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DRG 87: Pulmonary Edema & Respiratory Failure - OIG Report on Coding Errors & Overpayments, Lecture notes of Demography

A report by the Office of Inspector General (OIG) on errors in the assignment of Diagnosis Related Groups (DRGs) for pulmonary edema and respiratory failure (DRG 87) under the Prospective Payment System (PPS). The report identifies overpayments to hospitals due to incorrect coding and recommends actions for recovery of overpayments.

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DRG 87: PULMONARY EDEMA AND
RESPIRATORY FAILURE
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OFFICE OF INSPECTOR GENERAL
OFFICE OF ANALYSIS AND INSPECTIONS
AUGUST 1989
10
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Download DRG 87: Pulmonary Edema & Respiratory Failure - OIG Report on Coding Errors & Overpayments and more Lecture notes Demography in PDF only on Docsity!

DRG 87: PULMONARY EDEMA AND

RESPIRATORY FAILURE

.. stRV/CE

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OFFICE OF INSPECTOR GENERAL

OFFICE OF ANALYSIS AND INSPECTIONS

AUGUST 1989

10

DRG 87: PULMONARY EDEMA AND

RESPIRATORY FAILURE

RICHARD P. KUSSEROW

INSPECTOR GENERAL

OAI. 12-88-

AUGUST 1989

EXECUTIVE SUMMARY

BACKGROUND

Diagnosis related group (DRG) 87 pays for

pulmonar edema and respiratory failure. Only

five, very specifc, ICD- CM codes group to DRG 87 as principal diagnoses. Disorders such

as cQngestive hear failur, chronic obstrctive pulmonar

disease, asthma, bronchitis, and

pneumonia also involve

lung pathology, but should group to other DRGs with lower relative

weights.

FINDINGS

Overall, 56.0 percent of the discharges biled as DRG 87 should have been

assigned to a different DRG.. This error rate significantly exceeds the 18.

percent for all DRGs from the National DRG Valdation Study.

Hospitals overpaid themselves in 96.4 percent of the incorrect DRG

assignments. This ratio significantly exceeds the National DRG Validation

Study s 59.7 percent of overpayments.

The codng errors principally derived from physician mis-specification of the

pricipal diagnosis or hospital resequencing of the diagnoses to substitute

respiratory failur for the

corrct principal diagnosis.

RECOMMENDATIONS

The Health Care Financing Admnistrtion (HCFA) should

diect the peer

review organizations (PROs) to review prospectively DRG 87

bils for codng

accurcy.

The HCFA should diect the PROs to educate physicians and hospitals about the

proper codng ofDRG 87.

The HCFA disagrees with the fist recommendation and believes that it has implemented the

second recommendation. The Offce of Inspector Genera has altered this report to accom

modte HCFA's comments and continues to believe that adopting these recommendations

could recover a projected $35.5 milion annually. The HCFA has alady implemented a third

recommendation made in the drt of this inspection.

.................................. ... .. ... .... .... ......... .......... ..... .................................... ... .. .. ... ........ ... ...... ...................................... ... ...... ........................... ............................ ....................... ........................... .................................. ....................... ............................. .......................... .......................... ................................... ........................... ................................... ................................... ................................... ............................. ............................................................................ .............................. ............... ............... .............. .......... .............. .. .. ......... ...... .. .. .. .. ... ...

TABLE OF CONTENTS

EXECUTIVE SUMMARY
INTRODUCTION

Background

PPS vulnerabilities

Claims processing.........

DRG 87 ......

Methodology........

FINDINGS

Sample charcteristics...

Assignment errrs.

Dirction of

errrs..

Soure of errors...

Reasons for assignment errors

Financial effects

Corrct DRG assignments..................................

Clinical review results..................

RECOMMENDATIONS

Appendix A- I: DRG 87 discharges from all PPS hospitals......................... A-

Appendix A-2: DRG 87 sampling fre.... A-

Appendix A-3: DRG 87 hospital demography........................

........... A-

Appendix A-4: DRG 87 hospital demography comparson...

...................... A ..........

Appendix A- S: DRG 87 patient demogrphy

Appendix A-6: DRG 87 patient demogrphy comparson...

....................... A-

Appendix B- 1: DRG 87 assignment errors

.. B-

Appendix B- 2: DRG 87 assignment errors comparson

........................... B-

Appendix B- 3: DRG 87 assignment errors by patient demography

.................. B-

Appendix C- l: DRG 87 diection of

errr..

. C-

Appendix C-

2: DRG 87 diction of

error comparson....

........................ C

INTRODUCTION

Background

On October 1, 1983, the Health

Car Financing

Admistration

(HCFA) began implementing a

new system of payment for inpatient hospital services under the

Medicar

program. The new

prospective payment system (PPS) replaced the cost-based reimbursement system. Congrss

mandated this change because of rapid growth in health care costs, parcularly inpatient ex

penses under Medicare.

Under PPS, hospitals received a pre-established payment for each discharge, based upon the

diagnosis related group (DRG) to which the discharge is assigned.

PPS classifed discharges

into clinicaly coherent groups which used simlar amounts of hospital resources, based on

varables such as diagnosis; evaluation and tratment procedures; and patient age, sex, and dis

charge status. Each of the 473 DRGs had an associated

relative. weight, which represented the

average cost for hospital care provided to patients with diagnoses

gruping to

that DRG as a

proporton of the cost of the average patient The hospita received this payment, independent

of the actual lengt of hospitalzation or cost of treatment for the individual patient The

hospital retaned any

surlus from patients consumig less than the expected amount of resour

ces, and suffered losses on those patients consuming more.

The shift from cost-based, retrospective reimbursement to prospective payment constituted

one of the most dramtic changes in health care reimbursement since the creation of Medicare.

A fixed payment per discharge induced hospitals to implement economies and reduce unneces

sar servces. The total payments to the hospitas provided the same financial resources for

patient car. In effect, PPS reversed the financial incentives for hospitals.

Where the cost-

reimbursement system rewarded longer hospita stays and more costly

tratments, PPS

rewarded earlier discharges and less costly procedures. One

of the first consequences of the

new payment system was a drop in average length of hospita stay for Medicare patients.

PPS vulnerabilties

The advent of PPS created new opportnities for manipulation or "

gamng " to increase hospi

tal revenues from

Medicar patients. To protect the integrty of PPS and

maitain quality of

care Congress established the peer review organizations (PROs) to monitor hospital activities.

The Office of the Inspector General (OIG) conducted The National DRG Validation Study

(NDRGVS) to

surey the general accuracy of DRG assignment and

qualty of care performed

by hospitas under PPS. Its examnation of

700

medical records established that assignment

errors resulted in $300 milion in overpayments to hospitals, and that

the majority of overpay

ments could be trced to assignment errors afecting a small number of DRGs. This report is

one in a series examning assignment accuracy of one of the DRGs

identied as having the

highest impact on overpayments under PPS and the

gratest potential for cost

recovery.

PPS gamg takes two principal forms: optimization and creep. "

Optimzation

" strategies ad

here to codng rules, but

maximi hospital reimburements by selecting the most expensive

among viable alternative principal diagnoses or adding more

secondar diagnoses. PPS per

mits optization, which flows from

the basic incentive strctu of the PPS system.

DRG creep

" results from codg practices which do not conform to codng rules.

Sources of

DRG crp include:

Misspecijcation:

The attending physician wrtes an incorrct principal diagnosis

(defied by the Uniform Hospital Discharge Data Set (UDS)

as "that condition

established after study to be chiefly responsible for occasioning the

admssion of the

patient to the hospital for care ), seconda diagnoses, or

procedurs on the attestation

sheet.

Miscoding: The hospita assigns incorrct numeric codes to diseases or procedures

corrctly attested to by the attending physician.

Resequencing: The hospital substitutes a seconda diagnosis for the corrct principal

diagnosis.

Auditig and review practices seek to curail ilegal creep by identiying discharges in which

codng rules are misapplied or ignored.

Claims processing

Under PPS, the hospita fies a clai for Medicare reimbursement upon discharging the

beneficiar. At the time of discharge, the attending physician attests to the principal diagnosis

which caused the patient s adssion to the hospita, seconda diagnoses, and procedures

(diagnostic and therapeutic) provided. The

hospita translates the narative diagnoses of the

physician s attestation statement into numeric codes based on the International Classification

of Diseases, Ninth Revision

, Clinical Modcation (lCD- CM), and prepars a claim. Fiscal

intermediar

(P

organizations, working under contract with HCFA , enter the hospital' s codes

into the GROUPER computer progr which assigns the appropriate DRG for reimbursement.

Hospita reimbursement is calculated by multiplying the " relative weight " of each DRG

category by a standadized amount, as

moded by certn hospital-specific factors. The rela

tive weight of each DRG vares above or below 1.

00 accordig to the average amount of

hospital resoures used by

patients in that diagnostic group. The higher the relative weight,

the greater the reimburement.

Mis-assignment of the ICD- CM categories, or erroneous as

signment or sequencing of patient diagnoses, can thus have significant financial implications.

DRG 87

This study examnes erroneous assignment in a single DRG: 87, pulmonar edema and

respirtory failur. At the time covered by this inspection , only five ICD- CM codes group

to DRG 87: thee types of pulmonar edema and

two forms of pulmonar insufficiency.

Methodology

This study used a strtified two-stage sampling design based on hospitals to select medical

records for review. The fist stage used simple random sampling without replacement to

select up to 80 hospitas in each of thee bed size

strata: Less than 100 beds (small), 100 to

299 beds (medium), and 300 or more beds (large)

The second stage of the design employed

systematic random sampling to select at least 25 DRG 87

bils from each strata for Medicar

discharges between October 1, 1984 and March 31 , 1985.

100 beds

10029 beds

1:.:.:.:.:.:.:.:.

30+ beds

DRG 87 All DRGs

Figure 2: Samplil)g frame

The OIG contrcted with the Health Data Institute

(HI) of Lexington

, Massachusetts to

reabstrct the medical records. Upon receipt, the

contrctor "blinded" the ICD- CM codes

by covering them , and assigned an identification number to each record. An Accredited

Record Technician or Registered Record Admnistrator proficient in ICD- CM codng

reviewed the enti record to substantiate the principal diagnosis, other diagnoses, and proce

dures indicated by the attending physician in the

narative attestation form. Any records

which did not support the assigned DRG classification were referred to physician reviewers.

The physician reviewers designated the corrct Uniform Hospita Discharge Data

Set pricipal

diagnosis, and additional diagnoses and/or proedures which were substantiated by the patient

records. The GROUPER computer program processed the reabstracted ICD- CM codes to

determne corrct DRGs. A full discussion of the methodology and fmdings of the contractor

record review is available in the fmal report of the National DRG Validation Study (available

from OIG Public Affais).

DRG 87 was chosen for this inspection because of its high relative weight (1.

  1. and its

high rate of errors. The OIG contrcted with BOTEC Analysis of Cambridge, MA to examne

data for DRG 87 in greater detal

, to identiy sources of

assignment errors, and to make recom

mendations for recovery of overpayments.

..::_ ::'...--....-... .-.-.:.;._" ':..-----..=-"-' ' , ..--- - -.-.-- -.- --.---..-- -.-..-

FINDINGS

Sample characteristics

In FY 1985, 90, 917 of the 8.3 milion PPS discharges (1.1 percent) grouped to DRG 87. The

National DRG Validation Study estiated that approximately equal proportons came from

each bed size strta. Small hospitals therefore biled for DRG 87 at a higher rate than large

and medium sized institutions as a proportion of all PPS bills (Chi-square 4. 09, df 2

25). In the fist half of FY 1985, the 239 hospitals selected in stage-one of the sample

design (the sampling

fre) biled for 222 396 discharges of which 2,417 came from DRG 87

(1. 1 percent). The sampling frame reflects their higher frequency of discharges from larger

hospitals, while the sampling

frction capturs the significantly higher rate in smaller hospitas

(Chi-square 3.

1). (Appendix A , df 1, P

Additionally, the two-stage sample design

permts calculation of separate results for Medicar

beneficiares (the probabilty of something happening to a person) and hospitals (the odds

' of

an event at a parcular hospita). The appendices, tables, and char therefore report in

dividual totas weighted by both discharges and hospitas.

Yes

DRG 87: Urban

All DRGs: Urban

DRG 87: Teaching

All DRGs: Teaching

DRG 87: Profi

All DRGs: Profi

rt "" - ..

100

Percent of discharges

Figure 3: Hospital demography

Like all Medicar discharges as measured by the National DRG Validation Study, the majority

ofDRG 87 discharges came from urban (Mantel-

Haenszel chi-square 0. 16, df 1 , P 75),

nonteaching (Mantel-

Haenszel chi-squar 0.

59, df I , P 5), and nonprofit (Mantel-Haenszel

chi-squar 0. 05, df I

, P 9) hospitas; but not a signifcant rates when controllng for hospi

tal size. (Appendi A-

3J In comparson to all PPS discharges, a slightly larger proportion of

DRG 87 discharges came from

ru and nonteaching hospitals. (Appendix A

-------- ..------------------------- --- - --. '"..... ..,. .- ------------------- .... ------------------- .-------------------------------------- ---------------------------------------------- ----------------- - -- - - -- -- - - - - - -- -- - -- - - -- - - - - - - - -. ....... ------------------- --- - -- - - -- - - - - -- - -- - -. .............. ---------------------------------------------------- --- - --

Patient demographics differ between the correct and incorrct subsamples of discharges. In

discharges assigned incorrctly, patients were on average slightly older, more frequently

femae, and had higher mortality. The length of hospital stay averaged slightly longer, but

reimbursements lower, in discharges incorrectly assigned to DRG 87. (Appendix B-

Direction of errors

The overwhelmng majority of errors in assignment for DRG 87 resulted in overpayments to

hospitals. Weighted by discharges, hospitals overpaid themselves in 96.4 percent of

codng

mis-assignments. In other words, hospitals biled discharges with lower weighted diagnoses

as DRG 87 which, in 1985, had a relative weight of 1.5368. This rate signifcantly exceeds

the 59. 6 percent overpayments rate for all discharges (Mantel-

Haenszel chi-square 1.05, df I

P c: 0. 5). Combining the 56. 0 percent error rate with this 96.4 percent overpayment rate gives

an effective overpayment rate of 54. 0 percent. This rate is nearly five times the 11. 1 percent

for the National DRG Validation Study. (Appendix C-

Percent

DRG 87: Overpaid

All DRGs: Overpaid

CI

DRG 87: Underpaid

EJ All DRGs: Underpaid

..100 10029 30+

Bed size

Figure 5: Direction of errors

Hospitals of al

tyes overpaid themselves on

DRG 87 errors. However , except for nonteach

ing status (Mantel-

Haenszel chi-squar 3.

, df 1 , P c: 0. 05), these demographic trnds did not

signficantly exceeded those in the National DRG

Validation Study when

controllng for hospi

tal size. (Appendi C-

2) While there were

some differences in patient demographics among

over- and under- paid discharges, the number of underpayments was too small to allow mean

ingful analysis of these dierences. (Appendix C-

Source of errors

Almost all the errors in this sample can be traced to the hospitas

' medical records practices.

Fifty- thee cases were miscoded as DRG 87 and

biled accordingly. Only one case

was coded

corrctly to a DRG other than 87 but

biled incorrectly as DRG 87 by the hospita.

(Appendi

!:::::::::::::::::::::::::::::::

Reasons for assignment errors

Physicians made the majority of errors by incorrctly specifying the diagnoses or procedures

on patient attestation sheets. This mis-specification caused 48. 2 percent of the mis-assign-

ments. Most of these errors concerned the nartive pricipal diagnosis. In one case, the

physician mis-specified a procedure. 29. 6 percent of errors occurd when the hospita rese

quenced the narative to substitute a seconda diagnosis for the corrct principal diagnosis. A

smaller number of errors resulted when the medical records deparent selected incorrect

numeric codes for correct nartive diagnoses. The distrbution of errors in this sample be

tween physicians and other hospital deparents approximated the trnds in the entie Nation

al DRG Valdation Study. (Appendix E-

t.:.:.:.:.:.:.:.:

Misspeclfcation

Miscing

Resuenclng

DRG 87 All DRGs

Oter

Figure 6: Reasons for errors

The reasons for errrs in biling discharges to DRG 87 vared slightly by hospital

demogrphics. (Appendix E-2) Narative (physician) errors occured parcularly frequent

discharges from small hospitals and mid-sized facilties.

Large hospitals, in

contrst, had

higher rates of miscodg and

resequencing errors. Teaching hospitals miscoded records at

over twice the rate of non-teaching hospitas, but non-teaching

facilties resequenced diag

noses nearly twice as often as their non-teaching counterpars.

In discharges from for- profit

hospitals, narative errors appeared

frequently, but no resequencing errors. Patient age, sex,

length of stay, and mortity were roughly similar across error

tyes. (Appendix E-

Financial effects

After reabstrction , the average relative weight for DRG 87 discharges in this sample dropped

from 1.5368 to 1.2277. Discharge weighted, the

decrease amounted to a net overpayment of

3 percent and applies to FY 1984- 87 without modfication.

(Appendix F

---------------- - -- - --- - --- - - - - -- - - - - - - - - - - - - -._.- - - - - - - -- - - - -- --- - - - -- - --

The majority of cases corrctly assigned to DRG 87 also involved patients with respiratory

faiure. The balance of corrctly biled discharges have acute lung edema -- not otherwise

specified, as their principal diagnosis. (Appendix G-

Percent

DRG 87

All DRGs

Unneeed admissions Poor quality care Premature discharges

Figure 8: Clinical incidents

Clinical review results

Reviewers concluded that only 1.3 percent of discharges in this sample constituted unneces

sar admssions ("an admssion in which the care received by the patient was either not

needed or did not require the use of the inpatient setting. "

) (Appendix H- l) However, this rate

did not dier signifcantly from the 10.

0 percent for all DRGs (Chi-squar 3.

2, df 2, P .. 0. 25).

Two discharges were judged to have been

prematur, a rate also not significantly different

frm the National DRG Valdation Study (Chi-square 1.66, df 2, P.. 0. 50). (Appendix H-

Overal, 8.

8 percent of discharges in this sample (discharge-weighted) evidenced "

quality of

. care not meetig professionally recognized standards.

" Qualty of

care problems concentrted

in discharges from small hospitals, which had over twice the rate of poor

qualty compared to

other hospitals in this sample, and substantialy more problems than discharges from small

hospitals in the full National DRG Validation Study.

RECOMMENDATIONS

The Health Care Financing Admnistration should dict the peer review organizations

to review prospectively DRG 87 bils for codng accurcy.

The HCF A should diect the PROs to educate physicians and hospitals about the proper

codng of DRG 87.

The HCFA disagrees with the fist recommendation and believes that it has implemented the

second recommendation. The OIG has considered the HCFA' s comments on the drt of this

report and contiues to believe that adopting these recommendations could recover a projected

$35. 5 millon annually. The HCFA has alady implemented a third recommendation made in

the draft of this inspection.

Appendix A-4: DRG 87 hospital demography comparison

Percent Bed size Weighted percentage

distribution c:100 100- 299 300+ Sample Discharge Hospital

Urban

DRG 87 10. 71.4 100 53. 65. 44.

NDRGVS 19.

Rural DRG 87

NDRGVS

Teaching DRG 87 14. 52. 18.

NDRGVS

Non- DRG 87 100 85. 48.

teaching

NDRGVS 97.4 81. 44. 74.

Profit DRG 87

NDRGVS 17.

Non- DRG 87

    1. 100

profit NDRGVS 90.

    1. 89

Appendix A-5:

DRG 87 patient

demography

Bed size Weighted average

c: 100- 299 300+ Sample Discharge Hospital

Age (years)

Sex (% male)

LOS (days)

Payment ($) 2868 4217 5476 3987 4328 3720

Mortality (%)

(%)($)

Appendix A-

6: DRG 87 patient demography comparison

Bed size Weighted average

c:100 100- 299 300+ Sample Discharge Hospital

Age DRG 87 74. 72. 67. 72. 71.

(years) NDRGVS

Sex DRG 87 69. 50.

(% male) NDRGVS 43. 45. 48. 45.

LOS DRG 87 11.

(days) NDRGVS

Payment DRG 87 2868 4217 5476 3987 4328 3720

NDRGVS 1849 2923 3807 2860 3074 2508

Mortality DRG 87

NDRGVS