CHA News Article

Updated APR-DRG Policy Available for State Fiscal Year 2018-19

The Department of Health Care Services (DHCS) recently updated its policy for hospitals reimbursed under the All Patient Refined Diagnosis-Related Group (APR-DRG) for claims with dates of service in state fiscal year 2018-19.

Effective July 1, the following changes apply to general acute inpatient hospital services provided by private hospitals and non-designated public hospitals in California, out-of-state (border and non-border) hospitals and Medicare-designated critical access hospitals:

  • Changes to the APR-DRG grouping algorithm Version 34 to Version 35
  • Modifications to Version 35 relative weights under the hospital-specific relative value methodology
  • Decrease in the policy adjustor-age for pediatric services from 1.45 to 1.25
  • Application of the following policy adjustors for high severity of illness (SOI) 4:
    • Policy adjustor of 1.4 is additionally applied to the SOI 4 Pediatric (Age) and Neonate (NICU services and NICU surgery) care categories.
    • Policy adjustor 1.1 is additionally applied to SOI 4 Adult (Miscellaneous, Respiratory, Gastroenterology and Circulatory) and Obstetrics care categories.
  • Decrease in the high-cost outlier threshold by 5 percent and increase in the marginal cost factor from 50 percent to 60 percent
  • Decrease in the statewide APR-DRG base price of approximately 4 percent
  • Changes to the California and border hospital wage area index values, as provided by the Centers for Medicare & Medicaid Services and adjusted by the California Wage Area Neutrality Adjustment, of 0.9771
  • Applications of the labor share portion according to the Medicare rule, where hospitals with wage areas less than or equal to 1 will be at 62 percent, and hospitals with wage areas greater than 1 will be at 68.3 percent

To help providers understand and predict estimated payment for inpatient stays covered by fee-for-service Medi-Cal, DHCS has released the new pricing calculator. For more information about APR-DRGs, visit the DHCS website.