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PA Bulletin, Doc. No. 15-1733



Changes to the All Patient Refined-Diagnosis Related Groups Classification System

[45 Pa.B. 5883]
[Saturday, September 26, 2015]

 The Department of Human Services (Department) is announcing its intent to change the relative values used for the fee-for-service (FFS) payment methodology for inpatient acute care services. Specifically, the Department intends to use National relative values instead of New York Medicaid relative values, effective for dates of discharge on and after October 1, 2015. Additionally, as part of the rebasing of the relative values, the Department intends to include managed care encounter data, along with FFS claims data to determine the adjustment factor.


 Effective July 1, 2010, the Department revised its Medical Assistance (MA) FFS payment methodology for inpatient acute care hospital services. The new methodology included adoption of the All Patient Refined-Diagnosis Related Groups (APR-DRG) patient classification system and implementation of APR-DRG relative values based on relative values developed by the New York Medicaid program. At the time the Department developed the new FFS payment methodology for inpatient acute care services, National relative values were not being utilized for payment by any payer in the Nation. For this reason, the Department adopted the New York Medicaid relative values.


 The World Health Organization has revised its International Statistical Classification of Diseases and Related Health Problems, or International Classification of Diseases (ICD), to version ICD-10. This classification system provides diagnosis, procedure codes and other related data, which is used by the APR-DRG classification system to assign patients to specific DRGs for payment purposes. With the transition to ICD-10, the APR-DRG classification system will be updated to recognize and accept the revised diagnoses and procedure codes of ICD-10.

 To comply with Federal requirements relating to transition to ICD-10, the Department will use the updated APR-DRG classification system for the FFS program so that the Department is able to accept the revised diagnosis and procedure codes of ICD-10, effective with dates of discharge on and after October 1, 2015.

 With the adoption of the updated APR-DRG classification system, the Department intends to change the relative values used to determine the FFS payment for inpatient acute care services to National relative values. Recently, the National relative values were upgraded and are appropriate for use as a base for Medicaid payment systems. The National relative values represent a broader clinical approach to health care delivery.

 Consistent with the State Plan, the Department will apply an adjustment factor to each of the new APR-DRG relative values so that the Commonwealth MA Statewide APR-DRG Case Mix Index is at a level that is budget-neutral. In addition to FFS claims data, the Department intends to use managed care encounter data to determine this adjustment factor to ensure budget neutrality across the MA Program.

Fiscal Impact

 No fiscal impact is anticipated as a result of the change to the APR-DRG classification system.

Public Comment

 Interested persons are invited to submit written comments regarding this notice to the Department of Human Services, Office of Medical Assistance Programs, c/o Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120. Comments received within 30 days will be reviewed and considered.

 Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).


Fiscal Note: 14-NOT-975. No fiscal impact; (8) recommends adoption.

[Pa.B. Doc. No. 15-1733. Filed for public inspection September 25, 2015, 9:00 a.m.]

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