1.0 APPLICABILITY
This policy is mandatory for reimbursement
of services provided by either network or non-network providers.
However, alternative network reimbursement methodologies are permitted
when approved by the Defense Health Agency (DHA) and specifically
included in the network provider agreement.
2.0 ISSUE
What is the purpose of DRG weighting factors
under the TRICARE DRG-based payment system, and how will they be
calculated, used, and updated?
3.0 POLICY
3.1 DRG Weighting
Factors. The DRG weights reflect the relative resource consumption
associated with each DRG. That is, the weight reflects the average
resources required by all hospitals to treat a case classified as
a specific DRG relative to the resources required to treat cases
in each of the other DRGs. All weights are standardized to a theoretical
average weight of 1.0 which is the average weight of all TRICARE
claims in the data base. (This is the relative weight of the national
average charge per discharge.)
3.2 Calculation of DRG weights.
The TRICARE weights are derived from charges. They will not reflect
standardization for capital or direct medical education expenses,
but the charges on which they are based are standardized for Indirect
Medical Education (IDME) differences. The TRICARE DRG weights will
be discharge-weighted. Specifically, the denominator used to calculate
each weight represents the national average charge per discharge
for the average patient. In order to calculate the DRG relative weights
the following procedures will be followed.
3.2.1 Grouping of charges. All discharge
records in the database will be grouped by DRG using the current
TRICARE grouper program.
3.2.2 Remove DRGs that represent
discharges with invalid data or diagnoses insufficient for DRG assignment
purposes. Therefore, these records are removed from the database.
3.2.3 IDME standardization.
To standardize the charges for the cost effects of IDME factors,
each teaching hospital’s charges will be divided by 1.0 plus the
following ratio on a hospital-specific basis:
• For admissions occurring
during Fiscal Year (FY) 2016, the above formula applies.
3.2.4 Calculation
of DRG average charges. After the standardization for IDME, an average
charge for each DRG category will be computed by summing charges
in a DRG and dividing that sum by the number of records in the DRG.
3.2.5 Calculation
of national average charge per discharge. A national average charge
per discharge will be calculated by summing all charges and dividing
that sum by the total number of records from all DRG categories.
3.2.6 DRG relative
weights. DRG relative weights will be calculated for each DRG category
by dividing each DRG average charge by the national average charge.
3.3 Empty and
low-volume DRGs. For any DRG with less than 10 occurrences in the
TRICARE database, the Director, DHA, or designee, has the authority
to consider alternative methods for estimating TRICARE weights in
these low-volume DRG categories.
3.4 Updating DRG weights. Medicare
is required to adjust the DRG relative weights under the Prospective
Payment System annually to ensure that the weights reflect the use
of new technologies and other practice pattern changes that affect
the relative use of hospital resources among DRG categories. Likewise,
every year during the annual DRG update DHA will recalculate all
DRG weights using TRICARE charge data and the methodology described
above.