Ask the Experts: Calculating Contract DRGs
What is a simple way to accurately determine my current base DRG rate? I’ve tried several times to determine it based off of past Medicare explanation of benefits and never come up with the exact same amount. I’ve even called Medicare directly and received different amounts from different people.
Answer 1: Calculating the base DRG rate isn’t as daunting as it may appear. It’s always good to start with an overview of how the DRG standardized amounts are calculated. MedPAC provides a short introduction to the inpatient prospective payment system (IPPS) with a nice schematic in its Payment Basics series, last updated in October 2017.
The next place to go is the 2018 IPPS Final Rule tables:
- Tables 1A – 1E contain the operating and capital standardized amounts.
- Tables 2 – 3 show the wage indexes by CCN (Centers for Medicare & Medicaid Services [CMS] Certification Number) needed to identify which standardized amount tables to use.
- Table 5 has the DRG relative weights.
- Table 15 lists the adjustment factors for the Hospital Readmissions Reduction Program (HRRP) by CCN.
- Table 16B contains the actual FY18 Value Based Purchasing adjustment factors by CCN.
I’m omitting the indirect medical education (IME) and disproportionate share hospital (DSH) calculations.
This question was answered by: Christoph Stauder, FHFMA, CPA, president, Stauder Consulting, LLC, and a member of HFMA’s Oregon Chapter.
Answer 2: The CMS website under Medicare IPPS has public use files that will provide the base rate. Also, your payment and reimbursement department should have the details as well.
This question was answered by: Caswell Samms, III, vice president and CFO, WellStar Kennestone, and a member of HFMA’s New Jersey Chapter.
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