Linkedin Medical Tourism excerpt: Major Diagnostic Category flaws

Medical Tourism for Group Health: Using Major Diagnostic Categories (MDCs) to Predict Medical Tourism Utilization – A Flawed Strategy that Can Lead to Unrealistic Expectations

The MDC is a very commonly used term, and widely misunderstood. All diagnoses or illnesses are put into one of the 25 Major Diagnostic Categories. With only 25 categories, a wide range of illnesses get lumped together. For example, anemia and heart attacks both are part of the Circulatory System category. Insurers often give clients a report of all claims dollars by MDC. So, you could see that your plan spent $500,000 on digestive system, $200,000 on nervous system and so forth.

One common misperception is about the term “major.” “Major” refers to the categories, not to the illnesses being summarized. Every medical claim will have a diagnosis and will fit into one of the categories, whether the claim is for a bruise or for a heart attack. MDCs give you a high level picture of where your plan dollars are going, but like any high-level picture, it is fuzzy at best.

When we work with brokers and MGAs and insurance agents who would like us to quote network pricing and ROI estimates for domestic or international medical tourism, often, they quote us past year expenses in MDCs.

Instead of using MDCs we tend to estimate utilization projections for a particular employers’ population using various predictive modeling tools. We can accept a flat file of employer claims data from the previous year, match this with pharmacy data and zoom in on who is using more pain medication, who is tapering off, and claims for office visits, diagnostic imaging, physical and occupational therapy, and other indicators and predict impending musculoskeletal, spine, and soft tissue surgeries which might lend themselves to medical tourism, assuming that the patient is willing and able to travel. We can use similar techniques to predictively model heart surgeries in adults, and in some cases, children. We can also use predictive modeling tools to stage cancer cases that may require resections, bariatrics cases that also intersect with other comorbid conditions, etc.

These generic numbers then must be critically evaluated to trim out cases that might be urgent or emergent in nature and not a candidate for medical tourism, those cases were the benefit design (e.g., participant has enrolled as an HMO member, and while part of the population, does not have the benefit option, participant has no desire to travel for care, participant is a union member and the union objects to utilization of a medical tourism benefit outside the USA, etc.).

For a hospital or healthcare provider to make use of this information when negotiating with a group health buyer such as Mercury Healthcare International on behalf of its employer clients, the hospital must review this information with Mercury and/or the employer and couple it with knowledge of incidence frequency rate or prevalence rate, to determine how likely it is for the population to utilize the medical tourism product. Only then can a reasonably sound expectation be made about steerage and rewarding said steerage with preferential pricing.

If you have successfully identified another way to reliably calculate anticipated medical tourism volumes in the group health setting, and can share some lessons learned, please continue the thread below.

1 month ago


Maria K Todd MHA PhD • In case you are unfamiliar with the Major Diagnostic Categories (MDC), these categories are formed by dividing all possible principal diagnoses (from ICD-9-CM) into 25 mutually exclusive diagnosis areas. MDC codes, like DRG codes, are primarily a claims and administrative data element unique to the United States medical care reimbursement system. DRG codes also are mapped, or grouped, into MDC codes.

The diagnoses in each MDC correspond to a single organ system or etiology and, in general, are associated with a particular medical specialty. MDC 1 to MDC 23 are grouped according to principal diagnoses. Patients are assigned to MDC 24 (Multiple Significant Trauma) with at least two significant trauma diagnosis codes (either as principal or secondaries) from different body site categories. Patients assigned to MDC 25 (HIV Infections) must have a principal diagnosis of an HIV Infection or a principal diagnosis of a significant HIV related condition and a secondary diagnosis of an HIV Infection. There is a crosswalk for re-categorizing them into ICD-10, using SNOMED.

MDC 0, unlike the others, can be reached from a number of diagnosis/procedure situations, all related to transplants. This is due to the expense involved for the transplants so designated and because these transplants can be needed for a number of reasons which do not all come from one diagnosis domain. DRGs which reach MDC 0 are assigned to the MDC for the principal diagnosis instead of to the MDC associated with the designated DRG.

List of Major Diagnostic Categories

MDC Description
0 Pre-MDC
* System
* Nose, Mouth And Throat
* System
* System
* System
* System And Pancreas
* System And Connective Tissue
* Subcutaneous Tissue And Breast
* Nutritional And Metabolic System
* And Urinary Tract
* Reproductive System
* Reproductive System
* Childbirth & Puerperium
* & Other Neonates (Perinatal Period)
* and Blood Forming Organs and Immunological Disorders
* DDs (Poorly Differentiated Neoplasms)
* and Parasitic DDs
* Diseases and Disorders
* Use or Induced Mental Disorders
* Poison and Toxic Effect of Drugs
* Influencing Health Status
* Significant Trauma
* Immunodeficiency Virus Infection

I hope that the above helps those of you from outside the USA better evaluate this coding system and how you can use it to project utilization from US employer-sponsored health benefit plans. Currently, the number of employer-sponsored, self-funded group benefit plans is about 210,000. The number of NCQA accredited fully insured health insurance plans is about 395, meaning that there are roughly 583 self funded employer benefit plans for every one licensed plan. Licensed health benefit plans are not really jumping on the benefits expansion bandwagon just yet, other than in Baja California from Southern California.

1 month ago• Like

Maria K Todd MHA PhD • To set one posted price for all medical tourism clients is not really a well thought out competitive strategy. First, every posted price is laden with disclaimers, and therefore the posted price is usually not reliable.

Second, why should a one-off case pay the same price as one who steers volumes to a designated provider? And third, if two or more referral sources steer volumes, how does the provider incentivize the group health buyer with the potential to steer hundreds of cases, against the group health buyer who may have the ability to realistically steer three to five cases in a year?

The book of business evaluation is more than simply an exercise in counting belly buttons. It is a qualitative analysis using evidence-based medicine coupled with a steerage pledge that could have repercussions if certain minimum spend is not met, similar to how corporate airline ticketing discounts are contracted. In corporate airline spending, annual minimum dollar spend entitles the corporation to a discount rate at a predetermined discount level. Failure to produce the minimum revenue per measurement period (quarter, year, etc., causes the company to be moved to a different tier, presumably after a probationary period where the deficit could be rectified, or the consequence is applied.

Employers who purchase healthcare services directly from employers may or may not know how to calculate their anticipated medical tourism volumes. We seen this to be the rule more than the exception. Once we begin to chat with the medical director for the plan, the benefits administrator and the CFO of the company, we usually find three distinct points of view: Quality, Safety and Evidence-based medicine, convenience and simplicity, and cost, respectively.

The broker, MGA or benefits consultant that can competently and skillfully guide the client through this needs analysis is worth every penny of their fee or commission.

1 month ago• Like
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • In addition to assessing the market for specific diagnoses, it would seem that an evaluation of one’s capacity utilization of existing fixed assets (diagnostic and therapeutic equipment) would be necessary before soliciting specific types of medical tourists cases. Along with that would be an assessment of needed expert and non-expert personnel associated with caring for acute vs chronic diseases and therapies.

These fixed and variable assets will vary significantly between facilities and over time in a single facility (by chance and by strategic design). The MDC might be a rough guide to the assets that are needed, but there’s a wide range of therapies and tools used within a category.

Ideally, a facility should choose those cases in which it should have a long term competitive advantage due to its infrastructure which includes maximizing capacity utilization from the correct mix of cases, inexpensive non-expert personnel, and from its unique legal access and affordability to specific drugs, implants (organs included), procedures, and experts.

29 days ago1
Brian Gregory, MD, MBA

Brian Gregory, MD, MBA • Adding to my prior comment, I’d suggest applying contraint theory (includes capacity utilization and variable assets) and simulation using existing and realistically obtainable assets before embarking on any expensive strategy of soliciting and preparing for specific patients.

29 days ago

Maria K Todd MHA PhD • Bravo Brian,
Too often, medical tourism providers have a five track mind: cardiac, orthopedics, bariatric, plastic, and minimally invasive robotic surgery. The myriad cases that can be undertaken through medical tourism lend themselves nicely to niche providers who are high volume shops, centers of excellence, focus factories, and even ambulatory surgery centers with appropriate accommodations nearby.

Personally, I prefer smaller boutique hospitals such as Fortis La Femme, and many ambulatory surgery centers that focus on a few things right, rather than be subjected to some huge facility where I might get lost, get exposed to more potential hospital acquired critters, or have to negotiate long distances between reception and treatment departments.

I also like your admonition about constraint. Expand the market to include more capture, rather than expand the service lines. Medical tourism growth for hospitals is slower than the media (and some trade associations) would lead us to believe.

About Brian D Gregory MD, MBA

Board Certified Anesthesiologist for 30 years. TOC design and implement for 30 years. MBA from U of Georgia '90: Finance, Data Management, Risk Management. Practiced in multiple US states and Saudi Arabia at KFSH&RC and KFMC Taught residents in two locations. Worked with CRNAs for 20 years.
This entry was posted in board of directors, CEO, Uncategorized and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s