Toward a prospective payment system for ambulatory surgery

Health Care Financing Review, Spring, 1990 by Joanna Lion, James Vertrees, Alan Malbon, Ann Collard, Peter Mowschenson

Very expensive ambulatory procedures (such as cataract surgery) tend to have weights that differ little from much less expensive ambulatory procedures (such as a polypectomy done through a scope). The clinical reason for this is almost certainly that cataract surgery represents a homogeneous set of procedures. Other homogeneous groups of procedures are dilatation and curettage, carpal tunnel release, breast biopsy, and other eye procedures. All of these DRGs have relatively similar ratios of outpatient facility charges to weights. Iris procedures, anal procedures, and skin procedures, however, are clinically heterogeneous, with only the more minor ones being performed on an outpatient basis.

Anal procedures are a case in point. DRG 157 is among the DRGs intended to capture only surgical procedures requiring an inpatient stay. Within this DRG, polyps in the large colon adjacent to the anus were removed on an inpatient basis using an abdominal approach. New technology has made possible the removal of these polyps using a scope procedure; this procedure is now being done on an outpatient basis. Within this DRG, then, local excision of the large bowel (ICD-9-CM procedure code 45.41) is now done inpatient only when actual incisional surgery is involved; when scoping only is involved, the procedure has moved to the OPD. For 1985, the inexpensive scoping procedure, still coded 45.41, accounted for 82 percent of the outpatient procedures done in this DRG.

Under these circumstances, it appears as though the DRGs would require an independent set of weights calculated for ambulatory surgery. Researchers from the Center for Health Policy Studies (CHPS) came to this same conclusion while analyzing surgical DRGs for private patients reimbursed for by Blue Cross of Eastern Pennsylvania (Center for Health Policy Studies, 1987). CHPS researchers found that total hospital reimbursement increased when outpatient surgery was put on a DRG basis in the two experimental hospitals they studied. The mix of DRGs for ambulatory surgery is considerably different for younger, private patients than for the aged Medicare population. Because data on ambulatory surgery in non-Medicare populations were difficult to obtain, Table 6 has been adapted from the unpublished CHPS Blue Cross Study and is included here. The only ambulatory surgery DRGs found in common among the Medicare beneficiaries and the Blue Cross populations under 65 years of age are dilatation and curettage (DRG 364) and carpal tunnel release (DRG 6). This dissimilarity of procedures will have to be considered, of course, in any prospective payment system that, like DRGs, spans both Medicare and other payers.

In order to justify use of a particular system in both inpatient and ambulatory settings, there must be consistent differences in the two settings. Use of the inpatient DRG weights allows comparisons of these differences. Using these weights, both this article and the CHPS study have shown that the ratio of resource use for particular surgical DRGs is different in the inpatient and outpatient settings. The conclusion is that inpatient DRGs cannot be easily or logically translated for use in ambulatory surgery populations of any age group.