New York State seal

July 28, 1989

SUBJECT: INSURANCE

WITHDRAWN

Circular Letter No. 8 (1989)

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

WC/NF Pages 32-131

 
 

Rate Per Discharge

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

DTERMINATIO 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 & Telegrap

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$ HCols. 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).