What are DRG's
Over the weekend, we were enjoying a little Mexican food with some friends and I was asked why the hospital left notes for physicians and prompted them to discharge patients.
From a business standpoint, my friend didn’t understand why hospitals would want patients out of the hospital. He thought the longer a patient stayed, the more money was made.
This would have been true some 20-30 years ago. At that time, hospitals were paid based on charges. The more tests, labs, x-rays, and days in the hospital meant more gross charges and ultimately more revenue.
Then came government intervention and the DRG system.
DRG or Diagnosis Related Groupings are an American patient classification system that describes the types of patients treated by a hospital (i.e. its case mix).
The DRGs work by grouping the 10,000+ ICD-9 (diagnoses) codes into a more manageable number of meaningful patient categories (close to 500 now). Patients within each category are considered similar clinically and therefore should be similar in terms of resource use and allocations.
Using these broader groupings, Medicare, and now most major Insurers, contract with hospitals to pay for services by DRG categories rather than individual charges.
This means that a patient with a heart attack will fall into a certain DRG classification and statistically should have an average length of stay in the hospital of a defined number of days. This DRG is associated with a certain reimbursement rate by the Insurer and is set by Medicare based on “obscure” criteria and relative value units.
So now, for hospitals to make money, they want patients out of the facility in less than the days allotted for “average length of stay”. In addition, there are no additional charges for tests etc. while in the hospital. The hospital is given one lump sum to cover the entire hospital stay. If physicians begin ordering lots of tests unrelated to the DRG classification, the hospital basically eats the additional costs.
This is a very simplified explanation of how the overall system works. Additional DRG classifications can be added to patient while in the hospital, but there has to be more documentation etc. and they are not always accepted.
So the theme in the past was, “the more you did, the more you made”.
Now it is; “the less you do, and the quicker you do it, the more you make”
I am not sure this is advancement in Medical Care!
From a business standpoint, my friend didn’t understand why hospitals would want patients out of the hospital. He thought the longer a patient stayed, the more money was made.
This would have been true some 20-30 years ago. At that time, hospitals were paid based on charges. The more tests, labs, x-rays, and days in the hospital meant more gross charges and ultimately more revenue.
Then came government intervention and the DRG system.
DRG or Diagnosis Related Groupings are an American patient classification system that describes the types of patients treated by a hospital (i.e. its case mix).
The DRGs work by grouping the 10,000+ ICD-9 (diagnoses) codes into a more manageable number of meaningful patient categories (close to 500 now). Patients within each category are considered similar clinically and therefore should be similar in terms of resource use and allocations.
Using these broader groupings, Medicare, and now most major Insurers, contract with hospitals to pay for services by DRG categories rather than individual charges.
This means that a patient with a heart attack will fall into a certain DRG classification and statistically should have an average length of stay in the hospital of a defined number of days. This DRG is associated with a certain reimbursement rate by the Insurer and is set by Medicare based on “obscure” criteria and relative value units.
So now, for hospitals to make money, they want patients out of the facility in less than the days allotted for “average length of stay”. In addition, there are no additional charges for tests etc. while in the hospital. The hospital is given one lump sum to cover the entire hospital stay. If physicians begin ordering lots of tests unrelated to the DRG classification, the hospital basically eats the additional costs.
This is a very simplified explanation of how the overall system works. Additional DRG classifications can be added to patient while in the hospital, but there has to be more documentation etc. and they are not always accepted.
So the theme in the past was, “the more you did, the more you made”.
Now it is; “the less you do, and the quicker you do it, the more you make”
I am not sure this is advancement in Medical Care!
posted by Anonymous at 6:18 AM
4 Comments:
I feel the same way about DRG's - they are not the best advancement in medical care, however, what would you propose? You know as well as I do that there are certain physicians that either drag their feet on getting things done (tests, procedures, consults) or are just poor clinicians who let their egos take over and will not get consults or value any opinions of the staff taking care of the patient (Dr. Pierce comes to mind). Also, let us not forget the convenience of some of the physicians out there who will not come in and see patients on a timely basis and this causes many delays. Therefore, patients end up with more days in the hospital than what is necessary.
I am not for kicking patients out of the hospital. I am in favor of appropriate utilization of our healthcare resources - and I stress the word appropriate. I would make a bet that I could go to any hospital locally and find at least 30 to 40% of patients whose needs could be met at a lower level of care safely instead of in the hospital setting.
Also, why should patients be admitted who repeatedly are non-compliant? For example, we spend millions on treating people in the hospital who have asthma. However, when you assess a lot them, you find they are still smoking, still exposing themselves to whatever aggravates their situation, etc. And this is just one example. I can sit here and think of at least ten patients off the bat who treat the ED as a doctors' office and then go right back to the unhealthy or risky habits that brought them there in the first place.
It is largely because of the abuse (by physicians and healthcare entities) that we are in the boat we are in now - and there are those who are still fleecing the system. I also don't understand what a lot of the physicians have to complain about. How much money is enough? Take yourself for instance (and I am not trying to be mean - just making a point). Your office visit charge last time I was a patient there was $95.00 - and this was for a family practice physician. My transplant doctor charges 73.00 for an office visit and my cardiologist charges 72.00. I would venture the thought that the patients that these two guys are seeing are a lot more costly and complex - so why the difference in charges?
Also, what about the outside interests of physicians - specifically, the money-making ventures such as owning their own facilities (such as the private hospital industry) at the expense of all of us? For example, you (and I may be wrong but this is what I was told) are a partner along with Dr. Croft and Dr. Pope in the Landmark nursing home - a for profit facility. You make referrals there - and I assume - add to your salary. So - how much is enough - one million? two? ten?
I believe in order to "fix" the broken system we need to do many things such as:
1. Rein in the profits of some of the biomedical, pharmaceutical and insurance industries - it's ridiculous the profit they make. Especially the ones whose research is largely funded by the taxpayers.
2. Rein in the frivoulous lawsuits that are brought against medical professionals who are genuinely trying their best to take care of patients but occasionally make mistakes because they are human.
3. Make people more responsible for their own care. If they choose to be consistently irresponsible, then penalize them.
4. Rein in the money-making ventures of physicians and private entities who are bleeding the system. Do I think people are entitled to make a huge salary for what they do? Yes - but not at the expense of those who are sick and truly need help and not at the expense of society as a whole. Healthcare in its true form is not a frivolous pursuit - it's a necessity. People may gripe about the salary of the CEO of GE, but he is not making his money on the sick. A washing machine is not something you HAVE to have - healthcare, unfortunately, is a necessity. I agree with Gandhi when he said that the way a society treats its sick is a sign of how civilized they are. I personally feel that everyone from the very young to the very old should have the SAME healthcare - it should not depend on your pocketbook. I believe God would agree.
5. Also, I would rein in some of the dollars spent on frivolous things such as research that really doesn't matter. For instance, I once read a journal article about how they did a study on whether or not a mouse loses its masculinity when its testicles are removed. I would venture to say that this NIH-funded study was something that could be done without. Besides, what if they do lose their masculinity? Are we going to get them into counseling?
6. Get more education to the masses. At this point in time, we are seeing more and more education dollars being cut, especially with our man Mitch here in Indiana. Educating our children enables them to make good choices and a lot of what we spend money trying to prevent (such as unwanted pregnancies, drug use, homelessness) could be avoided if our people were just more educated.
I will stop here but there are many other things we could do. It is just a matter of how much people are concerned. And unfortunately, most people are concerned about themselves and their interests only and not about our society as a whole.
Hothead1,
Just to clarify a few inaccuracies in your statements.
I have no ownership in any outside entity. I serve as a medical director at landmark only and have no financial investment. I get a small salary for seeing patients, doing physicals on employees, taking care of paperwork, seeing patients routinely and making rounds etc. The other two physicians do have ownership in the entity.
As far as our office fees, they very greatly depending on what is done and what additional labs etc. are performed. Typical routine charges are:
99212 OV/LOW $55.00
99213 OV/MOD $70.00
99214 OV/HIGH $100.00
As far as some of your other thoughts, I have mixed feelings. I agee with some and strongly disagree with others.
Basic Healthcare should be offered to everyone in a civilized country. But who defines what basic healthcare is?
Everyone cannot have everything. Healthcare is not a right!!
Patients need to be held responsible, but when they aren't, how do you propose dealing with them and their families?
If patients were responsible for paying the healthcare bills directly, as they do in all other aspects of their lives, things would change rapidly.
Patients have been shielded by the system and yes, it has led to bigger problems.
Everyone is to blame in some regard.
Thank you for the clarification on your position at Landmark - I appreciate it. I also liked the comment about paying for healthcare directly. That sounds great to me but until something is done about the exorbitant costs, people can't afford it. I am all for a total overhaul of the current system - obviously the one we have is seriously broken. And you are right, there is a lot of blame to go around.
At any rate, I have to hope that decisions regarding healthcare that lead to policies/regulations in the future are guided by those who are actually taking care of patients hands-on - doctors, nurses, CNA's, techs in every dept., etc. Right now, we have too many business majors, lawyers, politicians, etc. mucking everything up! It is also unbelievable to me that at a lot of the insurance companies that I had to deal with, the persons making decisions were clerks with no medical background or doctors making denials that do not even have the background to make appropriate decisions. For instance, one of the doctors who used to deny things a lot at Anthem happened to be a pathologist - hardly seems fitting that he should be making decisions on LIVE patients.
I've said it before and I will say it again - the MD's out there have more clout and are able to speak out a lot more than lowly old nurses such as myself. And until the doctors wake up and smell the coffee and start worrying about their profession as a whole instead of thinking about themselves individually, we are going to remain in this mess.
It was my understanding that the AMA is one of the largest lobbying organizations in the U.S. - what happens at their conferences, etc.? What are they currently doing to address the breakdown of the system? Just curious.
The person who said Healthcare is not a right is seriously jacked up. that is the pathetic and sadly negative and untrue. that's like saying voting is not a right or enlisting in the service is not a right or a litiny of other rights. I am a health care professional and it sounds like that doctor who made that comment is angry and burned out. so I encourage you to do something about it and lobby with the AMA, physicians are a big part our voice in the healthcare field. Talk with out action is dead, like faith without works. Healthcare cost and services does need some major changes. Getting MD's, nurses, CEO's, Insurance Company CEO's, Pharmaceutical Companies, Medical sales Rep's, Medical supply companies together would be a great start. Lets work together to get resolution instead of complaining about the problem.
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