New DRGs may affect your hospital’s reimbursement

Cardiovascular, orthopedic procedures are included

The Centers for Medicare & Medicaid Services (CMS) has made changes to the Inpatient Prospective Payment System which could have a major impact on your hospital’s reimbursement for certain procedures.

The final rule, which went into effect Oct. 1, 2005, creates 16 new DRGs, 37 new procedure codes, and 173 new diagnosis codes.

Among the changes are:

  • Elimination of some DRGs for interventional cardiology procedures. They have been replaced with new, paired DRGs that differentiate whether or not the patient having the procedure has a secondary cardiac condition.
  • Changes in the DRGs for major joint procedures to distinguish between a first-time replacement or extension and a revision of a hip or knee replacement.
  • Institution of new codes for patients with chronic kidney disease, and eliminating the code for chronic renal failure.

"Hospitals are going to be looking at clinical documentation in areas where they never had to be concerned in the past. If these procedures are not correctly coded and documented, it can have a major impact on reimbursement and the data the hospital include on its public report cards," says Deborah Hale, CCS, president of Administrative Consultant Services, LLC, a health care consulting firm based in Shawnee, OK.

The changes in the DRGs for cardiovascular conditions came about because claims data showed varying use of resources depending upon whether the patient had certain major cardiovascular conditions, she says.

In addition, "CMS has gotten more data about resource utilization and determined that certain procedures were more clinically similar to other procedures," Hale says.

For instance, the DRGs for coronary bypass grafts have been split into paired DRGs.

DRG 547 is coronary bypass graft with catheterization and with a secondary major cardiovascular condition. DRG 548 is coronary bypass graft with catheterization and without a secondary major cardiovascular condition.

Similarly paired DRGs are specified for procedures that include permanent pacemaker installation, percutaneous cardiovascular procedures, and other vascular procedures.

The new DRGs can have a big impact on reimbursement if the hospital doesn’t have an effective mechanism to make sure that it is accurately reporting the secondary diagnosis, Hale points out.

"If the documentation is adequate to show the presence of a major cardiovascular condition, the hospital will be paid more for the procedure. If the documentation isn’t there, the hospital will be paid at the lower rate, which is less than last year’s rate," she explains.

For instance, if a patient undergoing a coronary bypass is under current treatment for congestive heart failure even though currently compensated, the secondary diagnosis would place the patient in the higher-paying DRG.

But if the surgeon documents that the patient has "cardiomyopathy" rather than "congestive heart failure," the hospital would be paid at the lower rate.

"The documentation should include information, if applicable, that puts the procedure into the higher-paying category," Hale says.

The new DRGs also could affect patient outcomes data reflected on many public report cards, Hale says.

"If they don’t give attention to documentation, the cost-to-payment ratio and expected length of stay will not reflect an accurate picture of the patient’s resource utilization. If the severity of illness of the patient and secondary diagnoses are not documented, it looks like the hospital is not effective in managing length of stay and costs," Hale says.

The request for the change in the joint replacement DRGs was submitted to CMS by orthopedic surgeons representing the American Association of Orthopaedic Surgeons who wanted to have better outcomes data that differentiated between first-time joint replacement surgeries and subsequent surgeries on the same joint, Hale adds.

Under the new rules from CMS, DRG 209 has been eliminated and has been replaced by DRG 544 (major joint replacement or reattachment of lower extremity) and DRG 545 (revision of hip or knee replacement).

DRG 545 has a higher payment and slightly higher length of stay than DRG 544, which is major (initial) joint replacement, Hale says.

"In the past, DRG 209 was frequently assigned to any patient with a hip or knee replacement, whether it was a first-time surgery or a second surgery because of a complication of the prosthesis. Consequently, in an outcomes report card, a hospital that took failures from other facilities looked like it was the facility having bad outcomes for joint replacement," Hale says.

Using the new DRGs, hospitals will be able to identify problems with joint replacement early on and embark on performance improvement documentation. Hospitals will be able to compile data on failure rates and identify the cause of implant failure, allowing them to refine the procedures, techniques, or choice of implant, Hale says.

"The new DRG helps to differentiate between the two and gives the public a better picture of outcomes. It also increases the reimbursement for the revisions, which are generally more costly than the initial implant. This means that case managers should make sure physicians are documenting the complications of the prosthesis and the procedures correctly," she adds.

Under the new CMS rules, "chronic renal failure" no longer is an appropriate diagnosis. That diagnosis has been redefined as "chronic kidney disease" and five codes for various stages have been implemented. For instance, DRG 585.1 indicates chronic kidney disease, Stage 1 and DRG 585.5 is to be used for Stage 5. End-stage renal disease is DRG 585.6. Unspecified chronic kidney disease should be documented as DRG 585.9.

The new codes assess the risk for adverse outcomes and complications and determine which patients require which specific treatments, based on the severity of their disease, Hale says.

"If case managers make sure the physicians identify and document correctly, using the new DRG will positively impact the hospital’s report card, contribute to better patient care, and result in additional reimbursement," she says.