(a) For discharges
on or after January 1, 2024, the department will reimburse inpatient hospital
services provided by general acute care hospitals on a per-stay basis using a
Diagnosis Related Groups (DRG) payment methodology. The department will apply
the DRG payment methodology to in-state general acute care hospitals, except
hospitals listed in (b) of this section, and to all out-of-state hospitals. The
department will designate certain out-of-state hospitals with a high volume of
Medicaid claims for this state as border hospitals for reimbursement purposes.
Components of the DRG payment methodology are as follows:
(1) the department will determine and assign
hospital-specific DRG base rates to in-state general acute care hospitals
subject to the DRG payment methodology and to designated border hospitals; the
department will determine and assign a single DRG base rate to all other
out-of-state hospitals;
(2) the DRG
grouper used to assign inpatient stays to a DRG is an All Patient Refined
Diagnosis Related Groups (APR DRG) grouper; the APR DRG system classifies each
inpatient stay based on information contained in the Medicaid inpatient claim,
including diagnosis codes, procedure codes, discharge status codes, and patient
characteristics;
(3) DRG relative
weights are derived from an APR DRG national hospital-specific relative value
(HSRV) weight set for the version of the grouper that is in place; the
department may scale the DRG relative weight values to represent Medicaid
claims experience for this state to achieve a case mix index of 1.0;
(4) average lengths of stay are derived from
an APR DRG national weight set for the version of the grouper that is in
place;
(5) a Healthcare Acquired
Conditions (HAC) utility is used to remove HACs from consideration in an APR
DRG assignment;
(6) the department
may multiply DRG relative weights by policy adjustors based on patient age or
the patient's APR DRG assignment to increase or decrease reimbursement; each
APR DRG is assigned to a service category determined by the
department;
(7) the DRG base
payment before the application of other payment adjustments is calculated as
follows:
DRG base rate * APR DRG relative weight * policy adjuster =
DRG base payment;
(8)
transfer adjustments that are based on uniform billing discharge status codes,
as set out in the American Hospital Association's
Official UB-04 Data
Specification Manual, 2024 edition, adopted by reference in
7
AAC 160.900(a), and that are based on
length of stay, prorate payments as follows:
(A) transfer adjustments apply in cases where
a patient is transferred to another hospital before completing the expected
full course of treatment as determined by the national length of stay for the
APR DRG assigned to a case;
(B) the
transfer payment policy applies to the hospital making the transfer; the
hospital receiving the patient is not subject to the transfer payment
policy;
(C) APR DRGs that are
specifically described to apply to transferred patients are exempt from
transfer payment adjustments;
(D)
in the transfer adjustment calculation, one day is added to the actual length
of stay to reflect the higher costs of care that typically occur on the first
day of an inpatient stay;
(E) the
discharge status codes triggering a transfer payment are discharge status codes
02, 05, 62, 63, 65, 66, 82, 85, 90, 91, 93, and 94;
(F) if the actual length of stay plus one is
less than the national average length of stay and the discharge status code on
the claim is one specified by the department to trigger the transfer
adjustment, the transfer adjustment calculation is as follows:
(DRG base payment / national average length of stay) *
(actual length of stay + 1) = transfer-adjusted allowed
amount;
(9) the
department will make outlier payments for high-cost cases; in order to receive
an outlier payment, the estimated financial loss to a hospital must exceed a
threshold, calculated by the department, that aims to result in outlier
payments between five percent and 15 percent of total payments; the department
will multiply amounts in excess of that threshold by a marginal cost
percentage, as follows, to calculate outlier payments:
(A) estimated cost is calculated as: charges
* cost-to-charge ratio = estimated cost;
(B) estimated gain or loss is calculated as:
DRG base payment (or transfer-adjusted allowed amount if applicable) -
estimated cost = estimated gain or loss;
(C) if estimated loss is greater than the
cost outlier threshold, the claim qualifies for an outlier payment; the
department will publish the cost outlier threshold value on the department's
website;
(D) the outlier payment is
calculated as: (estimated loss - cost outlier threshold) * outlier payment
percentage = cost outlier payment;
(E) outlier payments are added to the DRG
base payment, or transfer-adjusted allowed amount if applicable;
(10) the department will utilize a
cost-to-charge ratio in the calculation of outlier payments; the department
will assign a hospital-specific cost-to-charge ratio to in-state general acute
care hospitals and designated border hospitals; the department will assign the
in-state average cost-to-charge ratio to all other out-of-state
hospitals;
(11) the department will
adjust the DRG base rate for an in-state teaching hospital for direct medical
education costs reported on the Medicare hospital cost report; the specific
criteria and methodology for teaching hospital base rate adjustments are
described in the
Alaska Provider Billing Manual, adopted by
reference in
7
AAC 160.900;
(12) the APR DRG base payment is calculated
by multiplying the hospital's base rate by the relative weight and each policy
adjustor; transfer adjustments and outlier payment calculations follow this
initial calculation;
(13) the
department will reimburse all services, supplies, and devices provided during
an inpatient stay through the DRG payment; however, the department may make a
payment in addition to the DRG payment for
(A)
a quality incentive program; or
(B)
another initiative adopted by regulation under the Administrative Procedure Act
(AS 44.62).
(b) The DRG payment methodology does not
apply to critical access hospitals, psychiatric hospitals, rehabilitation
hospitals, and long-term acute care hospitals. Tribally owned and operated
general acute care hospitals not being paid under the state payment methodology
are exempted from the DRG payment methodology. Tribally owned and operated
general acute care hospitals may opt in to the DRG payment methodology upon
notification to the department.
(c)
The department will assign a new in-state general acute care hospital or
designated border hospital the in-state average base rate and cost-to-charge
ratio until a hospital-specific base rate and cost-to-charge ratio can be
determined during the next biennial or triennial DRG rate update.
(d) The department will periodically update
base rates and other DRG system parameters. The department will make updates on
a biennial or triennial basis as determined by the department. If base rates
are updated triennially, the department will adjust base rates between years
two and three using the most recent quarterly publication of the IHS Markit
Healthcare Cost Review, Hospital Market Basket inflationary
index, available 60 days before the beginning of a facility's fiscal year. The
department will determine classification as a border hospital during the DRG
update process.
