Uniform Coding and Simplified Pricing HEALTH AUTHORITY – ABU DHABI Health Systems Finance May, 2007

1 HOW TO IMPLEMENT UNIFORM CODING FOR INPATIENT SERVICES © Health Authority – Abu Dhabi Why do we need uniform coding (e.g., ICD-9 diagnosis and procedure) on every claim? prerequisite for efficient handling of claims on both sides (provider and insurer) in current system prerequisite for further automation (electronic data exchange) prerequisite for introduction of DRGs prerequisite for all meaningful statistical analysis by HAAD, payors and providers How will we go about implementing uniform coding on every claim (“Educate then legislate”) Educate Convince insurers to agree on uniform claims format amongst themselves Focus on top public hospitals (80% market share) to explain need for uniform coding in claims and help redesign processes to make it happen Legislate Power to make claims and reporting forms in uniform coding format mandatory Power to introduce new price lists based on uniform codes Power to move to DRG based reimbursement system (which needs uniform code)

2 MAKING UNIFORM CLAIMS CODING HAPPEN IN TOP PUBLIC HOSPITALS © Health Authority – Abu Dhabi Doctor Billing Medical Records Current Situation Short Term Goals Doctor files patient record in paper form Oftentimes missing or incomplete documentation Medical Coding Department uses paper records from doctors and codes ICD-9 for both diagnosis as well as procedures Finishes within weeks after discharge Billing Department needs immediate solution upon patient discharge (co- payment problem) Billing does not refer to codes from medical records but manually assembles bill Careful attention to detail (plus incentives) Matches codes with prices Finishes within days after discharge All bills submitted with ICD-9 diagnosis and procedure code All bills submitted electronically All bills submitted two weeks after discharge Issues to be resolved Timing (e.g., for co- payment) Communication Staffing & training

3 WHY IS IT A WORTHWHILE PURSUIT © Health Authority – Abu Dhabi All data present, we just need to start using it! If we start using it, we can get a complete patient record to greatly improve the quality of care and provide full feedback to providers start reimbursing hospitals with a DRG based pricing method to greatly simplify the claims filing procedure for hospitals move to an electronic filing system for claims to greatly improve the efficiency and lower the cost of claims filing for hospitals and insurers absorb the intended insurance of nationals into the system by closing the claims gap to avoid additional financial strain on the system

4 WHAT’S BROKEN WITH THE CURRENT PRICING SYSTEM © Health Authority – Abu Dhabi Incomplete Complex list with over 1500 individual procedures for a fee-for- service type reimbursement Still frequently missing items leading to multiple calls into HAAD Inconsistent No uniform reference to one set of standard codes (CPT or ICD-9) Pricing too high for individual items, too low for others Descriptions of procedures are not unique identifiers (leading to various amounts being billed for the same procedure) Resulting problems Hospitals do not understand pricing system and therefore do not (fully) use it to bill There is no (IT) system to help them use existing price list Even if there were, it is too complicated and neither transparent nor clinical in focus

5 WHY WE NEED A DRG-BASED SYSTEM FOR INPATIENTS © Health Authority – Abu Dhabi What are DRGs DRG = diagnosis-related group System to classify hospital cases into ca. 500 groups referred to as DRGs (example: normal newborn, vaginal delivery; heart failure; pneumonia) DRGs assigned by a grouper program based on standard diagnoses, procedures and other factors (age, sex, co-morbidities) Patients within a DRG a expected to use similar hospital resources therefore used as a basis for payment to hospitals Why do we need them? Complete (and simple): only 500 items needed instead of over 1500 on the current price list (which is still incomplete) Consistent: rational basis for determining prices (equal use of resources), relative weights known, only multipliers needed All the source data in place (ICD-9 diagnoses and procedures) for grouping by provider, payor or HAAD Proper incentive for hospitals for efficient use of resources (manage length of stay, compete for more patients) It is easy for HAAD to come up with DRG list based on Saudi data from Daman ICD- 9 Standard Procedure Coding DRGs Grouper

6 DRG-BASED REVENUE PLANNING © Health Authority – Abu Dhabi # Cases Revenue Case Mix Index (CMI) Base Rate 1 – Av. Discount Average Price In addition, DRGs are a necessary planning tool for intelligent discussion about individual budgets in hospital negotiation process

7 WHAT ABOUT OUTPATIENTS © Health Authority – Abu Dhabi Large volume of claims [insert number from DAMAN] Small size of average claim [insert value in AED from DAMAN] Sizable part of overall value [insert value of % of DAMAN claims in outpatient] Description of Outpatient Claims Need to refer to CPT codes (large number) for mostly routine procedures Most bills in the end still of similar value (little spread) Real value (time of the doctor spent with the patient) not reflected Current Reimbursement System Move to a capitation-based model (i.e. pay per person seen) because it will greatly simplify and thereby encourage billing to increase revenues it is in-line with resource consumption (doctor’s time) no clinical data will be lost (provided that an ICD 9 diagnosis is furnished with the claim) Solution For Discussion