Medicare Diagnosis-Related Group Case Study

Background:

A more accurate and precise diagnosis allows the opportunity for higher reimbursement. This is where MSDRG’s come into play. Medicare severity diagnosis related group (MS – DRG) is a system of classifying a Medicare patient’s hospital stay into various groups in order to facilitate payment of services, which allows for payment to be more closely aligned with resource utilization. “The diagnosis related group is an inpatient classification that categorizes patients who are similar in terms of diagnoses and treatments, age, resources used, and lengths of stay. Under the prospective payment system (PPS), hospitals are paid a set free for treating patients in a single DRG category.” (Casto) It is used as a useful tool for utilization

Each one (DRG) is assigned with a numeric value of an episode of care with a relative weight that is intended to represent the resource intensity of the clinical group. It determines the payment level for the group, and these four guidelines are used for the formation of DRG system: “1) the patient characteristics used in the DRG definition should be limited to information routinely collected on the hospital billing form. 2) There should be a manageable number of DRGs that encompass all patients seen on an inpatient basis. 3) Each DRG should contain patients with a similar pattern of resource intensity. 4) Each DRG should contain patients who are similar from a clinical perspective.” (http://library.ahima.org) The assignment is purely based on the payment includes all the services rendered between hospital admission and discharge and per patient stay. The structure of the DRG system is hierarchical, and the highest level is major diagnostic categories (MDC). MDC represents the body systems treated by medicine and contain 23 MDCs plus a group for DRG associated with all MDCs, pre-MDC, and two new MDCs were added to represent the Human Immunodeficiency Virus Infection and Multiple Significant Trauma categories. The second level is divided into two sections

The third and final level is divided into the medical and surgical sections among 25 MDC groups based on the procedure performed and the principal diagnosis. (Anne B. Casto) “The components of the DRG version are: title, geometric mean length of stay, arithmetic mean length of stay, relative weight, and ICD-9-CM now ICD-10-CM consist of the principal diagnosis, operating room procedure, or diagnostic procedure combination that drives the DRG assignment.” Case mix index (CMI) is a single number that compares the overall complexity of the healthcare organizations patients to the complexity of the average of all hospitals. It is an average of the sum of all diagnosis, related group weights, divided by the number of Medicare cases. CMI refers the severity of illness, risk of mortality, prognosis, treatment difficulty, or need for intervention, and it is a direct measure if the resource consumption. (Anne B. Casto) The assignment of DRG to case mix groups is done through the computer programs called groupers which are a series of steps in calculating the total DRG payment. The Medicare Administrative Contractors use groupers for calculating the MS-DRG payment for each