / OR Rent/Lights etc…..

36. Example DRG Weights and Thresholds Selected DRGs that relate to diabetes

37. Relative Weighted Products • Weighted workload measure intended to represent hospital costliness: • Conceptually similar to payment rules • “Normal cases” receive the same RWP credit in the same DRG • RWP = Relative Weight • Normal Case is one with LOS between long and short stay thresholds. • Most cases are “normal” or short stay outliers

38. Relative Weighted Products • Outlier RWPs: • Relies on the concept of a daily weight • Per diem weight is RW / GLOS • (GLOS= Geometric Mean LOS; because LOS is not normally distributed) • Short Stay: RWP never higher than relative weight • Long Stay: More credit than a routine stay, but not so much to encourage excessive LOS.

39. RWP • Short Stay Outlier Rule: • Twice the per diem for first day • Per diem for each additional day • Capped at relative weight • Same as payment rule 1st day gets two times the RWP as the other days

40. RWP • Long Stay Outlier Rule: • Relative weight for entire ‘normal stay” • A third of the per diem weight for each extra day • Discourages excessive lengths of stay Slight growth in RWP once Long Stay Threshold is crossed DRG Weight

41. Total RWPs for a Low BirthweightNewborn DRG Weight = 3.05; Per Diem = .1271 Short Stay Threshold is 12 days; Long Stay Threshold is 36 days

42. RWP • Long Stay Outliers: • TRICARE and Medicare do not pay more for long stay outliers • Discourages excessive lengths of stays • Cost outliers do receive additional payments, though • RWPs do give the extra long stay credit • Since “cost outlier” status is difficult to determine in direct care • Done in both direct and purchased care data for consistency

43. Changes in Weights and RWPs for FY10 Overall change in MS-DRG Weights of 1% (decline) Tripler change was -1% Selected DRGs with significant increases in weights

44. Changes in RWPs for 2010 Selected DRGs with significant decrease in DRG weights

45. MS DRGs • MS-DRGs include a mechanism to reduce payments for certain hospital acquired conditions (HAC) • Conditions identified are deemed high cost or high volume by CMS • Based on reported “present on admission” indicators • Required on primary and secondary diagnosis codes • “Pay for performance”: Concept is that hospitals don’t get paid for problems they cause

46. Hospital Acquired Conditions • Conditions for which Medicare and TRICARE no longer pay if not present on admission: • Foreign object retained after surgery • Air embolism • Blood incompatibility • Stage III and IV pressure ulcers • Falls and trauma • Manifestations of poor glycemic control • Catheter associated UTI • Vascular catheter associated infection • Surgical site infections after some surgeries • Deep vein thrombosis / pulmonary embolism after knee / hip replacement

47. MS DRG • Medicare example, primary diagnosis is stroke

48. MS DRGs • From ~ 500 DRGs to more than 800 DRGs • DRGs also have been renumbered! • 001 used to be a craniotomy; now it’s a heart DRG! • Likely a good thing, since definitions have fundamentally changed. • Some MHS information systems (i.e., CHCS) will only show one DRG data element, though • Will cause misunderstanding among users as the same code value will have different meanings depending on date of service.

49. Use of RWPs in MHS PPS • Inpatient Earnings • Mental Health vs. Other • Mental Health and Substance Abuse: • # of Bed Days * Local Market Rate • Major Diagnostic Category 19 & 20 • All other services based on “relative weighted product” or RWP • # RWPs * Local Market Rate 49

50. Use of RWPs in MHS PPS • Historically, PPS used the “old” DRG system • FY10 switch to MS-DRGs • Necessary because old groupers no longer being maintained • Limitations in MHS Inpatient PPS • Earnings rates incorporate hospital + provider • But the RWP only reflects hospital expenses • Some care is expensive for the hospital and not the doctor • And vice versa