MHAC Workshop Review Impact Drill Down Reports Elizabeth C. McCullough 2 October 2009

2 Impact Report Components Expected PPC Rate by APR DRG Test of Significance Marginal Charge Impact

3 Expected Value The PPC expected value is the number of patients with a PPC that would occur if a hospital’s mix of patients by APR DRG and severity of illness subclass had experienced the same PPC rate as that in a reference or norm set of hospitals. The technique by which the expected value or expected number of PPCs is calculated is called indirect standardization. The PPC rates in the normative database are calculated for each admission APR DRG and severity of illness subclass by dividing the observed number of PPCs by the total number of patients at risk. Once a set of PPC norms are calculated, they can be applied to individual hospitals to compute its expected PPC rate. Number of Excess or Avoided PPCs equals the difference between the actual number of cases assigned a PPC minus the expected number of cases for that PPC.

4 Test of Significance A hospital’s actual and expected PPC rate can be different. This can represent a true difference or can be caused by random variation. A difference between a hospital’s actual and expected PPC rate is considered “statistically significant” if the probability that the difference can be the result of random variation is small.

5 Test of Significance (cont.) In the PPC reports, a difference between the actual and expected PPC rate is considered statistically significant at the 0.05 level. This means that the probability that the difference between the actual and expected PPC rate is the result of random variation is five percent or less (i.e., less than one chance in twenty). The calculation of statistical significance of the difference between the actual and expected PPC rate uses the Cochran-Mantel- Haenszel test (CMH).

6 Marginal Charge Impact Estimated marginal charge amount for a specific PPC PPC Impact equals the difference in the actual and expected number of PPCs times the marginal charge amount for a specific PPC Overall MHAC impact is the net sum of the PPC impact across the 50 PPCs defined in the MHAC policy for FY2010

7 Report Drill Down Overall Service Line PPC PPC by Service Line PPC by Top 25 Base Admission APR DRGs PPC by Top 25 Base Admission APR DRGs and Severity of Illness Level

8 Report Structure Drill down aggregation MHAC Total Impact Number of discharges at risk for PPC Observed (actual) number of cases assigned PPC Expected number of cases for PPC Number of observed and expected shown in rates per 1000 Percent Difference between observed and expected Significance Level –'*': Statistically significant ( p<0.05 ) higher rate of PPCs –‘***': Statistically significant ( p<0.05 ) lower rate of PPCs

9 Report – Tab 1 Overall

10 Report – Tab 1 by Service Line

11 Report – Tab 2 PPC Impact

12 Report – Tab 3 PPC by Service Line

13 Report – Tab 4 Top 25 Base APR DRGs

14 Report – Tab 5 Top APR DRGs by SOI

15 PPC v27 On-Line Access User ID - MDHosp Password - aprdrg401 PPC v27 Definition Manual Health Care Financing Review Spring 2006 Article on PPCs Methodology Overview PPC v27 Calculator