Good morning. So my objectives for the presentation are to explain the diagnosis-related groups and how they determine and describe the challenges from a DRG system building regarding medication utilization and explain how to navigate therapeutic utilization in the DRG system. So to just recap what the DRG system is, it's a payment classification system that typically tries to group similar disease or types of situations that a patient would come to the hospital into different groups. And the thought or the impetus behind this is that these groups require similar inpatient or hospital resources from a payment standpoint and we're gonna pay out similarly because of the resource intensity that these groups typically carry. And there's a lot of different things and nuances that go into these different groups as how they come about, whether it be the severity of the illness, mortality, prognosis, comorbidities, treatment, and the need for various interventions typically during that hospital stay and that's how they develop these DRG groups. And it's a way for Medicare and other insurance companies, payers, to efficiently and easily pay out hospitals based out what's going on with the patient rather than looking at everything from an itemized perspective. And when we look at this, the hospital's gonna get a predetermined amount based off a modifier, so there is a slight wiggle room based off the hospital costs expected for that particular DRG. And it includes everything from a hospital perspective that the patient may encounter, all resources that may be used, including medications. And previously, maybe 15, 20 years ago before we've seen the exorbitant expense that medications come, this may have been reasonable, but now currently with the high cost of medication, this can be particularly problematic. It doesn't bill for every individual team or service that's provided within the hospital, but it's grouped into one lump sum. Everything that is included into the three days up to hospitalization that had to do with the hospitalization is included into the DRG payment. And there could be, I think we all can understand the problem in trying to fit individual patients and their comorbidities and disease into these individual groups, and that may be creating more or more flexibility within the DRG system could alleviate some of the unrealistic expectation of trying to pigeonhole patients that may have pneumonia or may have different disease states that typically are, that may fit into these DRG systems, but they have different unique ideas about them that make them unique and that require unique services, but that don't fit into the DRG payment system. So the Medicare DRG system is determined by the diagnosis that the hospitalization caused. Typically medical coders, providers will be involved in ICD-9, ICD-10 codes that represent each condition that the patient has experienced within the hospital. Different things as far as age and gender, discharge status will affect the DRG assignment, and each DRG can have a weight that's associated with the average length of stay. So as mentioned before, the shortest time that a patient spends in a hospital can be advantageous in the DRG system, and each DRG system weight has associated a particular dollar amount associated with it. So the DRG system and the rate can be based on a variety of different factors, wage index and different things, particularly for a given area. So based off these DRGs or ICD-9 codes and the modifiers that, and the weights that a patient may experience within the hospitalization, the Medicare and the insurance payers are typically trying to give a fixed dollar amount based off that hospitalization, regardless of what occurs within that hospitalization. So there are inherent flaws within the system. The hospital could channel resources to DRGs that pay out higher and cause minimal resource utilization to increase margins. Hospitals may be tempted to discharge sooner than you should in order not to lose money. So in one flip of the coin that it can increase quality if we're trying to minimize length of stay in an effort to be more efficient and to judicious with resources, but it also could be problematic if we're attempting to discharge patients before they're ready to enhance DRG payments. DRGs are updated annually, and the predetermined amount are associated with the DRG changes from year to year. This tends to be okay, but the update may not be happening as frequently as it needs to. There could be changes in the medical literature that require different therapies or interventions that may not be reflected in the DRG system. So standard of care could be that we need to do XYZ for a patient because it's quality of care and it's beneficial, but it may not be reflected into the DRG or regarding payment, and this could be problematic. As a part of that, this could drastically impact drug selection. So that DRG payment is fixed, but as we're moving into a system where drug therapy is more cumbersome, it's more complex, and it's more costly, we don't always see that reflection in the cost and the intensity of medication therapy reflected into DRG payments. And now we're seeing that and experiencing that there's a delicate balance between trying to control expense, maximize margins, and also balancing between quality of care, what is actually needed to take care of the patient. So from a medication utilization perspective, this is an aspect of care that is, we've seen over the last several years that's causing costs within the healthcare system, particularly inpatient patients to, inpatient to comprise a significant portion of healthcare costs within the hospital. And it's not only the purchase of the medications, which is a significant portion, but also typically what it takes to administer this medication. So we're seeing more complex therapies, more intensive therapies, where if you look at it from an ICU perspective, where depending on the medication that you could be giving, could require a one to two or one to one nursing care, which is really intensive just to give a particular medication, which incurs and contributes to the cost and the resource utilization of that particular medication. What we now have to do, and what typically the pharmacist on your teams is responsible for, is really looking at those medications, looking at the patients, and trying to determine what is really necessary from a medication utilization to take care of the patient. Obviously, and ideally, we would like to use the best medication and use it in the most optimal way. But there are opportunities to where we can maybe use a medication that may be less resource intensive that could be better and accomplish the same thing from a patient care standpoint and is not as intensive from a resource utilization standpoint. So it's important that we leverage our clinical and therapeutic committee to develop these policies and pathways to help promote judicious use of medications. And in most institutions, this is gonna be your pharmacy and therapeutic committees and the associated subcommittees. Because medications are not in the inpatient setting, there is no structured way right now to bill for medications outside of the DRG system. They're gonna be rolled up into that. And with the increasing cost and intensity and complexity of medication therapies, it's incumbent upon the pharmacy and therapeutics committee and their associated subcommittees to be involved in how we use these medications and providing guidance to the pharmacy and the providers on what scenarios make sense for certain medications to be used. And this could be between criteria of use, different clinical pathways and guidelines that are particular to that medication and that institution on the appropriate use of medications. It's also incumbent that we leverage our electronic medical record to embed some of this into the electronic medical record and other forms of technology so it's not as resource intensive and burdensome on providers to understand when and where certain medications can be used. It's become mainstay to have pharmacists within our ICUs and other patient care areas, but where we can leverage technology to aid in the utilization of medications, provide and present criteria for use, and steer the use in the direction that we want to is optimal and more efficient when it comes from a patient care perspective. And the overall goal is not to just limit medications. It's to optimize their use and to minimize waste. So we wanna use the best medication in the best scenario to achieve the best outcome. And at times, that's the most expensive medication, but there are opportunities to where we can accomplish the same thing with a more cost effective and a less resource intensive medication and accomplish the same patient outcome. So it's incumbent to have and build a strong formula system. When I say a strong formula system, that's the pharmacy and therapeutic committee and the associated committees, the pharmacist involvement in patient care and medication decisions, criteria for use, and guidance that describes how we should use some of these expensive and resource intensive medications so that we can minimize waste and optimize the intended outcome and optimize patient care. This should be used, the criteria for use and the formula system should be seen as a tool to help guide and support providers, not something that should restrict access to when medications are needed. So we will hope that the formula system be seen as a tool to work in line with providers to help guide use and promote appropriate use of medications. And ideally within institutions, the PNT system and the formula system should serve as kind of that gatekeeper for how we use medications. So it's incumbent that not just pharmacy, but all providers are involved within their formula system and the PNT process to have input and share how medications can be appropriately utilized in the hospital system to minimize waste and to maximize efficacy of their use. So in conclusion, the DRG is a payment classification system that tends to try and group similar conditions within one group for efficacy and ease of payment. Hospitals are paid based on the number and type of DRGs they produce, and it's typically a fixed payment that does not include medications or supplies. It's just a fixed payment. Medication expense is typically bundled into the DRG payment, and over time we've seen that expense drastically increase. And the forecast is that it will continue to increase, so it's something that we have to account for. And it's incumbent that we leverage strong formulary systems and subcommittees to help control drug expense and guide use. And as I mentioned, it's a delicate balance between quality of care and expense reduction. Thank you.

Diagnosis-Related Group

payment classification system

medication expenses

formulary systems

medication utilization