A review of the complexity adjustment in the Korean Diagnosis-Related Group (KDRG)

Background: The Korean Diagnosis-Related Groups (KDRG) was revised in 2003, modifying the complexity adjustment mechanism of the Australian Refined Diagnosis-Related Groups (AR-DRGs). In 2014, the Complication and Comorbidity Level (CCL) of the existing AR-DRG system was found to have very little correlation with cost. Objective: Based on the Australian experience, the CCL for KDRG version 3.4 was reviewed. Method: Inpatient claim data for 2011 were used in this study. About 5,731,551 episodes, which had one or no complication and comorbidity (CC) and met the inclusion criteria, were selected. The differences of average hospital charges by the CCL were analysed in each Adjacent Diagnosis-Related Group (ADRG) using analysis of variance followed by Duncan’s test. The patterns of differences were presented with R 2 in three patterns: The CCL reflected the complexity well (VALID); the average charge of CCL 2, 3, 4 was greater than CCL 0 (PARTIALLY VALID); the CCL did not reflect the complexity (NOT VALID). Results: A total of 114 (19.03%), 190 (31.72%) and 295 (49.25%) ADRGs were included in VALID, PARTIALLY VALID and NOT VALID, respectively. The average R 2 for hospital charge of CCL was 4.94%. The average R 2 in VALID, PARTIALLY VALID and NOT VALID was 4.54%, 5.21%, and 4.93%, respectively. Conclusion: The CCL, the first step of complexity adjustment using secondary diagnoses, exhibited low performance. If highly accurate coding data and cost data become available, the performance of secondary diagnosis as a variable to reflect the case complexity should be re-evaluated. Implications: Lack of reviewing the complexity adjustment mechanism of the KDRG since 2003 has resulted in outdated CC lists and levels that no longer reflect the current Korean healthcare system. Reliable cost data (vs. charge) and accurate coding are essential for accuracy of reimbursement.