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DRG changes for 2018 [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Mary Devine, Director of Revenue Cycle Services as BESLER, to discuss the impact of DRG changes in 2018.

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To view the transcript of this podcast episode, click HERE

To view a SlideShare presentation about this episode, click HERE 

Is your hospital recovering all Transfer DRG overpayments and underpayments? For additional validation, contact BESLER about our Transfer DRG Recovery Service.

MS DRG Changes – 2018 Recap and 2019 Look ahead

Annually, CMS proposes changes to the Inpatient Prospective Payment System (IPPS) rules that can impact how IPPS facilities are reimbursed from Medicare – either positively or negatively.

Proposed updates are posted in April and issued as a final rule in October of each year. Because IPPS hospitals are paid based on Medicare Severity Diagnosis Related Groups (MS-DRG), additions, deletions, or alterations to MS DRGs can affect how hospitals should submit claims to Medicare.

MS DRG changes in the 2018 final rule

  • A reduction in the number of MS DRGs from 757 to 754.
  • DRGs 984, 985 and 986 deleted.
  • There were several DRG name changes to clarify the actual MS DRG diagnosis codes.
  • There were no new DRGs added to the list of MS-DRGs subject to the post-acute care transfer policy (PACT). Additionally, there were no MS-DRGs eliminated from the list. The list remains at 280 DRGS impacted by the rule.
  • The special payment policy had DRGs 987, 988 and 989 added and now has 40 MS DRGs on the list that qualify for special payments.

In addition to MS DRGs, there were several changes to ICD-10 including:

  • 324 new ICD-10-CM diagnosis codes proposed for fiscal 2018
  • 3,151 new ICD-10-PCS procedure codes
  • 38 invalid ICD-10-CM diagnosis codes
  • 641 invalid ICD-10-PCS procedure codes
  • 43 revised ICD-10-CM diagnosis code titles
  • 1,808 revised ICD-10-PCS procedure code titles

2019 MS DRG and ICD 10 proposed changes

The 2019 proposed IPPS final rule issued in April 2018 suggests:

  • MS DRGs increased from 754 to 759
  • DRGs 685,765, 766, 767, 774, 775, 777, 778, 780, 781, 782 are deleted
  • DRGs 783, 784, 785, 786, 787, 788, 797, 798, 799, 805, 806, 807, 817, 818, 819, 831, 832 and 833 are added.
  • 435 ICD 10 code changes
  • 247 new codes
  • 139 revised codes
  • 49 deleted codes.

The increase of the MS-DRGs are for vaginal delivery, Cesarean Section procedures and antepartum care and procedures.

Most of the newly proposed ICD-10-CM codes are found in Neoplasms Diseases of the eye and adnexa and injury, poisoning and certain other consequences of external causes.

There is review on the ICD–10 logic for Pre-MDC MS–DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively), as well as MS–DRG 215 (Other Heart Assist System Implant) and MS–DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively) where procedures involving heart assist devices are currently assigned. CMS is seeking comments prior to adding additional MS-DRGs into the final rule.

Proposed MS DRG changes affecting hospice reimbursement

For 2019, there are no additional DRGs that will be impacted by the transfer policy. There are proposals to revise the MS-DRG classifications based on the additional ICD-10 codes referenced above, but do not impact the number of overall DRGs or the ones impacted by the transfer policy.

As established in the bipartisan budget act of 2018, discharges to hospice services provided by a hospice program will be impacted by the post-acute care transfer policy. Likely discharge status codes that will be impacted by the post-acute transfer policy under the 2019 IPPS proposed rule are 50 (hospice home) and 51 (hospice inpatient). In 2018, providers are entitled to the full MS DRG when 50 or 51 is used. Should the provisions in the 2019 proposed rule survive, providers will receive a per diem payment instead.

Resources related to this episode

Transcript: “DRG changes for 2018”

Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.

Each year, CMS makes changes to DRG’s under the IPPS rule that affect how hospitals are reimbursed. And to help us understand the impact of those changes for 2018, and what we might be looking at in 2019 is Mary Devine who is the Director of Revenue Cycle Services here at BESLER. Mary, welcome back to the show.

Mary Devine: Thank you. Happy to be back!

Mike: So, my guess is many in our audience is familiar with the concept of a DRG. But for those who may not be, could you just briefly explain that for us?

Mary: Sure! So the DRG started in 1982 as part of the Tax and Fiscal Responsibility Act. It was designed as a statistical system of classifying any inpatient stay into groups for payment. The DRG system divides possible diagnosis codes from more than 20 major body systems and subdivides them into almost 500 groups for Medicare reimbursement.

It really takes into consideration the severity of illness, the complexity of the treatment as well as other things that impact the reimbursement—wage index, capital expenditure, that kind of thing.

This really was started mostly for Medicare. But at this point, so many payers are utilizing the DRG system on one level or another.

Mike: And there are dozens and dozens of DRG codes. And each year, as I mentioned in the intro, CMS makes changes to them to sort of just update their latest thinking on reimbursement and certain issues which makes it important to keep on top of those changes, right?

Mary: Oh, absolutely! So, in some of those things, the reason you want to stay on top of these changes is it really impacts how the DRGs are grouped and sub-grouped which impacts how you are reimbursed. So you want to make sure you understand what the changes are and how they’re going to be grouped and how your reimbursement is going to be impacted.

And some of the other things that get impacted are whether the DRG is impacted by the transfer rule or not or whether they’re categorized as a special payment for new technology or new medical services.

Mike: So, let’s get into some of the meat of the changes that happened in 2018. Could you just explain some of the highlights of DRG changes for this year?

Mary: Absolutely! So, there was a reduction in MS DRG’s from 757 to 754 for 2018. There were three DRGs that were deleted—984, 985 and 986. There were several DRG name changes to really clarify the actual MS DRG diagnosis code. So when you look at the DRG description, you can more tell the diagnoes that go into making up that DRG.

There were no new DRGs added to the list of MS DRGs subject to the post-acute care transfer policy. And additionally, there were none that were eliminated from that list. So the transfer policy is impacted by 280 DRGs for 2018.

Mike: And in addition to DRGs, it’s a little bit different than what we’ve just talked about, but CMS makes change to the ICD-10 codes that are there as well. And those affect of course how claims are coded. Can you give us a recap on those?

Mary: Sure! There were a lot of ICD-10 changes. There were 324 new ones added for the CMs. There were 3,151 PCS procedure codes added. And then there were 38 invalid CM codes that were eliminated. And there were 641 procedure codes that were eliminated in 2018.

They did some 43 title changes as well as 1,808 procedure code title changes. And mostly, these were impacted in four chapters. So, it was chapter 4 for the endocrine and nutritional diagnoses. There were codes in chapter 5 for mental health and behavioral health diagnoses. There were some in chapter 9 which was for circulatory system diagnoses. And then, chapter 15 had a bunch as it relates to pregnancy and childbirth.

Mike: Right now, as we’re doing this podcast, the 2019 proposed IPPS rule is out. And of course, there are some DRG and ICD-10 changes proposed in that one. Can you tell us what they are?

Mary: Sure! One of the things to keep in mind is that 2019 is just proposed at this time. And Medicare is still taking comments for people to weight in what was proposed.

So, as it’s proposed right now, there would be an increase in the MS DRGs from 754 to 759. There are proposed a bunch deleted as well as new additional ones. And the big additional ones are as it relates to childbirth and delivery, whether it be vaginal or caesarian. They would be the biggest changes as it relates to the DRGs.

And then, additionally, there are no new DRGs included in the transfer policy and none for the special payment which is, again, towards the new technology and new medical services.

Mike: Now, in the 2019 proposed rule, there are some specific changes that affect hospice under the transfer rule. Can you explain them for us?

Mary: Sure! And that to me is the biggest change in the proposed rule.

Currently, under the transfer policy, anything that’s coded a discharge status code of a 50 or a 51 indicating the patient is going off to receive in-patient hospice or out-patient hospice, all those DRGs are excluded from the payment policy. So when the patient gets discharged and if they have a length of stay that is below the geometric mean length of stay, and they get coded a 50 or a 51 as a discharge status, the hospital will receive the full DRG payment on those.

Starting in October of 2018, once a claim is coded a 50 or a 51 for the 280 DRGs that are listed as affected by the transfer policy, they will now be impacted by the policy with the 50 or 51, and they will receive the full per diem payment versus the full DRG.

And again, this is in the proposed, but I do believe that it is going to be passed and going to be effective for all discharges starting October ’18.

Mike: Okay. And Mary obviously went through a lot of detail here today and talked a lot about the DRG codes in depth. We have more information on our blog with the post that’s related to this episode, so please go there and give that a look for some additional detail.

And I’d also mention that if you’d like additional validation on whether or not you’re recovering all of your transfer DRG overpayments and underpayments, take a look at our Transfer DRG Service on as well. We’d be happy to talk with you more about that.

Mary, thanks so much for visiting us today on the Hospital Finance Podcast.

Mary: Thank you for having me.


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