1. An Overview of 3M TM All Patient Refined Diagnostic Related Groups (3M APR DRG) 1 Lisa Lyons, Product Marketing Manager 3M HIS July 13, 2012

2. 3M Health Information Systems 3M APR-DRG Education Session Agenda  Introduction to APR DRG  Differences between MS DRG and APR DRG  APR-DRG clinical logic primer  Uses of APR-DRGs.  Steps for Your Organization’s Success.  Frequently Asked Questions 2

3. 3M Health Information Systems 3M Approach 3© 3M 2011. All Rights Reserved. Set the right foundation 3M All Patient Refined Diagnostic Related Groups 3M Enhanced Ambulatory Groups Improve Quality Outcomes Acute Care Outcomes 3M Potentially Preventable Complications 3M Potentially Preventable Readmissions Community Outcomes 3M Potentially Preventable ED Visits 3M Potentially Preventable Initial Admissions 3M Potentially Preventable Ancillary Services Understand the overall burden of illness you carry 3M Clinical Risk Groups Understand your total cost of care CMS Episodic Grouper 3M Patient centered episode grouper Value Based Health Care

4. 3M Health Information Systems 44% Doctors or other health professionals comparisons. 36% Hospitals or other medical facilities comparisons 66% Look up information on specific conditions The Internet Dynamic- reputation 3 most popular reasons for going online: 1.Checking Email 2.Search engines 3.Search healthcare information.

5. 3M Health Information Systems © 3M 2009. All rights reserved. Importance of Understanding Risk Adjusted Data 5

6. 3M Health Information Systems How are 3M Methodologies updated? Clinical Panels review clinical logic for needed adjustments Hospitals State Agencies input New literature evaluated New code set Data is run to validate changes 2 tier Peer review of changes are reviewed

7. 3M Health Information Systems Difference between CMS MS DRG and 3M APR DRG MS DRG  Data Source - Medicare  Coverage- 65+ years old  3 levels of severity  Not all conditions contain 3 levels of severity  No risk categorization for risk of dying  Intended for reimbursement only APR DRG  Data Source- All payer  Coverage includes all ages  4 levels of severity  All conditions have 4 levels of severity  4 levels of risk of mortality for every condition.  Used in both reimbursement and quality performance measurement 7 © 3M 2011 - 3M Confidential - For Customer's Internal Review Only. Further use or disclosure requires prior approval from 3M.

8. 3M Health Information Systems What are APR DRGs?  All Patients Refined Diagnosis Related Groups (APR DRG) is a classification system that classifies patients according to their reason of admission, severity of illness and risk of mortality.  The patient characteristics used in the definition of the DRGs are limited to information routinely collected on hospital abstract systems.  There are a manageable number of DRGs which encompass all patients seen on an inpatient basis.  Each DRG contains patients with a similar pattern of resource intensity.  Each DRG contains patients who are similar from a clinical perspective. 8

9. 3M Health Information Systems © 3M 2009. All rights reserved. Summary of APR DRGs MDC Subdivide each base APR DRG into subclasses Four Severity of Illness Subclasses 1.Minor 2.Moderate 3.Major 4.Extreme Four Risk of Mortality Subclasses 1.Minor 2.Moderate 3.Major 4.Extreme 314 APR DRGs + 2 error DRGs 1256 Subclasses 25 MDCs 1256 Subclasses Severity of Illness is used for payment 9

10. 3M Health Information Systems Key Definitions  Severity of Illness: the extent of physiologic decompensation or organ system loss of function  Risk of Mortality : the likelihood of dying  Resource Intensity : the relative volume and types of diagnostic, therapeutic and bed services used in the management of a particular disease 10

11. 3M Health Information Systems SOI and ROM are Independent The severity of illness and risk of mortality subclass are calculated separately and may be different from each other. ROM = 1 Low risk of mortality Significant Organ Decompensation SOI = 3 Acute Cholecystitis 11

12. 3M Health Information Systems Example of Severity of Illness Progression of Diagnoses Severity Of Illness Secondary Diagnosis of Diabetes Mellitus 1 MinorUncomplicated Diabetes (250.0X) 2 ModerateDiabetes with Renal Manifestation (250.4X) 3 MajorDiabetes with Ketoacidosis (250.1X) 4 SevereDiabetes with Hyperosmolar Coma (250.2X) 12

13. 3M Health Information Systems Fundamental Principle of APR DRG Clinical Logic:  Severity of illness and risk of mortality are dependent on the patient’s underlying condition (i.e., the base APR DRG).  High severity of illness and risk of mortality are characterized by multiple serious diseases and the interaction of those diseases. 13

14. 3M Health Information Systems Explanation of APR DRG Methodology Phase 0 Assign the base APR DRG Phase I Determine level of each secondary diagnosis Phase II Determines a base subclass for the patient based on all of the patient’s secondary diagnoses Phase III The final subclass for the patient is determined 6 steps 3 steps 9 steps 18 steps total 14

15. 3M Health Information Systems Assign the Base APR DRG 15

16. 3M Health Information Systems SOI Phase I: Step 1 Eliminate secondary diagnoses (SDX) that are associated with principal diagnosis (PDX) Step 2 Assign each secondary diagnosis its standard severity of illness (SOI) 1-Minor 2-Moderate 3-Major 4-Extreme Modify the standard severity of illness of each secondary diagnosis based on: Step 3 Age Step 4 APR DRG and PDX (DRG 190) Step 5 APR DRG Step 6 Non-OR procedures 16 Phase I Determine level of each secondary diagnosis Phase I Determine level of each secondary diagnosis

17. 3M Health Information Systems SOI Phase II: Step 7 Eliminate SDXs that are redundant with other SDXs. Step 8 Combine all SDX to determine the base SOI subclass for the patient. (Highest SOI used) Step 9 Reduce the subclass of patients in level 3 or 4 to next lower subclass if no multiple secondary diagnoses at a high severity of illness level exist. Phase II Determines a base subclass for the patient based on all of the patient’s secondary diagnoses 17

18. 3M Health Information Systems SOI Phase III: Modify patient SOI subclass based on the interaction of: Step 10 APR DRG and PDX Step 11 APR DRG and age or APR DRG and PDX and age Step 12 APR and non-OR procedure Step 13 APR DRG and OR procedure Step 17 Establish a minimum SOI subclass based on the presence of specific combinations of categories of SDXs. Step 18 Compute the final SOI subclass based on a hierarchy established for steps 9-17 Phase III The final subclass for the patient is determined Modify patient SOI subclass based on the interaction of: Step 14 APR DRG and pairs of OR procedures Step 15 APR DRG and ECMO and presence/absence of certain OR procedures (DRG 583) Step 16 APR DRG and PDX and non-OR procedures 18

19. 3M Health Information Systems MDC 15 Criteria  Age at admission = 0 - 7 days  Age at admission = 8 -14 days and birthweight <1,000 grams  Age at admission = 8 -14 days, birthweight 1,000 -1,999 grams, and procedure from MDC 15 list of major O.R. procedures  Age at admission = 8 -14 days, birthweight 1,000 -1,999 grams, and mechanical ventilation (procedure codes 9670, 9671 and 9672)  Age at admission = 8 -14 days and principal diagnosis of an acute perinatal problem 19

20. 3M Health Information Systems New criteria for low birth weight babies…  DRG 589- Neonate BWT <500G or GA <24 weeks  MDC 15 neonates who do not meet the criteria for DRGs 580,581, 583, or 588, and  Birthweight < 500 grams- (PDX, SDX, or entered*), or  Birthweight 500-999 grams (PDX, SDX, or entered*) and gestational age <24 weeks (PDX or SDX of 76521), or  Birthweight 500-749 grams (PDX,SDX, or entered*) and does not have any life sustaining non-O.R. premature newborn intervention procedures as listed  For SOI and ROM assignment, DRG 589 will bypass the usual 18 step algorithm 20

21. 3M Health Information Systems PDX: 562.11 Diverticulitis of colon Proc: 45.71 Multiple segmental resection of large intestine Case 1Case 2Case 3Case 4Description Secondary Diagnoses 569.41 560.9 569.41 560.9 422.99 426.0 569.41 560.9 422.99 426.0 584.9 Ulcer of anus and rectum Unspecified intestinal obstruction Acute myocarditis Atrioventricular block, complete Acute renal failure, unspecified CMS DRG APR DRG 149 wo CC 221 Subclass 1 148 w CC 221 Subclass 2 148 w CC 221 Subclass 3 148 w CC 221 Subclass 4 Major small and large bowel procedures CMS DRG APR DRG 2.3164 1.3322 4.2303 1.7681 4.2303 2.9531 4.2303 6.3732 Payment weights * * Payment weights are budget neutral and computed from a national database 21

22. 3M Health Information Systems PDX V3000: Single liveborn, born in hospital, delivered without mention of cesarean section Admission age in days: 0 Discharge status: Home Birthweight: 500G Case 1Case 2Case 3Case 4Description Secondary Diagnoses 748.4 770.8 748.4 770.8 753.0 Congenital Cystic Lung Respiratory Failure of NB Renal Agenesis CMS DRG APR DRG 391 591 Subclass 1 390 591 Subclass 2 389 591Subclass 3 389 591 Subclass 4 Normal Newborn/ Newborn with other significant problems/Full Term Neonate w/ Maj. Prob. Neonate, birth weight 500-749G, without major procedure CMS DRG APR DRG 0.2560 0.1134 0.2892 2.6320 0.6430 12.8901 0.6430 23.1141 Payment weights * * Payment weights are budget neutral and computed from a national database 22

23. 3M Health Information Systems How is Chocolate Cake like APR DRG’s?

24. 3M Health Information Systems Keys to Success 1.Complete and Accurate coding ( including POA)  Changes to HIM productivity may be needed 2.Documentation Improvement/Concurrent review 3.Use APR DRG throughout organization 4.Know where you stand - Monitor rates 5.Tools to analyze your data - Distribution Matters

25. 3M Health Information Systems CMS DRG to APR DRG Migration © 3M 2009. All rights reserved. Complete and Accurate Coding Concurrent Review of Documentation Common Language for entire organization Accurate representation of CMI Coders strong in anatomy, physiology, and patho-physiology Coders benefit from seeing grouped data Provides early dialog and queries for most accurate data Allows data to be used for performance, finance and quality and IT Clinical Specificity 25

26. 3M Health Information Systems © 3M 2009. All rights reserved. Severity-Based Index Example Data Source: 3M APR DRG Classification System utilizing MEDPAR 2007 data LOSLOS COST Severity-Adjusted Average Length of Stay and Cost 26

27. 3M Health Information Systems © 3M 2009. All rights reserved. Severity Index Distribution for APR DRG Data Source: 3M APR DRG Classification System utilizing MEDPAR 2007 data On average, 55% of cases in the peer group are paid without a MCC vs. Hospital A, which has 80% of their cases without a MCC 27

28. 3M Health Information Systems Who Uses APR DRGs:  Groups using the APR DRG  Providers  Quality Improvement  Clinical Improvement  Utilization Management  Strategic Planning  Operations/Finance  Payers  Managed care  States  Consumer  Public Reporting 28

29. 3M Health Information Systems Why is Risk Adjustment so important for Analytics?  Allows for apples to apples comparisons  Make data more actionable  Can be quantifiable  Ties quality outcome to financial performance  Better analytics  More accurate trending

30. 3M Health Information Systems

31. Potentially Preventable Complications Profile 4 Hospital System Example: $6.4M Annual PPC Cost $4.9M (77%) represents the top 10 4 Hospital System Example: $6.4M Annual PPC Cost $4.9M (77%) represents the top 10

32. 3M Health Information Systems PPR rates by SNF and Relative Severity. © 3M 2011 - 3M Confidential - For Customer's Internal Review Only. Further use or disclosure requires prior approval from 3M.32

33. 3M Health Information Systems Who Uses APR DRGs:  Groups using the APR DRG  Providers  Quality Improvement  Clinical Improvement  Utilization Management  Strategic Planning  Operations/Finance  Payers  Managed care  States  Consumer  Public Reporting 33

34. 3M Health Information Systems APR DRG is used for NJ gain sharing pilot © 3M 2011 - 3M Confidential - For Customer's Internal Review Only. Further use or disclosure requires prior approval from 3M.34

35. 3M Health Information Systems 35 Case study of how to calculate a reimbursement from APR DRG and SOI. Base Rate Ex: $8200 Base Rate Ex: $8200 Relative Wt by APR/SOI Est. Reimb. $$ Formula

36. 3M Health Information Systems Frequently Asked Questions 1.Why Non OR procedures? 2.Palliative Care - how is this considered in the ROM assignment? 3.How many codes do you need for an accurate SOI? 4.Does the choice of principal diagnosis affect SOI and ROM? 5.What is the productivity difference of using APR DRG? 6.Will I see a difference in days to final bill? 7.What is the Admission APR DRG? 8.Do I need to use a different standard for coding? 9.Does APR DRG have interfaces to my HIS system? 10.Any other questions? © 3M 2009. All rights reserved. 36

37. 3M Health Information Systems © 3M 2009. All rights reserved. Admission APR DRG  Leverages POA  Adds seven steps to the APR assignment process  Used to Assign and risk adjust complication rates  Used to Risk Adjust Mortality Rates

38. 3M Health Information Systems REFERENCE 38

39. 3M Health Information Systems © 3M 2009. All rights reserved. 6/10/2016© 3M 2007. All rights reserved. Characteristics of APR DRGs: Effects are additive not absolute Every secondary DX and all procedures are evaluated for their impact on a case 3 byte DRG + 1 byte SOI + 1 byte ROM APR DRGs are transparent APRs have increased payment categories to 1256 APRs are a statistically better methodology 39

40. 3M Health Information Systems Key APR Outputs: Core Grouping Software (CGS) & Grouper Plus System (GPS) and Mainframe Groupers  DRG  MDC  SOI (subclass)  ROM (subclass)  Diagnosis SOI (level)  Diagnosis ROM (level)  Diagnosis Affect DRG Flag  Diagnosis Affect ROM Flag  Diagnosis Affect SOI Flag  Procedure Affect DRG Flag  Procedure Affect ROM Flag  Procedure Affect SOI Flag Full set of outputs available for both admission and discharge APR DRGs 40

41. 3M Health Information Systems 3M Product Inputs & Outputs  Only standard grouping inputs required  Diagnoses with POA  Procedures  Patient age  Patient sex  Discharge status  Birthweight  No change to grouper outputs  Changes to reimbursement outputs not yet known, expected to be simplified. 41

42. 3M Health Information Systems Products  3M TM APR DRG grouping software  Interactive – allows you to see the grouped information at the point of coding  Batch – Core grouping software – allows you to send a batch file of abstracted data to report grouping information.  3M TM Advanced Analyzer Software  Works with Coding and Reimbursement system to assist in complete and accurate coding.  3M TM 360 Encompass suite  Assists HIM departments in more accurate documentation, coding and higher productivity.  Other products and services are available. © 3M 2009. All rights reserved. 42