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DRG Changes for 2020 [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Mary Devine, Senior Director of Revenue Cycle at BESLER, to discuss the changes to DRG’s in 2020 as a result of the IPPS Final Rule.

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Highlights of this episode include:

  • Why it’s important for providers to be on top of the changes found in the IPPS Final Rule.
  • A recap of the changes in 2019 that were made to MS DRGs and ICD-10 coding.
  • A look at the 2020 IPPS Final Rule changes to MS DRG and ICD-10.
  • What MS DRG changes will affect the Transfer DRG Rule.
  • And more…

To view a Slideshare presentation about this episode, click HERE

To view the transcript of this podcast episode, click HERE

Mistakes often occur during retrospective Transfer DRG reviews that can result in compliance concerns for hospitals. Our new special report explores five common pitfalls associated with these reviews and how to avoid them.

MS DRG Changes – 2019 Recap and 2020 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 2019 final rule recap
  • 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.

For 2019, there were no additional DRGs that were impacted by the transfer policy.  The biggest change impacted the transfer policy was the addition of hospice being included as impacted by the rule. Transfers to 50 (hospice home) and 51 (hospice inpatient) with a DRG included in the rule and a length of stay below the GMLOS will result in a per diem payment.  This increased the overall impact of the transfer rule to all providers.

2020 MS DRG and ICD 10 Final Rule Changes

The 2020 IPPS final rule issued in August 2019 suggests:

  • All analysis was completed with ICD-10 claim data from 2018 Medpar data, No MS-DRG data was examined. They examine resource consumption and patient care costs.
  • There is an estimated $3.4 billion increase in CMS payments, represents a 3.1% increase over last year

DRG Changes:

  • MS DRGs remains constant at 761
  • 28 DRGs were deleted
    • 207, 291, 296, 870, 014, 034-036, 176, 216-221, 228, 229, 273, 274, 548, 549, 550, 459, 460, 691, 692, 769, 776
  • 28 DRGS were added
    • 003, 016, 017, 037, 038, 039,175, 266, 267, 319, 320, 260, 261, 262, 485, 486, 487, 456, 457, 458, 693, 694, 817, 818, 819, 831, 832, 833

ICD-10 Changes:

  • 252 ICD-10-CM (diagnosis)codes added
  • 1,660 ICD-10-PCS (procedure) codes deleted

The biggest changes were related to the peripheral ECMO changes and the transcatheter mitral valve repair with implant.  Additionally, other specified conditions affecting pregnancy, childbirth and puerperium were reclassified as antepartum conditions.

The areas that are impacted predominantly with the severity shift are Neoplasms, Circulatory System, Skin and Subcutaneous Tissue, Genitourinary Systems, Injury and Poisoning, and Factors Influencing Healthcare Status.  Bronchoalveolar lavage, percutaneous drainage of the pelvic cavity and percutaneous removal of a drainage device are all moved from an OR category to a Non-OR classification.  These changes impact the DRG changes and moved their corresponding classifications.

MS DRG changes affecting the Transfer DRG Rule

For 2020, there are only 278 DRGs that will be impacted by the transfer policy.  This represents a drop in 2 DRGS that will be impacted by the rule.  Based on the final rule to revise the MS-DRG classifications and on the additional ICD-10 codes referenced above, there were changes to the DRGs impacted by the transfer policy.

MS–DRGs 273 and 274 are currently subject to the postacute care transfer policy and are being removed from the list for 2020.   MS– DRGs 693 and 694 are currently not subject to the postacute care transfer policy revised and do not qualify in 2020, even being reclassified.  The new MS–DRGs 319 and 320 also would not qualify to be included on the list of DRGs that are subject to the postacute care transfer policy.

Transcript for “What Medicare Part C growth means to providers”:

Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast. Each year, CMS releases its IPPS final rule and when it does there are always ICD-10 and DRG changes that occur. And to walk us through this year’s changes, I’m joined by Mary Devine, who is the Director of Revenue Cycle Services here at BESLER. Mary, welcome back to the show.

Mary Devine: Thank you for having me, and I always look forward to talking about the new changes ahead.

Mike: Yeah. And, Mary, why is it so important to keep on top of these changes in your view?

Mary: It’s always important to keep on top of these changes because they impact your reimbursement and if you don’t understand the changes that are coming, your reimbursement could substantially decline, and you might not understand why.

Mike: Yeah, absolutely, couldn’t agree more. So why don’t we do this, Mary? Let’s take a look at some of the key changes that happened in 2019 as a result of that rule and then we’ll transition and talk a little bit about some of the things that are now coming up with the 2020 rule being finalized. So briefly just explain for us what happened in 2019.

Mary: You got it. So I think the biggest thing is to talk about – there’s two big things – is the increase of DRGs from 754 to 759 DRGs. There were 11 deleted, and there were 17 added to the new DRGs. Additionally, there were 435 ICD-10 code changes. There were 247 new codes added and 139 revised with 49 deleted codes. So again, if you talk about why you need to pay attention to these and pay attention to the changes ahead, you need to make sure that you have an updated price so that your claims are pricing out right and you’re sending correct codes over to Medicare, so your claims are not rejected. The biggest changes that were due to the DRG changes was because of the vaginal and cesarean section deliveries. They made some changes to the ways that the DRGs are grouped and eliminated some as well as added a few additional.

As far as the ICD-10 procedure codes, those were all cardiac-related and the way that they were qualifying some of the procedures that were occurring. And then for the diagnosis ICD-10s, most of those were neoplasm of DI and the way that they were getting coded. But I think the biggest change that occurred last year was when you talk about the Transfer DRG rule, they added discharge status code 50 and 51 which is the hospice discharge status codes. In the past, hospice was never impacted by the rule. And starting in 2019, it was now, in fact, included in the rule and if someone was discharged to a 50 or a 51, they would receive the per diem payment if the stay was below the geometric mean length of stay. And I think that kind of sums up what happened in 2019.

Mike: Mary, the fiscal year 2020 rule is just about to become in effect in October, just a short time from now. Can you walk us through some of the key changes that we can expect to see when that 2020 rules comes into effect?

Mary: Sure. So you are exactly correct, Mike. The final rule for 2020 came out in August, not that long ago. It was late August. And this comes off of the proposed changes that they always post in April. So for the changes that are coming up in 2020. They did a review of only the ICD-10 claim data from 2018 MedPAR data. They did not do any MSERG data examination at all. And what they looked at is resource consumption and patient care costs. And so then that is how they determine what DRGs are going to be added, combined, eliminated from the 2020. And based on the changes that are made, they are estimating that there will be a $3.4 billion increase in CMS payments over 2019. And that represents a 3.1% increase over last year.

So I think the first to highlight is that the DRGs are staying constant for 2020. There were 28 DRGs deleted, and there were 28 that were added in. The specific reason that these DRGs were changed or deleted is due to the peripheral ECMO changes and the transcatheter mitral valve repair with an implant. And then there also were a few changes from the way that they are grouping the pregnancy and childbirth. So those were the DRG changes. As for the ICD-10 codes, for the diagnosis codes, there were 252 codes that were added as it relates to the diagnosis. And then for the procedure codes, there were over 1,600 that are being deleted for 2020, and some of those changes are specific to the neoplasms, circulatory system, skin and subcutaneous tissues just to mention a few.

Mike: Great. And there were a couple of those changes that did effect the Transfer DRG rule, correct?

Mary: You are correct. So for 2020, there are only 278 DRGs that are going to be impacted by the rule now. So that represents a drop in 2 because last year there were 280 that were affected. And this is due to all those ICD-10 changes that we mentioned. So they felt that because of some of the changes that really they should not be impacted by the rule. So the 2 that were impacted were MS-DRGs 273 and 274. They’re being removed. And then there was 693 and 694 that are not subject to the rule, and they did not qualify for 2020 either. But then they removed 319 and 320.

Mike: Mary, obviously went through a lot of detail here today and talked about the DRG codes in depth. We have more information on our blog with a post that’s related to this episode. So please go up there and give that a look for some additional detail. Also, if you’d like to understand whether or not you’re recovering all of your transfer DRG overpayments and underpayments, take a look at our Transfer DRG service on We also offer a DRG validation as well as a coding and compliance services, so you can see those on as well. Just head over there to services section, and you can read all about it. Mary, thanks so much for joining us on the podcast today.

Mary: Thanks for having me.

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