2014 DRG Workshop Health Authority – Abu Dhabi September 30, 2014

2014 DRG Workshop Meeting Minutes

2014 DRG Workshop Meeting Minutes

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 Normal Delivery Childbirth Cesarean 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 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

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 Template

2014 DRG Enhancements 2014 DRG Enhancements Step 1 Step 2 Step 3 Step 4 Step 5 Reduce 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 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, 2014 HAAD 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.

High Cost Consumables and Devices List

HCPCS Add-on payment tool

Entity Name: License ID: 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 1 Using 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 2 Adding 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 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 Highlight specific DRG weight changes that create a problem 4 Will the proposed DRG weight /outlier changes that will decrease revenue for specific specialty area encourage change of behavior or decrease private investments? Please specify 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 For Payers and Providers 6 Do you support the implementation for both DRG weights and outlier payment changes to be March 15th, 2014? 7 Do you support the implementation of only DRG outlier payment changes to be March 15th, 2014? 8 Do you see DRG weight /outlier changes will improve access for your members/patients to health care services in Abu Dhabi? Please specify 9 Do You have other comments you want to share?