Understanding Diagnosis Related Group billing (DRG) is crucial for ensuring fair and accurate payments for the care insurance companies provide coverage for. Let us break down what it means and how it affects hospital reimbursements.
What is DRG Billing and How Does it Work?
DRG billing is a payment method adopted by the Centers for Medicare and Medicaid Services (CMS) in the early 1980’s to pay hospitals for inpatient stays.1 Working DRGs are often established shortly after admission, modified during the patient’s hospitalization, and finalized upon discharge. DRGs categorize similar cases into groups expected to have comparable resource usage, so instead of reimbursing every single service provided, hospitals are paid a fixed amount based on the DRG assigned. Each DRG has a pre-determined payment rate established by Medicare, considering the average cost of treating patients within that category. But that’s where things can get murky – hospitals have a financial incentive to assign higher, more severe DRGs to maximize reimbursements. Commercial payers should check their respective payment policies and provider contracts for how inpatient stays are reimbursed.
What to Look For?
Did you know that DRG Septicemia or Severe Sepsis is one of the most frequently billed DRGs? Payers should review hospital claim submissions to ensure they are properly billed. HCFS recommends comparing the assigned DRG severity with other factors, such as diagnosis codes, procedures performed and/or length of stay. Additionally, it is recommended to benchmark submissions against similar cases.
If you are using the HCFSPlatform™, we have you covered. HCFS uses our library of 1750+ alerts in combination with our artificial intelligence to detect known and unknown schemes. Our AI models identify anomalous DRG behaviors on facility claims. In addition, our DRG specific Alerts can flag potential outliers and/or potential upcoding with alerts such as:
[3054-20] – OUTLIER, MS-DRG, SEPTICEMIA
[3054-21] – UPCODING, MS-DRG, SEPTICEMIA
[3054-22] – UPCODING, MS-DRG, SEPTICEMIA OR SEVERE SEPSIS, WITHOUT MV >96 HOURS WITH MCC
[3064-20] – OUTLIER, V24 – HCC 02, SEPTICEMIA, SEPSIS AND SYSTEMIC INFLAMMATORY RESPONSE SYNDROME/SHOCK
[3064-21] – OUTLIER, V28 – HCC 02, SEPTICEMIA, SEPSIS AND SYSTEMIC INFLAMMATORY RESPONSE SYNDROME/SHOCK
REFERENCES:
[1] https://www.cms.gov/icd10m/version37-fullcode-cms/fullcode_cms/Design_and_development_of_the_Diagnosis_Related_Group_(DRGs).pdf
If you have questions or comments you may email us at [email protected].