Presenter: Joanne Fitzgerald (Executive Director, Policy and Classification) Date: 2 November 2018 Event: 2018 HIMAA NCCH National Conference

1. What to expect in
AR-DRG
Version 10.0
Joanne Fitzgerald
Executive Director, Policy and
Classification

2. www.ihpa.gov.au
Overview
• Approach to classification development
• Areas of review for consideration in the new version
• In depth focus on two change proposals
• Final outcomes and areas of refinement for Australian
Refined Diagnosis Related Groups (AR-DRG) V10.0
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3. www.ihpa.gov.au
AR-DRG Classification System
• AR-DRG classification groups together treatments and
services provided to admitted patients
• ICD-10-AM diagnosis codes and ACHI procedure codes
are used to assign an episode of care to an AR-DRG
• Some other factors may also be considered for certain
AR-DRGs
‒Length of stay
‒Admission weight for neonates
‒Transfer or discharge status3

4. www.ihpa.gov.au
Timeline of AR-DRG Development
Release
of V8.0
July
2015
Pricing
using
V8.0
July
2016
Release
of V9.0
July
2017
Pricing
using
V9.0
July
2018
Release
of
V10.0
July
2019
Pricing
using
V10.0
July
2020
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5. www.ihpa.gov.au
AR-DRG assignment
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Demographic and
Clinical edits
Pre MDC
Processing
MDC
Processing
Adjacent DRG
Processing
DRG
Allocation
AR-DRG V9.0
AR-DRG V8.0

6. www.ihpa.gov.au
Approach to AR-DRG development
Work program
Clinical
review
Analytical
assessment
Stakeholder
consultation
Finalise AR-
DRG V10.0
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7. www.ihpa.gov.au
Areas of review for AR-DRG V10.0
• Episode clinical complexity model
‒Diagnoses excluded from episode complexity
calculations
‒Stability of episode complexity calculations between
versions
• Caesarean sections
• Nephrolithiasis interventions
• Public submissions
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8. www.ihpa.gov.au
Areas of review for AR-DRG V10.0
• Review of each MDC hierarchy
• Review of complexity splits and thresholds for every
adjacent DRG
• For full details of all proposals reviewed, refer to
Consultation Paper on Australian Refined Diagnosis
Related Groups Version 10.0
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9. www.ihpa.gov.au
In focus – caesarean sections
• A number of DRG systems used internationally, including
in the United Kingdom and Germany, distinguish between
emergency and elective caesareans, and price them
differently
• Stakeholders have argued that the AR-DRG classification
inappropriately incentivises caesarean deliveries by
pricing them higher than vaginal deliveries
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Clinical review
• Noted that differentiating between ‘emergency’ and
‘elective’ interventions may create a precedent
• Noted that there were not consistent clinically derived
national definitions for ‘emergency’ and ‘elective’
caesareans
• Strong support from midwives and peak body
representing women’s hospitals to differentiate caesarean
sections on basis of ‘in labour’ and ‘not in labour’
caesareans
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Analytical assessment
Caesarean delivery Emergency Elective % Difference
(a) (b) (c) =(a)/(b)-1
Public Hospitals
Number of episodes 31,635 32,237
Percentage of episodes 49.53% 50.47%
Average length of stay 4.53 3.59 26.1%
Average cost $11,997 $9,966 20.4%
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Analytical assessment
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Caesarean delivery
Episodes with labour
codes
Episodes without labour
Codes
% Difference
(a) (b) (c) =(a)/(b)-1
Public Hospitals
Number of episodes 38,993 24,881
Percentage of episodes 61.05% 38.95%
Average length of stay 4.57 3.26 39.9%
Average cost $11,954 $9,433 26.7%

13. www.ihpa.gov.au
Stakeholder consultation
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• Position was to create two new adjacent DRGs for
caesarean sections, one for ‘in labour’ caesareans and
one for ‘all other’ caesareans
• Broad consultation as part of the AR-DRG V10.0 public
consultation in June 2018
• Mixed feedback

14. www.ihpa.gov.au
Final decision for AR-DRG V10.0
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$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000
O01A
O01B
O01C
ORIGINAL CAESAREAN COST DISTRIBUTION
$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000
O06A
O06B
O07A
O07B
PROPOSED CAESAREAN COST DISTRIBUTION

15. www.ihpa.gov.au
In focus – personality disorders
• A submission from WA noted that personality disorder
diagnoses accounted for a high volume of admitted
mental health services and requested consideration of
further breakdown of this adjacent DRG to differentiate
between the different clinical needs of patients
U67A Personality Disorders and Acute Reactions,
Major Complexity
U67B Personality Disorders and Acute Reactions,
Minor Complexity
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Clinical review
• Noted that there is a specific classification for mental
heath that will replace AR-DRGs as the classification for
patients receiving mental health care
• Noted the volume and types of personality disorders being
reported as principal diagnoses
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Clinical review
Principal diagnosis category Number of episodes Percentage of
episodes
Stress reactions and adjustment disorders 10,158 55.1%
Specific and mixed personality disorders 7,417 40.2%
Conduct disorders and mixed disorders of conduct and emotions 632 3.4%
Other 142 0.8%
Gender identity disorders, disorders of sexual preference and disorders
associated with sexual development and orientation 34 0.2%
Habit and impulse disorders 30 0.2%
Enduring personality changes 11 0.1%
Sexual dysfunction 10 0.1%
Total 18,434 100.0%
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18. www.ihpa.gov.au
Analytical assessment
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Complexity Split
Cohort Statistic A B Total
Episodes 3,715 14,719 18,434
Total ADRG Average Cost $13,384 $6,097 $7,566
Average Length of Stay 9.83 4.24 5.37
Episodes 1,945 8,213 10,158
Stress reactions and adjustment disorders Average Cost $12,308 $6,099 $7,288
Average Length of Stay 9.06 4.13 5.07
Episodes 1,523 5,894 7,417
Specific and mixed personality disorders Average Cost $14,727 $6,154 $7,915
Average Length of Stay 10.94 4.48 5.81
Episodes 247 612 859
Other Average Cost $13,573 $5,521 $7,836
Average Length of Stay 9.10 3.40 5.04

19. www.ihpa.gov.au
Stakeholder consultation
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• Position was not to proceed with any refinements to U67
Personality Disorders and Acute Reactions
• Broad consultation as part of the AR-DRG V10.0 public
consultation in June 2018
• Support from stakeholders not to pursue a refinement to this
adjacent DRG
• Therefore, final decision was no change for AR-DRG V10.0

20. www.ihpa.gov.au
What can you expect to see in AR-DRG
V10.0
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• Refinements to the episode clinical complexity model
‒Changes to diagnosis codes in-scope for receiving a
Diagnosis Complexity Level (DCL)
‒Stabilisation measures introduced to the calculation of
DCLs
‒Recalculation of DCLs based on updated cost data
‒Review of the number of ‘complexity splits’ and thresholds
for ‘complexity splits’ for every adjacent DRG

21. www.ihpa.gov.au
What can you expect to see in AR-DRG
V10.0
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• Nephrolithiasis interventions (to be confirmed)
‒More clinically coherent groupings for nephrolithiasis
interventions
‒Removing the same day variable that resulted in some
episodes with nephrolithiasis interventions being classified
to a medical DRG if they were overnight admitted episodes

22. www.ihpa.gov.au
What can you expect to see in AR-DRG
V10.0
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ADRG Current Criteria (AR-DRG V9.0) New Criteria (AR-DRG V10.0)
L40 Ureteroscopy intervention
Combine L40 and L41:
Ureteroscopy intervention and exclude
episodes with nephrolithiasis principal
diagnosis
L41 Cystourethroscopy intervention and a
sameday episode
Combine L40 and L41:
Cystourethroscopy intervention and
exclude episodes with nephrolithiasis
principal diagnosis
Remove the sameday criterion
L42
Nephrolithiasis principal diagnosis and
Extracorporeal Shock Wave Lithotripsy of
urinary tract intervention
Remove ADRG as it becomes
obsolete as these episodes would be
captured in L43
L43 New Based on specified nephrolithiasis
principal diagnoses and interventions

23. www.ihpa.gov.au
What can you expect to see in AR-DRG
V10.0
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• Removal of Z60 Rehabilitation as this adjacent DRG is
redundant following Ninth Edition coding standard changes
• Reassignment of episodes of liver procurement from a living
donor to a body system MDC
• Reassignment of osseointegration interventions of digit and
limbs to a more clinically appropriate adjacent DRG

24. www.ihpa.gov.au
Next steps
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• Final approval process through IHPA’s advisory groups
• Preparation of AR-DRG V10.0 report outlining all
refinements
• Approval from the Pricing Authority in February 2019
• Release of system materials including groupers, definitions
manual and education resources mid-2019

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