Workshop presentation

2014 DRG Workshop
Health Authority – Abu Dhabi
September 30, 2014
2014 DRG Workshop Meeting Minutes
30 Sep 14
ID Agenda item
DRG Workshop
Presented by Lina Jichi, Marwan Al Naoulsi, and Luis Perfetti from HAAD
a) Overviews of Published 2014 DRG Circular and documents
b) DRG Weight Update process
c) HCPCs Add-On Tool worksheet and document
Full presentation including all the changes effective Sep 15th, 2014 is available under:
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1) Confirmed attendees awareness that the outlier payment threshold (Basic Gap) has been reduced from 50,000
AED to 25,000 AED effective on Sep 15, 2014 for the Basic product, and for other products it is effective on the
agreed date per Standard Provider Contract or January 1st, 2015 whichever comes first. Gap and marginal can be
negotiated per DRG code per agreed Standard Provider Contract as well.
2) A discussion on HCPCS add on payment took place during the meeting on whether the price of HCPCS is the
invoice cost only or it includes provider markup + handling cost as mentioned in the "fee for service" billing under the
Claims and Adjudication rules. HAAD clarified to use the invoice cost for HCPCS in DRG claims billing and this will
be clarified in the HCPCs methodology document.
3) Reiterated that the HCPCS add on payment is only for the listed items on published Table A and only when they
cost at least 5000AED, this HCPCS add on payment was effective as of encounter start date September 15, 2014
along with the DRG updated weights as per HAAD Circular No. DG 37/14
4) Provider and payers confirmed their readiness to implement HAAD Circular No. DG 37/14
2014 DRG Workshop Meeting Minutes
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5) Providers and payers were equally concerned with requiring a second pre-authorization of consumables/devices if
additional consumables are needed during the inpatient stay. An agreement was reached that a notification is
OPTIONAL between providers and payers with no basis for claim rejection.
6) To avoid rejections due to calculation discrepancies, payers and providers recommended to change the number of
digits in the HCPCS add on tool to produce a rounded number to two decimal places throughout the calculation tool.
The HCPCs document and tool reflecting the change are updated on Shafafiya effective October 1st.
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7) It was presented how to submit claims using the new Routine Reporting Requirements as mentioned in the
published 20140901_HCPCS_Reimbursement_DRG_Update.docx document:
- Three observations can be used for each High cost HCPCS submitted: cost, description and invoice file attachment
- Although the method of sending files through observations has been available since the KEH system's beginning,
providers raised a concern that their own system is not ready to send this invoice file as an observation
- HAAD explained that the file attachment is currently an optional observation and will leave it as per payer and
provider agreement. If the invoice file will be sent thru KEH, it has to be done as described in the Routine Reporting
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8) It was explained that, as part of the Information Security requirements, HAAD has integrated shafafiya to the
main HAAD platform for the management of the users. New users have now a screen to add their data and a
process to get authorized, using the PRO of the organization to approve electronically. Also they can change the
password any time. The systems will impose password complexity and will have an expiry: after password expiry
shafafiya will not allow more transactions for the expired user. The expiry of a password will happen every 90 days.
Manually the providers will have to change the password. A circular and guidelines will be issued shortly about the
 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
 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?
Normal Delivery
Cesarean Delivery
DRG code 146131
DRG code 146101
Room & Board: 2 days
Simple Procedures(CPT)
Avg Basic fee for service = 4,646 AED
146131 DRG Weight
 ~0.600
DRG Payment = Base Rate X0.600 +outlier
Room & Board: 4 days
Complex Procedures(CPT)
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 Consumables Committee - HCPCs Prices Template
Facility ID:
Experience Period From?/?/2013
1- Choose a specified period in 2013 or 2014 (month, several months, ..) where you will count (estimate)how many the facility used in that period and enter that period in Cells H2 & J2
2- In column C (Facility Reported Price), fill out the price (cost to the facility)of the consumable per HCPCs coded item, and in column D (Facility Reported Average quantity per inpatient
3- For each consumable that has multiple prices (depending on brand, size, modifier, ..etc), calculate the weighted average price per the HCPCs code
Experience Period To ?/?/2013
Code Description
Facility Reported Average
Facility Reported Average
Total Average Price per
Number of
Assigned DRG code Comments (new technology,
Price (AED)
quantity per inpatient
Inpatient Encounter (AED)
(if available)
rarely used, ..)
2014 DRG Enhancements
2014 DRG Enhancements
Step 1
Reduce Outlier
payment threshold
(‘basic Gap’) by 50%,
and incentivize
providers to bill for
outlier payments (at
least 20M AED
annually do not get
Now Basic Gap =
25,000AED (Down
from 50,000AED)
Step 2
Update DRG weights
using fresh market data.
Smooth weight changes
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
Step 3
Step 4
Improve high HCPCS
Revise Mandatory
implants and
Tariff prices both
Consumables related
outpatient and
DRGs weights based on
inpatient by qualified
directly collecting HCPCS international
prices from providers.
organization using
Plus, implementing limited patient utilization
list of High Cost
pattern, market
Technology Add-on
feedback, and
payment program
reference pricing
Step 5
Create Native to Abu
Dhabi DRG grouper to
customize the DRG
classification to Abu
Dhabi needs.
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
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.
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
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:
• 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* handles similar add on payments and also a goal to
support an efficient payment system.
High Cost Consumables and Devices List
Table A - High Cost Consumables
Anchor/screw for opposing bone-to-bone or soft tissue-to-bone (implantable)
Cardioverter-defibrillator, dual chamber (implantable)
Cardioverter-defibrillator, single chamber (implantable)
Catheter, electrophysiology, diagnostic, other than 3D mapping (20 or more electrodes)
Catheter, electrophysiology, diagnostic/ablation, 3D or vector mapping
Joint device (implantable)
Mesh (implantable)
Pacemaker, dual chamber, rate-responsive (implantable)
Pacemaker, single chamber, rate-responsive (implantable)
Septal defect implant system, intracardiac
Stent, coated/covered, with delivery system
Stent, coated/covered, without delivery system
Cardioverter-defibrillator, other than single or dual chamber (implantable)
Lead, left ventricular coronary venous system
Continuous airway pressure (CPAP) device
Implantable cardiac event recorder with memory, activator and programmer
Patient lift, electric with seat or sling
Cochlear device, includes all internal and external components
HCPCS Add-on payment tool
Add-On Calculation Tool: How to calculate the add-on payment for the specified high cost technology and consumables
Add on Payment = 75% X Diff (Cost 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
- HCPCS Activity Cost for this Add on Payment in a DRG claim is defined to be the invoice cost amount
High Cost Technology Add-on Payment Tool
Fill out the values in the gray boxes only
DRG Code
061131 IP Appendiceal Procedures
Product DRG Base Rate
DRG Payment
Sum of listed high cost HCPCs prices
HCPCS Portion %
rounded to 2 decimal places
rounded to 4 decimal places
Add on Payment = 75% X Diff (Price for High Cost Listed HCPCS in a DRG claim - DRG HCPCs portion AED)
Add - on Payment = 75% X (
Add - on Payment Amount =
Total payment
7,500.00 5,313.04
rounded to 2 decimal places
rounded to 2 decimal places
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:
Item Question
Option 1
Option 2
Option 3
Overall annualized
revenue impact on your
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
Overall annualized
revenue impact on your
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 % Positive
in the Comments section
Highlight specific DRG
weight changes that
solve existing problems
Will the proposed DRG weight /outlier changes that will increase revenue for specific
specialty area encourage change of behavior or increase private investments? Please
Highlight specific DRG
weight changes that
create a problem
Will the proposed DRG weight /outlier changes that will decrease revenue for specific
specialty area encourage change of behavior or decrease private investments? Please
Identify specific potential
competitive issues that
could arise from the
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
Do you support the implementation for both DRG weights and outlier payment changes to
be March 15th, 2014?
For Payers and Providers
Do you support the implementation of only DRG outlier payment changes to be March
15th, 2014?
For Payers and Providers
Do you see DRG weight /outlier changes will improve access for your members/patients to
health care services in Abu Dhabi? Please specify
Do You have other comments you want to share?
For Payers and Providers

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