DRGs and outlier payments

Diagnosis-related groups of procedures (DRGs) can include such circumstances as an inpatient stay followed by another inpatient stay

Also see: Hospital inpatient readmissions within 30 days.

Services considered part of the DRG payment

Certain services provided by facilities within 3 days of admission are considered part of the DRG and are not reimbursed separately. Those services include:

  • Outpatient services followed by admission before midnight of the following day are treated as inpatient services and part of DRG.
  • Diagnostic services (including clinical diagnostic laboratory tests) provided by the admitting hospital or entity owned by hospital within 3 days prior to admission are deemed inpatient services and included in DRG payment.
  • Other preadmission services related to admission and provided within 3 days of admission are considered part of DRG.
  • Emergency room services within 24 hours of admission are part of DRG.

Excluded from DRG payment

  • Diagnostic services rendered during ER visits 48 to 72 hours prior to admission are considered part of ER visit and are excluded from DRG payment, within a Critical Access Hospital (CAH) only. 
  • Ambulance services are not considered to be part of DRG payment.

Outlier claims and payments

The intent of an outlier is to recognize those claims with significantly higher than normal operating costs. Outlier payments partially offset the financial burden of caring for expensive patients. To qualify for outlier payments, a case must have costs above a fixed-loss cost threshold amount specified in the provider's contract.

Priority Health determines whether or not to reimburse above the normal DRG based on the terms of the facility contract. Any additional payments are subject to medical utilization and quality review procedures.

HMO/POS/PPO and MyPriority® outlier claims

Check your contract language. If you're required to contact us to ask for an outlier payment, contact Provider Services, or a Health Management specialist, to determine whether or not the admission meets outlier criteria.

If we find that the outlier criteria have not been met, Provider Services or the Health Management specialist will inform the facility that the case will not be considered for review. When we deny a request, we send a letter instructing the facility how it can take part in the appeal process.

Medicaid/Healthy Michigan Plan outlier claims

The State of Michigan Medicaid Low Day/Low Cost and High Day/High Cost Outlier Payment Methodology will be used for Medicaid claims when specified in contracts.

Medicare outlier claims

In-network outliers will follow same process as Medicaid, above. Out-of-network claims will be paid using the CMS pricer. Any additional payments are subject to medical and quality review procedures.

To request review

To request review of your outlier payment, submit documentation that you used services above and beyond those included in the fixed rate. Attach your documentation to the provider Level 1 appeal form.