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Variation in Health Care Spending Target Decision Making, Not Geography (2013) / Chapter Skim
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Appendix E: Harvard University Price Adjustment Memorandums
Pages 141-146

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From page 141...
... For these claims we distribute the spending over claims that do have a CPT on the same day and for the same person according to the proportion of total daily spending each CPT represents. We believe that the outpatient claims that are missing a CPT code are facility payments that have been carved out of the professional payments, and that this procedure 141
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From page 142...
... 69.7% of the claim amount is adjusted by the wage index value, a proportion based on the labor-related share outlined in the Hospital Inpatient Prospective Payment System Final rule.2 This is the same procedure we perform on any outpatient claims that cannot be apportioned as described above. (0.697 × raw claim day amount / wage index)
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From page 143...
... HARVARD CLAIM-DAY METHOD MEMORANDUM (11.04.11) Background There are frequent occurrences of multiple claims for a single procedure coded on a single day for a single person.
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From page 144...
... Harvard's approach is to create a nationalized standard price for each procedure code and type of claim (inpatient DRG, inpatient CPT, and outpatient CPT) based on the national mean payment for each procedure per day it was rendered.
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From page 145...
... Capitated claim days are omitted when calculating means/ medians. Drug claims are also left unadjusted Summing Procedure After the spending is adjusted as described above, the adjusted spending amounts and residual unadjusted spending (drug claims and claims that are missing procedure code after the apportioning step)
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Key Terms

  • price adjustment
  • procedure code
  • claim day
  • output price
  • claim days

  • input price
  • cpt code
  • inpatient facility
  • wage index
  • inpatient professional

  • capitated claim
  • raw claim
  • day amount
  • zero dollar
  • adjustment memorandum

  • standard price
  • outpatient cpt
  • facility claims
  • practice expense
  • total medical

  • inpatient cpt
  • capitated claims
  • dollar spending
  • left unadjusted
  • claim type

  • vard recognizes
  • proportion based
  • mean payment
  • final rule
  • procedure coded


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