July 30, 2012

DRGs Dethroned
By Judy Sturgeon, CCS, CCDS
For The Record
Vol. 24 No. 14 P. 8

Coming from someone with more than 20 years of inpatient coding experience—most of which have involved diagnosis-related groups (DRGs)—the title of this article sounds blasphemous. However, as time has progressed, reporting needs have changed, leading to a reformulation of the inpatient coder’s critical functions.

Because the profession is based on language logic rules, a typical coder is not particularly fond of change. As a result, the longer the language and the rules stay constant, the easier it is for coders to do their jobs well. Not all change is bad, however, especially when those changes make coders more valuable to their employers.

Let’s examine some of the ever-increasing reporting issues that DRG coders may encounter during the course of their daily tasks. Certainly, reviewing charts for principal and valid secondary diagnoses that will affect the DRG remains atop their list of priorities. But the DRG is no longer king. New considerations in data reporting and payment have changed the previous DRG monarchy to more of a critical data reporting collaboration.

Medicare began to reduce payments to hospitals that, with few specific DRGs, transferred patients to other medical facilities after a short stay if Medicare would still reimburse the hospital. To prevent what was perceived as “double dipping,” coders were instructed to include discharge status codes with each case. Today, approximately one-third of all Medicare severity-DRGs (MS-DRGs) are included on the list of transfer DRGs.

Then the all-patient refined (APR)-DRG entered the scene. The old DRG now had competition for data reporting of individual patient severity of illness and risk of mortality in addition to the average cost of care as represented by the original DRG system. Savvy facilities trained coding staff to recognize and report all significant secondary diagnoses so that not only were payments correct and optimal but also the public reporting of mortality data.

Best of Both Worlds?
Medicare considered adopting the APR-DRG but sidestepped and created its own medical severity system in an attempt to combine the best of both systems. DRGs were split into multiple levels of payment, with options for major secondary conditions, significant secondary conditions, and no secondary conditions, that were particularly impressive from either a financial or a clinical severity standpoint. Gone are the days when coders could identify the principal diagnosis, find one significant secondary condition and any major procedures, and move along to the next case.

Hospital-acquired conditions then entered the reimbursement scene, and several common patient diagnoses generally considered to be preventable were added to the types of codes that could affect reimbursement. To identify these for date of onset, an additional code set was created. Coders were given another requirement to add to nearly every diagnosis to identify whether the condition was present on admission.

The more-is-better concept of data reporting didn’t stop with MS-DRGs, APR-DRGs, or present-on-admission codes. Every time another financial determination hinges on what the doctor is trying to document in the chart, the more likely it is that the coder will need to query for clarification. Even if the coder is confident of what the doctor meant by a vague or ambiguous statement, it is the physician’s legal responsibility to clarify the final diagnosis. Even in hospitals that have a separate cadre of query staff, at the end of a patient’s stay, it is the coder who must make the final decision or send a final question to the physician.

When Medicare was first created, it just paid patient bills. That didn’t work out well; bills just got bigger. Then it paid by DRG to encourage hospitals to manage patient care more efficiently. The new system paid the average cost of care according to patient type. If the facility was well managed, it could reduce costs and length of stay to profit from the system.

Transfer DRGs eliminated the option of keeping patients just long enough to profit from the DRG and then transfer them for continued care at another facility.

Change in Focus
As part of a growing focus on quality of care, as opposed to cost of care, Medicare stopped paying extra for preventable, hospital-acquired conditions that resulted in a higher-paying DRG. Medicare annually reviews and adds to the quality indicators that determine other types of incentive payments or affect payment decreases.

Once again, coders are being asked to become critical partners in quality reporting. Readmission rates are identified in part by how codes are assigned. Is the principal diagnosis correct? That determines whether the encounter is considered for one of the target populations.

When included on the quality team, a competent DRG coder can educate the physician and nursing staff on the various quirks in coding rules and documentation shortfalls that can significantly affect the diagnoses that drive quality indicators.

Does your facility’s quality and risk assessment teams include coding leadership in meetings? Do quality nurses become partners to help assure clear diagnostic documentation is put into the chart before a patient is discharged and the case goes to coding? Do the coders return the favor by querying the physician after discharge regarding unclear documentation even when it won’t affect the DRG but may impact other quality reporting and payment initiatives? Does your chief financial officer understand that productivity drops each time the coding staff has another critical task added to chart review?

In this environment, chief financial officers who aren’t paying their best DRG coders top dollar risk having them poached by rival healthcare organizations that will fork over larger salaries.

Every hospital has to be on top of public comparative reporting of quality and mortality data, be aware of its case mix index and effect on annual payment, and stay in control of the optimum but compliant billing and payment of its patient accounts. Remember that inpatient coding staff are the ultimate translators between physicians and publicly reported data, and it isn’t just about DRGs anymore.

— Judy Sturgeon, CCS, CCDS, is the clinical coding/reimbursement compliance manager at Harris County Hospital District in Houston and a contributing editor at For The Record. While her initial education was in medical technology, she has been in hospital coding and compliance for 21 years.