Hospital DRG Base Rate Calc

[T-roy Boy]

I am trying to get a DRG equivalent Base Rate for a Hospital that we hae a Discount off charge contract with. I noticed that there are a few claims with the same DRG but have different $ amounts due to the lenth of stay. Do I take this into consideration for the Base DRG?

[Swiper]

Yes, most DRG contracts have outlier amendments such that the fixed DRG payment applies to admissions which do not reach the outlier limit. These limits can be based on length of stay, charges, or both.

Once the "outlier limit" is reached, various payment arrangements can be in place. Anything from a fixed discount applied to days/claims beyond the limit, to the entire claim being paid at a discount off charges.

[T-roy Boy]

Good point. Nutz! So I gotta strip these out, and thus the credibility of the Base rate yet decreases more. I might as well throw a dart again.

Thanks Swiper

[Swiper]

If I understand correctly, you are trying to determine what DRG base would produce the same amount of allowed charges as the current discount. Is that correct?

If so, you don't necessarily have to strip them out, and I wouldn't as they would become part of the payments if you were to convert to a DRG payment arrangement. You most likely would have some type of outlier arrangement and you need to consider that in setting the DRG base. If you don't consider outliers, you would end up setting your equivalent base DRG (ie. that which produces the same amount of allowed charges as the current discount) at too high a level. Let me know if you need an example.

[T-roy Boy]

Is that correct?

That is correct. I only have $50,000 worth of claims though. Barely enough to get me a good Base Rate estimate. I still wouldn't mind to see an example, just to see if I am consistent in methods though. Appreciated!