Diagnosis Related Group (DRG)

Notice

It has been determined that the DRG Relative Weights revised October 07 needs correcting.  The new weights will be posted as soon as the correction is made. 

1. Technical Denials, how will they be handled?
   There is no foreseeable change in the process
   
2. Is IME calculated in the base rate set by Medicare?
   The base rate includes reimbursement for indirect medical education expenses.  The adjustment to the base rate for IME is that used by Medicare on Oct. 1 of the preceding year.
   
3. Will DRG rates be available electronically?
   Yes.  The hospitals will receive an electronic file of the Relative Weights and Average Length of Stay.
   
4. What does EDS want billed if patient is only eligible for part of the stay?
   Hospitals may only bill for days when the patient was eligible.  For proper calculation of the reimbursement the actual admit and discharge date, and all ICD-9 and procedure codes (including those from when the patient was ineligible) should be provided.
   
5. Where did the Cost-to-Charge, used to calculate the Outlier, come from?
   The cost-to-charge ratio is the same cost-to-charge ratio used by Medicare for oulier calculations, as of Oct. 1 of the preceding year.
   
6. How will this effect the RA (remittance advice)?
   There will be a change to the RA, but this will not occur until October when changes will also be introduced to accommodate HIPAA.  Prior to implementation, when a revised version of the RA is accessible, it will be made available to providers.
   
7. How will Utilization Review change?
   As has been the practice, hospitals will still be required to contact the PRO for authorization prior to admission.  There will no longer be concurrent review for services reimbursed under the DRG.  Critical Access, Rehab, Ventilator facilities and all psychiatric services will still be subject to concurrent review criteria.  The PRO also will be conducting retroactive review of admissions including analysis of coding patterns, changes in case mix, re-admissions, outliers, quality of care, etc.  The review will necessitate the hospitals providing copies of medical records upon request and may include onsite review.
   
8. Will KMAP follow any changes in Outlier calculation also made by Medicare?
   Yes, if it is determined that any changes made by Medicare are in the best interests of Medicaid.
   
9. How was the Outpatient dollar amount associated with the 3-day rule determined?
   The calendar year 2001 claims data was analyzed using the criteria specified my Medicare under the 3-day rule.  Outpatient services meeting these criteria were then matched-up with inpatient claims for the same recipient that occurred within 3 days of the outpatient service.
   
   Payments were estimated for these outpatient services based on costs, which were determined by converting claim charges to costs using ancillary cost-to-charge ratios.
   
10. Will there still be Retroactive Review for eligibility?
    The eligibility process will not be affected by the change to DRG reimbursement.
    
11. Will there still be Interim billing?
    There will be no interim billing with DRG's.
    
12. How was Budget Neutrality calculated?
    Payments were estimated using current per diem rates for all calendar year inpatient claims, excluding out-of-state, crossover claims, and claims that were the responsibility of any third party payer.  Outpatient payments in the three-day window (described for question 14 above) were added to the totals.  The combined amounts represent the budget neutral target amount.
    
13. How is the cost figured for the Outlier payments?
    Costs were calculated by multiplying the facility-specified cost-to-charge ratio (described in question 5) times the covered charges for each claim.  Payment will be 80 percent of the amount that the estimated costs exceed the outlier threshold.
    
14. How will DMS pay when Psych, medical, or rehab is performed by the same provider?
    Payment, whether DRG or per diem, will be based upon the primary diagnosis.
    
15. Are Professional Component fees included in the DRG?
    No.  Physicians will need to receive Medicaid provider numbers, and claims must be billed on the CMS 1500.
    
16. How will Transfers be handled under DRG?
    The rules governing transfers and post acute care transfers are the same as those employed by Medicare.
    
17. Will the three-day rule effect ER patients?
    Yes, if the diagnosis is the same as diagnosis at time of admission.
    
18. If a provider is reclassified for Medicare will Medicaid make the same changes?
    Yes.
    
19. Will Freestanding or Hospital based rehabs go to the DRG system?
    Freestanding rehab will be reimbursed under the per diem system.  Rehab provided in an acute care facility will be under DRG's.
    
20. Will there be a change to the Cost Report or the Paid Claims listing?
    There is no change anticipated in the cost report.  The paid claims listing is currently undergoing revisions and will be shared with the hospitals when completed.