DRG's

Can someone tell me in depth what exactly are DRG's and how does the hospital bill for them?

DRG tutorial

Hi,
I know this site is not focused on hospital coding, but if you want to email me offline, I can send you a copy of my tutorial that explains DRGs and how they work. My email is cmbenjamin@bellsouth.net.

DRG's

Physician practices are paid based on the CPT code, with the ICD-9 supporting medical necessity. But, no matter how sick the patient is, physicians are paid based on the fee schedule for the code. 99214 is paid at the same rate, no matter what diagnosis code is used.

Hospitals are paid for inpatient stays based on the diagnosis related group (DRG's) they report to Medicare. Most commercial insurances still pay hospitals on a negotiated per diem rate. In order to select the correct DRG, the hospital coders list all of the relevant diagnosis codes, including underlying conditions. The hospital wants physicians to include everything, while we tell them to only select ICD-9 codes for the conditions addressed that day. The hospital then uses a piece of software to select the DRG.

Medicare has a discussion of this at their website


http://www.cms.hhs.gov/acuteinpatientpps/

MS-DRG Reimbursement Methodology

The MS-DRG Reimbursement Structure was updated by Medicare from the old DRG structure beginning 10-1-2007. The new structure is a tiered mechanism that will determine how hospitals are paid for inpatient claims encompassing more than 700 MS-DRG's, and include CC's (Complications & co-morbidities), and MCC's (major complications and co-morbidities. Critical for hospital coders:

The coder MUST correctly identify the REASON for the inpatient admission. After all studies have been completed, what is the issue that caused the inpatient admission? The correct principal diagnosis is dependent upon this identification. This is not usually a chronic condition unless there is an acute exacerbation. Failure by the coder to make the correct call will result in an incorrect reimbursement for the hospital.

It is essential that the physician be very detailed in the diagnosis statements. It is likely that hospitals will become increasingly demanding in the details of the physician documentation. This often will make a difference in the reimbursement. Example: CHF is not a CC. Chronic systolic heart failure is a CC, Acute on chronic systolic heart failure is a MCC.

All secondary conditions that either require management by the physician or affect the management of the patient are to be coded and present in the physician notes. There is significant data collection from codes reported by hospitals. Failure to document adequately to determine the most detailed codes may cause the data to be incomplete.