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August 27, 2014
AHCCCS and its Contractors understand the critical partnership with our hospital providers, in
service to AHCCCS members, and appreciate working together to make this transition to APR-DRG
payments as smooth and quiet as possible.
Since 1993, AHCCCS has paid hospital inpatient claims using a tiered per diem fee
schedule that was developed internally. Rates were rebased in 1998 and subsequently
inflated annually (except when otherwise permitted by legislation) using a nationally
recognized inflation factor. Effective 10/01/2014, AHCCCS will begin reimbursing
inpatient hospital services using a DRG-based payment system.
Compared with a tiered per diem system, which incentivizes quantity over quality, AHCCCS
believes the DRG-based payment methodology is better aligned with the agency’s focus on
improved patient safety and health outcomes for its members, and will result in reduced
costs. It will enhance AHCCCS’ ability to implement performance review and cost-saving
measures by facilitating measurement of inpatient readmissions and implementation of
Medicaid’s prohibition on reimbursement for hospital acquired conditions. AHCCCS has
contracted with Navigant Consulting
http://www.navigant.com/ to provide assistance in analyzing , acquiring and implementing,
a DRG-based inpatient hospital payment system. Some tasks associated with this project include:
Sept 10, 2014 Presentation to the Healthcare Financial Management Association
April 10, 2014 Presentation to the Healthcare Financial Management Association
Sept 17 & 18, 2014 Presentation to AHCCCS Staff
On November 14, 2013, AHCCCS distributed a letter to hospital stakeholders with a reminder
about the upcoming change to the APR-DRG payment methodology effective October 1, 2014.
Read that communication here:
Communication Letter [PDF]
On Thursday, June 14, AHCCCS hosted an open meeting to discuss the efforts in exploring
an option to the current inpatient hospital per diem payment methodology.
Meeting Presentation [PPTX]
Information related to the Contractor Workgroup, including meeting notes and the Arizona DRG Payment Policies document, can be found here:
AHCCCS appreciates the interest that the hospital community has expressed in participating
in our DRG Workgroup. The below list includes the names of the hospital representatives
that have been selected to work on this project. Hospital providers who are not
on this team may contact one of the members below to ensure that their issues and
concerns are raised to the workgroup.
Questions and comments to be considered in the workgroup may be addressed to
Additional documents concerning DRG methodology will be published below:
Selection of a DRG Grouper for the Medicaid Population [PDF]
Presentation for September 6, 2012 Workgroup Meeting [PPTX]
Presentation for December 6, 2012 Workgroup Meeting [PPTX]
Presentation for January 18, 2013 Workgroup Meeting [PDF]
Presentation for April 25, 2013 Workgroup Meeting [PDF]
Handouts for April 25, 2013 Workgroup Meeting [PDF]
APR-DRG Version 30 National Weights [Excel]
Data Components and Summaries (For Discussion Purposes Only) [PDF]
Payment Policy Issues [PDF]
Preliminary Model Version 12/17/2013 [PDF]
APR-DRG Version 31 National Weights [Excel]
Final Model Version March 2014 [PDF]
Final Rule (Effective 09/06/2014) [PDF]
AZ APR-DRG Calculator 2014-08-07 [Excel]
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