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.