Reimbursement for hospital inpatient services under no-fault for treatment rendered on and after January 1, 1988.

July 28, 1989 SUBJECT: INSURANCE Circular Letter No. 8 (1989) WITHDRAWN TO: AUTOMOBILE SELF-INSURERS AND INSURERS LICENSED TO WRITE AUTOMOBILE INSURANCE IN NEW YORK RE: REIMBURSEMENT FOR HOSPITAL INPATIENT SERVICES UNDER NO-FAULT FOR TREATMENT RENDERED ON AND AFTER JANUARY 1, 1988 This Circular Letter supplements Circular Letters No. 11 and 18 (1988) and provides updated information to enable no-fault "insurers to process and pay 1988,and 1989 hospital inpatient claims under the DRG (Diagnosis-Related Group) system. The Insurance Department has received 235 pages of revised data prepared by the Department of Health's Office of Health Systems Management. Upon receipt of a written request from the senior claims officer of your company, the Insurance Department will furnish one copy of this data to your company. Since this data has been provided to workers' compensation insurers, please request it only if you have not previously received it from another source. You should make this information available to all your claims personnel who are responsible for the review of hospital inpatient billings payable under the no-fault law. Hospitals will submit adjusted billings for 1988 hospitalizations based upon the revised data. information for the calculation of 1989 hospitalizations is also included with the data. This data, together with the sample calculations attached, will enable your claims personnel to make appropriate and timely DRG payments. It should be noted that the information is provided in a format which differs from that provided previously. Accordingly, the eight sample calculations included in the attachments supersede those provided with the previous circular letters, and should be used in calculating the 1988 adjustments, 1989 hospital bills and any future DRG billings. Amounts shown in the calculations are for illustrative purposes only and do not represent any particular hospital. In addition, the revised hospital inpatient fee schedule for the 1987 carryover rates is attached. These rates are applicable to patients admitted in 1987 and discharged in 1988. Requests for the revised data and any questions or problems in connection with DRG implementation involving no-fault insurers should be brought to the attention of Hyman Silberstein (212.602-0334), Senior Examiner, in the Department's Property and Casualty Insurance Bureau, at the above address. Very Truly yours, [SIGNATURE] Wendy E. Cooper Acting Superintendent of Insurance INDEX OF EXAMPLES (1) NO-FAULT CALCULATION OF INPATIENT HOSPITALIZATION BILLS FOR INLIERS (HOSPITALIZATIONS WITHIN TRIMPOINTS) WITH ALTERNATE LEVEL OF CARE (2) NO-FAULT ALTERNATE LEVEL OF CARE (3) NO-FAULT PAYMENT CALCULATION FOR. LONG STAY OUTLIER DRG WITH ALTERNATE LEVEL OF CARE (4) NO-FAULT PAYMENT CALCULATION OF SHORT STAY OUTLIER DRG (5) NO-FAULT TRANSFER PAYMENT WITH ALTERNATE LEVEL OF CARE COMPARED TO INLIER, SHORT STAY OUTLIER OR LONG STAY OUTLIER PAYMENT - (6) NO-FAULT HIGH COST OUTLIER WITH ALTERNATE LEVEL OF CARE (7) NO-FAULT DETERMINATION OF EXEMPT UNIT (HOSPITAL)"ACUTE CARE PAYMENT (8) NO-FAULT DETERMINATION OF ALTERNATE LEVEL OF CARE PAYMENT-EXEMPT HOSPITAL OR UNIT (1). Inlier This calculation is used for an inpatient hospitalization where the stay is within the trimpoints for that specific DRG, and no alternate level of care (ALC) is required. (2). Short Stay Outlier This calculation is used for an inpatient hospitalization where the stay is less than the short trimpoint for that specific DRG. (3). Short Stay Outlier Stay Outlier This calculation is used for an inpatient hospitalization where the stay is longer than the long trimpoint for that specific DRG. This calculation will provide the additional amount to be paid over a regular DRG (Inlier). (4). Alternate Level Of Care (ALC) This calculation is for an additional amount to be paid over the calculated amount for the DRG when the patient is awaiting release from the hospital either to a non-acute facility or when arrangements are being made for home health care. (5), (6) and (7) Inliers, Short Stay Outlier and Long Stay Outliers Compared to Transfer Payments These calculations "are made by a hospital which is transferring a patient to another acute facility. The. transfer amount cannot exceed the amount. of inlier, short stay outlier or long stay inlier DRG. (8). High Cost Outliers This calculation is used when a hospital's actual charges are far in excess of a calculated Inliers DRG payment only. It does not apply on short stay outliers, long stay outliers, or transfers. There are test checks within this calculation which are in accordance with New York State Health Department Laws [subpart 86.1.55(c)(2)] and should be followed carefully when determining any additional payment to be made. (9). Calculation for Exempt Unit Acute Care This calculation is for an exempt unit (hospital) - Medical Rehabilitation, Psychiatric, AIDS center, Alcohol Rehabilitation, etc. (10). Alternate Level Of Care Calculation For Exempt Unit This calculation is for a patient in an exempt facility awaiting release to a non acute facility or awaiting arrangements for home health care. SAMPLE CALCULATION (1) Blended Case Mix Neutral Rate Per Discharge WC/NF Pages 32-131 Col. 2 $ 2,340.00 (2) Base Year Malpractice Case Mix Neutral Cost WC/NF Pages 32-131 Per Case Col. 4 60.00 (3) Blended Rate Plus Malpractice Per Case Line 1 + Line 2 2,400.00 (4) DRG Classification UBF-1 27 (5) Per Case Service Intensity Weight(SIW) for DRG Class WC/NF Pages 13-23 2.8738 (6) Inlier DRG Line 3 x Line 5 $ 6,897.12 (7) Capital Cost Rate WC/NF Pages 32/131 Per Case Col. 3 280.00 (8) Inlier DRG Before Add-ons Line 6 + Line 7 $ 7,177.12 (9) Bad Debt and Charity Care Pool (a) percent WC/NF Pages 32-131 Col. 5 3.80% (b) amount Line 8 x Line 9(a) 272.73 (10) Excess Physicians' Malpractice Pool Rate WC/NF Pages 32-131 Per Case Col. 6 60.00 (11) SPARCS Rate Per Case WC/NF Pages 32-131 Col. 8 1.50 (12) a. Total No-Fault Payment Before Differential Line 8 + Line 9b + Line 10 + Line 11 7,511.35 b. Alternate Level of Care [if applicable] add amount calculated in. Example 2 Line 5 451.95 c. Total Line 12a + Line 12b 7,963.30 (13) a. Differential Subpart 86-1.51(c) 13% b. Amount Line 12C x Line 13a $ 1,035.23 (14) Total. No-Fault Inlier Payment With Alternate Level of Care Line 12C + Line 13b $ 8.998.53 SAMPLE CALCULATION (1) Alternate Care Operating WC/NF Pages 32-131 Per Diem Col. 9 $ 87.08 (2) a. Alternate Care Charity WC/NF Pages 32-131 Care Pool Percent Col. 10 3.80% b. Amount Line 1 x Line 2a 3.31 (3) Alternate Level of Care Per Diem Line 1 + Line 2b 90.39 (4) No. of Alternate Level of Care Days UBF-1 Box 144 5 (5) Total No-Fault Alternate Level of Care Payment Line 3 x Line 4 $ 451.95 Note: The above calculation is added (where applicable) to inlier, inlier and long stay outlier payment, high cost outlier payment or transfer payment for total payment. This calculation cannot be used with exempt units or exempt hospitals. LONG STAY OUTLIER PAYMENT WITH ALTERNATIVE LEVEL OF CARE - REVISED PAYMENT CALCULATION WORKSHEETS SAMPLE CALCULATION (1) Long Stay Group Specific Case Mix Neutral Cost Per WC/NF Pages 32-131 Discharge Col. 1 $ 2,550.00 (2) DRG Classification UBF-1 27 (3) Per Case Service Intensity. Weight For DRG Classification (SIW) WC/NF Pages 13-23 2.8738 (4) Subtotal Line 1 x Line 3 7,328.19 (5) Group Average Arithmetic Inlier Length of Stay for WC/NF Pages 13-23 DRG 11 (6) Subtotal Line 4/Line 5 666.20 (7) Long Stay Outlier Cost Adjustment Factor Subpart 86-1.55(b) .60 (8) Subtotal Line 6 x Line 7 399.72 (9) Price Component Percent Subpart 86-1.53 10% (10) Long Stay Outlier DRG Cost Per Day Line 8 x Line 9 39.97 (11) Number of Total Days UBF-1 (Field 199-5) 54 (12) Long Trimpoint WC/NF Pages 13-23 44 (13) Number of Long Stay Days Line 11 - Line 12 10 (14) Long Stay Outlier DRG Line 10 x Line 13 399.70 (15) Bad Debt and Charity Care Pool (a) percent WC/NF Pages 32-131 Col. 5 3.80% (b) amount Line 14 x LIne 15(a) 15.19 (16) Total No-Fault Payment Before Differential (a) Long Length. Of Stay Outlier Line 14 + Line 15b $ 414.89 (b) Inlier Example 1 Line 12a 7,511.35 (c) Alternate Level Of Care Example 2 Line 5 451.95 (d) Total Line 16a + Line 16b + Line 16c 8,378.19 (17) Differential (a) rate Subpart 86-1.51(c) 13% (b) amount Line 16(d) x Line 17 1,089.16 (18) Total No-Fault Long Stay Outlier Payment With Alternate Level of Care Line 16d + Line 17b $ 9.467.35 SHORT STAY OUTLIER PAYMENT - REVISED PAYMENT CALCULATION WORKSHEETS<*> SAMPLE CALCULATION (1) Blended Case Mix Neutral WC/NF Pages 32-131 Rate Per Discharge Col. 2 $ 2,340.00 (2) Base Year Case Mix Malpractice Case Mix WC/NF Pages 32-131 Neutral Cost Per Case Col. 4 60.00 (3) Blended Rate Plus Malpractice Per Case Line 1 + Line 2 $ 2,400.00 (4) DRG Classification UBF-1 27 (5) Per Case Service Intensity WC/NF Pages 13-23 Weight (SIW) for DRG Class 2.8738 (6) Subtotal Line 3 x Line 5 $ 6,897.12 (7) Group, Average Arithmetic Inlier Length of Stay For WC/NF Pages 13-23 DRG 11 (8) Subtotal Line 6/Line 7 627.01 (9) Short Stay Adjustment Factor Subpart 86-1.55(a) 150% (10) Short Stay Outlier DRG Cost Per Day Line 8 x Line 9 940.52 (11) Short Stay and Transfer WC/NF Pages 32-131 Capital Per Diem Col. 7 35.00 (12) Short Stay Outlier Cost Per Day Line 10 + Line 11 975.52 (13) Number Of Total Days UBF-1 (Field 199-5) 1 (14) Short Trimpoint WC/NF Pages 13-23 2 *PROCEED ONLY IF LINE 13 IS LESS THAN LINE 14 OR IS THE SAME DAY ADMISSION AND DISCHARGE. **WHERE THE GROUP ARITHMETIC INLIER LENGTH OF STAY IS EQUAL TO ONE, THE SHORT STAY PAYMENT SHALL BE NO MORE THAN THE MAXIMUM INLIER PAYMENT. SUBPART 86-1.55(a) SHORT STAY OUTLIER PAYMENT - REVISED PAYMENT CALCULATION WORKSHEETS<*> SAMPLE CALCULATION (15) Subtotal Line 12 x Line 13 $ 975.52 (16) Bad Debt & Charity Pool (a) percent WC/NF Pages 32-131 Col. 5 3.80% (b) amount Line 15 x Line 16(a) 37.07 (17) Excess Physician's Malpractice Pool Rate Per Case WC/NF Pages 32-131 Col. 6 60.00 (18) SPARCS Rate Per Case WC/NF Pages 32-131 Col. 8 1.50 (19) Total No-Fault Outlier Line 15 + Line 16(b) Before Differential +Line 17 + Line 18 1,074.09 (20) Differential (a) rate Subpart 86-1.51(c) 13% (b) amount Line 19 x Line 20(a) 139.63 (21) Total No-Fault Short Stay Outlier Payment Line 19 + Line 20(b) $ 1.213.72 DETERMINATION OF TRANSFER PAYMENT WITH ALTERNATE LEVEL OF CARE COMPARED TO INLIER, SHORT STAY OUTLIER OR LONG STAY OUTLIER PAYMENT SAMPLE CALCULATION (1) Blended Case Mix Neutral WC/NF Pages 32-131 Rate Per Discharge Col. 2 $ 2,340.00 (2) Base Year Malpractice Case WC/NF Pages 32-131 Mix Neutral Cost Per Case Col. 4 60.00 (3) Blended Rate Plus Malpractice Per Case Line 1 + Line 2 2,400.00 (4) DRG Classification UBF-1 27 (5) Per Case Service WC/NF Pages 13-23 Intensity Weight(SIW) For DRG Class 2.8738 (6) Subtotal Line 3 x Line 5 6,897.12 (7) Group Arithmetic Inlier WC/NF Pages 13-23 Length of Stay for DRG 11 (8) Subtotal Line 6/Line 7 627.01 (9) Transfer Adjustment Factor Subpart 86-1.54(1) 120% (10) Transfer DRG Cost Per Day Line 8 x Line 9 752.41 (11) Number of Transfer Days UBF-1.(Field 199-5) 8 (12) Transfer DRG Cost Line 10 x Line 11 6,019.28 *NOTE: TOTAL TRANSFER PAYMENT CAN NOT EXCEED AMOUNT THAT WOULD HAVE BEEN PAID IF PATIENT HAD BEEN DISCHARGED (13) Discharge DRG Test a. Inlier DRG Example (1), Line 6 $ 6,897.12 b. Long Stay Outlier DRG Example (3), Line 14 c. Short Stay Outlier-DRG 1. Short Stay Outlier DRG Cost Per Day Example (4), Line 10 2. Number of Days Example (4), Line 13 3. Short Stay Outlier DRG Line 13c1 x Line 13c2 EXAMPLE 5: DETRMINATION OF TRANSFER PAYMENT WITH ALTERNATIVE LEVEL OF CARE COMPARED TO INLIER, SHORT STAY OUTLIER OR LONG STAY OUTLIER PAYMENT SAMPLE CALCULATION ** NOTES: THE ABOVE TEST WOULD ONLY INCLUDE 6U OF THE FOREGOING CALCULATIONS (A,B, OR C) - DO NOT PROCEED UNLESS LINE 12 IS LESS THAN LINE 13 A,B, OR C (14) Short Stay and Transfer WC/NF Page 32-131 Capital Per Day Col. 7 $ 35.00 (15) Total Transfer Capital Line 11 x Line 14 280.00 (16) Subtotal Line 12 + Line 15 6,299.28 (17) Bad Debt and Charity Pool (a) percent WC/NF Pages 32-131 3.80% ?  (b) amount Line 16 x Line 17a 239.37 (18) Excess Physicians Malpractice Pool WC/NF. Pages12-131 Rate Per Case Col. 6 60.00 (19) SPARCS Rate Per Case WC/NF Page 32-131 Col. 8 1.50 (20) a. Total No-Fault Payment Line 16 + Line 17(b) Before Differential Line 18 + Line 19 6,600.15 . Alternate Level Of Care Example 2 Line 5 451.95 c. Total Line 20(a) + Line 20(b) 7,052.10 Differential ?  (a) rate Subpart 86-1.51(c) 13% ?  (b) amount Line 20c x Line 21a 916.77 Total No-Fault Transfer Payment With Alternate Level of Care Line 20c + Line 21b $ 7,968.87 EXAMPLE 6: DETERMINATION OF HIGH COST OUTLIER PAYMENT WITH ALTERNATE LEVEL OF CARE SAMPLE CALCULATION (1) High Cost Charge Convert rWC/NF Pages 32-131 Col.70 .850007 (2) Total Inpatient Gross Charges Per Patient UBF- UBF-1 (Field 197) $ 31,883.71 (3) Adjustment To Total Inpatient Gross Charges (a) Telephone & Telegraph UBF-1 (Field 196 code 561) 20.00 (b) Television & Radio Rental UBF-1 (Field 196 code 581) 60.00 (c) Private Room UBF-1 (Field 193, Differential code 2031-3638) (d) Blood UBF-1 (Field 187) (e) Other UBF-1 (Field 193 or 196) (4) Total Inpatient Cross Line 2-(Lines 3a + 3b + 3c Charges Reduced to Cost + 3d + 3e) 31,803.71 (5) Total Gross Inpatient Charges Reduced to Cost Line 1 x Line 4 27,033.38 (6) Inlier DRG Before Add-on Example 1, Line 8 7,177.12 (7) Twice Inlier DRG Before Subpart 86-1.55(c)(2) Add-ons Line 6 x 2 14,354.24 (8) Inlier Blended Rate Plus Malpractice Per Case Example 1, Line 3 2,400.00 (9) Overall Average Non- Medicare Case Mix Index WC/NF Pages 32-131 (High Cost) Col. 71 1.4435 (10) Subtotal Line 8 x Line 9 $ 3,464.40 (11) Capital Cost Rate, WC/NF Pages 32-131 Per Case Col. 3 280.00 (12) Average Cost Per Subpart 86-1.55(c)(2) Discharge Line 10 + Line 11 3,744.40 (13) Six Times Average Cost Subpart 86-1.55(c)(2) Per Discharge 6 x Line 12 22,466.40 (14) Greater of Line 7 or Line 13 Subpart 86-1.55(c)(2) 22,466.40 EXAMPLE 6: DETERMIANTION OF HIGH COST OUTLIER PAYMENT WITH ALTERNATIVE LEVEL OF CARE SAMPLE CALCULATION (15) Total Gross Inpatient Covered Charges Reduced to Subpart 86-1.55(c)(2) Cost Less Line 14 Line 5 - Line 14 $ 4,566.98 (16) Alternative Level Of Care (a) Operating Per Diem Example 2, Line 1 87.08 (b) Number of Alternate Level Of Care Days Example 2 Line 4 5 (c) Total Line 16a x Line 16b 435.40 (17) Subtotal Line 15 - Line 16c 4,131:58 **Note: CONTINUE ONLY IF LINE 5 IS GREATER THAN LINE 17 (18) Bad Debt and Charity Care Pool (a) percent WC/NF Pages 32-131 Col. 5 3.80% (b) amount Line 17 x Line 18a 157.00 (19) Total No-Fault Payment Before Differential (a) High Cost Outlier Line 17 + Line 18b 4,288.58 (b) Inlier Example 1, Line 12a 7,511.35 (c) Alternate Level of Care Example 2, Line 5 451.95 (d) Total 12,251.88 (20) Differential (a) rate Subpart 86-1.55(c) 13% (b) amount Line 19d x Line 20a 1,592.74 (21) Total No-Fault High Cost Outlier Payment With Alternate Level of Care Line 19d + Line 20d $ 13,844.62 EXAMPLE 7: CALCULATION OF EXEMPT UNIT (HOSPITAL) ACUTE CARE PAYMENT (MEDICAL REHAB., ALCOHOL, REHAB., PSYCH, AIDS CENTER CHILDREN, CANCER, MENTAL RETARDATION, HOSPICE) SAMPLE CALCULATION (1) Billing Rate Unit Acute WC/NF Pages 32-131 Care Per Diem $ Cols. 24,33,42,51,60 OR 69 $ 380.23 (2) Differential (a) rate Subpart 86-1.55(c) 13% (b) amount Line 1 x Line 2a 49.43 (3) Exempt Unit Acute Rate Per Day Line 1 + Line 2b 429.66 (4) Number of Exempt Unit Days UBF-1(Field 199-5) 15 (5) Total No-Fault Exempt Unit Acute Care Payment Line 3 x Line 4 $ 6,444.90 EXAMPLE 8: CALCULATION OF ALTERNATIVE LEVEL OF CASE EXEMPT UNIT OR HOSPITAL (MEDICAL REHAB., ALCOHOL, REHAB., PSYCH, AIDS CENTER CHILDREN, CANCER, MENTAL RETARDATION, HOSPICE) SAMPLE CALCULATION (1) Billing Rate Unit Acute WC/NF Pages 32-131 Care Per Diem Cols. 24,32,41,50, or 68 $ 111.73 (2) Differential (a) rate Subpart 86-1.55(c) 13% (b) amount Line 1 x Line 2a 14.52 (3) Exempt Unit Alternate Level of Care Days Line 1 + Line 2b 126.25 (4) Number of Exempt Unit Alternate Level of Care Payment Medical Records 5 (5) Total No-Fault Exempt Unit Acute Care Payment Line 3 x Line 4 $ 631.25 NOTE: The above alternate level of care calculations is to be used only by exempt units or exempt hospitals. The calculation uses data for the unit or hospital in which the patient received services (e.g. Medical Rehabilitation).