Refinement of the Medicare diagnosis-related groups to incorporate a measure of severity - Medicare Payment Systems: Moving Toward the Future

Health Care Financing Review, Winter, 1994 by Nancy Edwards, Dorothy Honemann, Dana Burley, Maria Navarro

Because the RDRGs represent a significant increase in the number of patient classes, several issues are raised:

* The number of low-volume RDRGs.

* The stability of the relative weights over time.

* The ability of the RDRGs to capture the difference in the amount of resources used to treat cases as severity increases.

Compared with the current Medicare DRGs, the Yale RDRGs result in a sizeable increase in the number of low-volume DRGs, and an even more significant increase in the number of DRGs with 30 or fewer cases. This creates a rise in the number of DRGs for which there are insufficient cases to calculate precise estimates of average resource consumption. Examining the stability of relative weights between 2 years of data, the relative weights of 48 percent of all Yale RDRGs changed by 5 percent or more. For the same 2 years, only 24 percent of the Medicare DRGs changed by 5 percent or more. Thus, RDRG-based relative weights are less stable over time than weights based on Medicare DRGs.

The differences in relative weights between adjacent severity classes were analyzed to ensure that the relative weights and charges increase along with severity class. For medical RDRGs, the relative weights of the "moderate" class of RDRGs are, on average, almost 40 percent higher than those for the "minor or no CC" class. The "major" RDRGs have, on average, a relative weight that is 65 percent higher than the "moderate" class. For surgical RDRGs, the average relative weight is 23 percent higher for "moderate" RDRGs than for "minor or no CC" RDRGs. The major RDRGs have average relative weights 34 percent higher than "moderate" RDRGs. The average relative weights of the "catastrophic" RDRGs are 66 percent higher than those for the "major" RDRGs. Thus, it appears that RDRGs consistently capture the differences in the amounts of resources used to treat more severe cases. These results indicate a per case patient classification system that incorporates severity distinctions representing an improvement in the explanation of resource use.

New York's AP-DRGs

In 1987, the State of New York enacted legislation mandating a PPS for all non-Medicare patients. The State Department of Health was required to assess the appropriateness of HCFA DRGs for a non-Medicare population, including a specific evaluation of the appropriateness for cases involving neonates and patients with the human immunodeficiency virus (HIV). When first implemented on January 1, 1988, the New York AP-DRGs expanded the Medicare DRG classification system to include newborn and neonate DRGs based on birth weight and ventilator dependence. These additional categories were modified versions of the neonatal categories of the Pediatric-Modified DRG system developed by the National Association of Children's Hospitals and Related Institutions (NACHRI).

In 1990, New York refined its DRG system by the addition of a severity measure. New York developed a list of secondary diagnoses that were considered to have a major effect on resource use when present in a case. This list was based on the Yale secondary diagnoses. designated "catastrophic" for surgical cases and "major" for medical cases. New York modified this list to eliminate diagnoses that do not appear to be consistently catastrophic or major or that were susceptible to code manipulation. In addition, New York expanded the CC list by adding other diagnoses that are not considered catastrophic or major in the RDRGs based on the clinical judgment of medical staff.