W. Va. Code R. § 65-26-5

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 65-26-5 - Peer Groups and the Variables of the Benchmark Ranking Process

5.1. Peer Groups. The Authority shall divide the hospitals into three peer groups for the initial year:

(1) Hospitals with a weighted average CMI greater than 1.300 or with a Level I or Level II trauma center designation from the Office of Health Facility Licensure and Certification;

(2) hospitals with a weighted average CMI of 1.050 to 1.300; and

(3) hospitals with a weighted average CMI of less than 1.050.

5.2. Variables. The two variables employed in analyzing the peer groups in the benchmark ranking process are the adjusted average inpatient cost per discharge and the adjusted average inpatient charge per discharge.

5.2.a. Inpatient charges. The average inpatient charge per discharge is a key variable. These charges are adjusted for the following factors:

5.2.a.1. Non-comparable costs - These include direct medical education, certified registered nurse anesthetists (CRNA"s) and physician costs which are included in rates;

5.2.a.2. The labor market - The Medicare hospital labor market index shall be applied to the labor related portion of costs;

5.2.a.3. The case mix - This includes DRG and major payer;

5.2.a.4. Indirect medical education - the Authority IME factor is used;

5.2.a.5. Compliance adjustments in the rates - If penalties were levied against a hospital's approved nongovernmental revenue limits in the prior year and the amount of the levied penalties was removed from the revenue limits for the benchmarking period, the approved revenue limits of the hospital are lower than they would have been if the hospital had not had penalties levied. Accordingly, the hospital should not be allowed to benefit in the benchmark rankings as a result of its levied penalties. Therefore, the impact of the levied penalties shall be eliminated from the charges used in the benchmarking model. For example: If a hospital had penalties of $100,000 in year 1 and the amount is removed from its rates in year 2 and year 2 is the year used to calculate the benchmark, then the charges in year 2 shall be increased to add back the effect of the $100,000 levied penalties; and

5.2.a.6. Outliers - Outlier revenues above the thresholds indicated in Table 65-26B of this rule are removed from the calculation of the average charge per discharge in the benchmark ranking process. The thresholds shall increase annually by the DRI inflation factor designated by the Authority.

5.2.b. Inpatient costs. The other variable is average inpatient costs. The inpatient average cost per discharge is calculated by applying a ratio of costs to charges to the charge for the case. Adjustments are made for:

5.2.b.1. Non-comparable costs - These include direct medical education, certified registered nurse anesthetists (CRNA"s) and physician costs which are included in rates;

5.2.b.2. The labor market - The Medicare hospital labor market index shall be applied to the labor related portion of costs;

5.2.b.3. The case mix - This includes DRG and major payer;

5.2.b.4. Indirect medical education - the Authority IME factor is used;

5.2.b.5. Compliance adjustments - If penalties were levied against a hospital's approved nongovernmental revenue limits that are considered as cost, i.e. underspending of wages penalty, these costs are converted to revenue by utilizing a charge to cost factor and the impact of the levied cost penalty is added to the revenue limits; and

5.2.b.6. Outliers - Outlier costs above the thresholds indicated in Table 65-26B are excluded from the calculation of the average cost per discharge in the benchmark ranking process. The thresholds shall increase annually by the DRI inflation factor designated by the Authority.

W. Va. Code R. § 65-26-5