DRG 475 – Respiratory System Diagnosis with Ventilator Support

Payment Error Prevention Program (PEPP) Special Project

Project Overview:

The Payment Error Prevention Program (PEPP) was developed by the Health Care Finance Administration (HCFA), now called the Centers for Medicare and Medicaid Services (CMS), for the purpose of identifying and decreasing payment errors caused by incorrect DRG assignment and unnecessary admissions. The goals of the Payment Error Prevention Program were to be accomplished through educational interventions. PEPP was part of the PRO 6th Scope of Work, which began in Arkansas on August 1, 1999.

The Arkansas Foundation for Medical Care (AFMC), the PRO for the State of Arkansas, studied paid claims data to determine the focus of the first PEPP project. From 1994 to 1998, there was a 16.19% increase in claims paid under DRG 475, “Respiratory System Diagnosis with Ventilator Support” in Arkansas. DRG 475 was, at that time, the second highest weighted non-surgical DRG with an average national payment of approximately $15,000. In order to appropriately group a case to DRG 475, very specific coding and sequencing guidelines must be followed. The potential that these guidelines are not always followed, and the substantial increase in claims billed under DRG 475, led to the development of the DRG 475 project. AFMC determined that DRG 475 offered excellent educational opportunities to correct inappropriate billing practices and reduce significant payment errors.

Baseline Study:

The initial/educational phase of the study involved data collection on 100% of Arkansas hospital discharges paid under DRG 475 for FY 1998. The statewide baseline error rate for DRG 475 was found to be 22.92%. The results of the baseline study were used as indicators for education and corrective interventions. No payment adjustments were made during the educational phase of the project.

The primary problem identified in Arkansas on the baseline study was the inappropriate sequencing of respiratory failure (518.81) as the principal diagnosis when patients are admitted to the hospital in respiratory failure due to an acute non-respiratory condition, most frequently congestive heart failure (CHF). Sequencing guidelines at the time of the project required that if a patient is admitted to the hospital because of respiratory failure due to CHF, then CHF (428.0) is sequenced as the principal diagnosis, with respiratory failure sequenced as a secondary diagnosis.** When these sequencing guidelines are followed, these cases group to DRG 127, “Heart failure and Shock,” rather than DRG 475. AFMC’s study showed that 28.5% of incorrect cases grouped to DRG 475 should have been grouped to DRG 127.

Facilities with an error rate of 3% or higher on the baseline study were required to develop and implement quality improvement plans (QIPs) to address the identified problems. The coding and sequencing guidelines that must be followed in order to accurately assign cases to DRG 475 were provided, to help hospitals identify the source of the problems and to assist in the development of the QIPs. Hospitals were encouraged to develop QIPs that would ensure that all billed data is supported by the chart documentation and that coding and sequencing guidelines are followed. Tools were provided by AFMC to help hospitals educate their medical staff regarding Medicare physician documentation requirements and the UHDDS definitions of principal and secondary diagnoses. To access these tools, click on the HPMP tools link under Resources.

In addition, if hospital DRG 475 analysis revealed inappropriate sequencing of respiratory failure and congestive heart failure, hospitals were encouraged to include the monitoring of DRG 087, “Pulmonary Edema and Respiratory Failure,” in their quality improvement plans. DRG 087 is affected by the same coding and sequencing guidelines as DRG 475, when a patient is admitted in respiratory failure due to CHF. It is reasonable to assume that sequencing errors occurring with DRG 475 are also occurring with DRG 087. AFMC’s analysis of claims paid under DRG 087 showed many cases with a billed principal diagnosis of “respiratory failure” which also had a billed secondary diagnosis of “congestive heart failure.”

Remeasurement Study:

The second phase, or the remeasurement phase, of the DRG 475 study was performed to ensure that the problems identified on the baseline study were corrected. The remeasurement study included cases billed after implementation of the quality improvement plans. AFMC used both data collection and case review to complete the second phase of this project. Data collection was performed on 100% of the cases paid under DRG 475 during the time period of December 1, 1999 through May 31, 2000. Cases failing the data collection screen were subjected to full case review and payment adjustments were made where necessary. Hospitals with 2 or more cases incorrectly billed and an improvement rate of below 50% were required to take further corrective action in the form of required self-audits. AFMC also conducted onsite hospital visits to hospitals that had an increase in their error rates on the remeasurement study to discuss and review the hospital DRG validation process.

Recommendations Resulting from Project Findings:

Because of the DRG 475 study findings, all Arkansas hospitals were encouraged to develop and implement continuous DRG/coding quality improvement plans to assure continued accuracy of DRG assignment in all areas. Physician documentation education should be a part of these DRG accuracy improvement interventions.

Follow-up:

AFMC will continue to monitor DRG 475 for inappropriate DRG assignment. If it appears that insufficient effort has been put forth to correct inappropriate DRG 475 claims, AFMC may choose to perform full case review with payment adjustments as necessary.

**The coding guidelines for the sequencing of Respiratory Failure as the principal diagnosis were revised effective with discharges of April 20, 2005. Please refer to the First Quarter, 2005, AHA Coding Clinic for ICD-9-CM for these revised guidelines.

Contact Person: If you have any questions regarding this special project, please call Karen Gabel, HPMP Manager, at 479-649-8501. ext. 7714.