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

* A comparison of the resource consumption of medical and surgical cases.

* A comparison of the resource consumption of cases in which the patient was discharged alive with cases in which the patient died during the hospital stay.

* An evaluation of cases where secondary diagnoses are necessary to determine the DRG assignment.

* An evaluation of cases where secondary diagnoses indicate adverse results of treatment during hospitalization.

* An evaluation of cases coded for conditions that are "not elsewhere classified" (NEC) and "not otherwise specified" (NOS).

In the sections that follow, we describe our methodology for evaluating secondary diagnoses and then describe each of the five special analyses.

Evaluation Methodology

We evaluated the effects of each diagnosis for cases in which the diagnosis is a secondary condition. Secondary diagnoses were defined as CCs if they currently are CCs for Medicare. A diagnosis was classified as an MCC if it was defined that way for the New York AP-DRGs. The current CC and MCC exclusions were used.(8) Cases were grouped into three subsets based on the presence and CC status of the other secondary diagnoses of the case. Numerical values were determined for each secondary diagnosis when:

* The patient has no other secondary diagnosis or only non-CC secondary diagnoses.

* The patient has at least one other secondary diagnosis that is a CC but none that is an MCC.

* The patient has at least one other secondary diagnosis that is an MCC.

We then assessed the diagnosis' effect on resource use and determined the closest approximation of the subclass (non-CC, CC, or MCC) to which it belongs based on resource use. Each diagnosis was evaluated if Medicare data were available. To make this determination, the average charge of the subclass value for each subset of cases was compared with the expected charge, or the expected value, for cases in that subset. The numerical values assigned to each diagnosis are summarized in Table 3.

Table 3
Computational Values for Secondary
Diagnosis
Value                         Meaning
0           Significantly below expected value
            for the non-CC subclass.
1           Approximately equal to expected value
            for the non-CC subclass.
2           Approximately equal to expected value
            for the CC subclass.
3           Approximately equal to expected value
            for the MCC subclass.
4           Significantly above the expected value
            for the MCC subclass.
NOTES: CC is comorbid condition. MCC is major CC.
SOURCE: 3M/Health Information Systems, 1994.
   Alive/Dead

Values of each secondary diagnosis were reestimated as the lists of CCs and MCCs were changed. This was done because, as the diagnosis' designation was revised, the cases in which it appears as a secondary were reevaluated using the new designation. After several iterations, the numerical values and the designation of the diagnoses stabilized. Our evaluation also supported the non-CC designation as appropriate to the E-codes, which are diagnosis codes used to classify external causes of injury and poisoning that are designated as non-CCs under the current DRG system. Final calculations of numerical values were made and we proceeded to our next step.