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.