General Category > General Questions
ICD procedures vs. CPT&HCPCS procedures and how physicians get paid
RichardP:
rferreira - we don't do hospital billing, so my knowledge of DRG issues is limited. Others may chime in with a more detailed response. The links below provide a good overview of the subject.
Diagnosis-related group (DRG) is a system to classify hospital cases into one of approximately 500 groups, also referred to as DRGs, expected to have similar hospital resource use. ... There is more than one DRG system being used in the United States, but only the MS-DRG (CMS-DRG) system is used by Medicare.
DRGs are assigned by a "grouper" program which gathers claim information based on ICD diagnoses, procedures, age, sex, discharge status and the presence of complications or comorbidities. All these factors are used to determine the appropriate DRG on a case by case basis.
From the first link. You might glance through the other links as well, if you haven't already.
http://www.findacode.com/drg/drg-diagnosis-related-group-codes.html
http://en.wikipedia.org/wiki/Diagnosis-related_group
http://www.smainformatics.com/pdfs/IPPS_FY2012MSDRG.pdf
--- Quote ---I believe that in the situations where we have DRG based reimbursement, the procedures have to be reported in ICD (ICD-9-CM Vol.3 or ICD-10-PCS) instead of CPT/HCPCS. Is this true?
--- End quote ---
Based on the words quoted above, it appears that DRGs are assigned after-the-fact (someone please correct me if I am wrong). That is, the DRG selected to describe the current case is based on the diagnosis code (ICD-9) and the procedure code (CPT/HCPCS) used for that encounter. Codes from both of these code groups must first be provided before the DRG code can be assigned.
--- Quote ---May I assume that DRG based payment is an alternative to RBRVS based payment
--- End quote ---
Yes. DRGs are an attempt to describe a product, such as an appendectomy or heart surgery or childbirth. Over time, the total costs for a given product are assumed to be approximately the same each time that product is "produced"; e.g., the cost of labor, supplies, overhead assigned, etc. for each appendectomy, heart surgery or childbirth would approach some constant figure over time.
DRG payment is based on the total cost to provide a given product. RBRVS payment is based on a cost/payment for each procedure performed, where total cost/payment becomes a function of how many procedures the doctor can justify for a given encounter.
--- Quote ---DRGs are used mainly for reimbursement in Inpatient settings while RBRVS is the main reimbursement basis when not using DRGs?
--- End quote ---
Yes. But note that diagnosis codes (ICD-9) and procedure codes (CPT) are used in both reimbursement situations. When using RBRVS, reimbursement is tied directly to the codes. When using DRGs, reimbursement is tied to the specific DRG identified - but the codes are used to help determine which DRG should be used for that encounter.
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Finally, note that we are using two different and distinct code sets. rferreira, the words you used make me think you maybe don't realize this. Diagnosis Codes (ICD-9 or 10) are different from procedure codes (CPT) As described above, both sets of codes must be used to ensure proper payment, whether you are using the RBRVS method or the DRG method.
http://en.wikipedia.org/wiki/List_of_ICD-9_codes
http://en.wikipedia.org/wiki/Current_Procedural_Terminology
PMRNC:
Completely not relevant to the question, but I used to do DRG reviews when I worked at the insurance companies.. LOVED it.. such a high taking a 200K hospital bill and taking it down to a $60K bill. We had a formula we used to do this.
RichardP:
Linda - doctors can be participating providers or not with a given carrier. If they are selected to participate, they should get a list of prices the carrier will pay for various procedures. Can hospitals also elect to participate or not, as individual doctors do? And if the answer is yes, do participating hospitals get a list of prices the carrier will pay for DRGs, the way that doctors get a list of prices the carrier will pay for CPT codes?
Billergirlnyc:
Ugh, I just had a long reply and lost it, so it's shorter than the original, lol. :o
I do Hospital billing and coding so a few basics here: The ICD-9 codes directly affect DRG assignment. CPT codes play no role in DRG assignments -- this doesn't mean they aren't used, just that they don't affect how DRGs (diagnosis related groups) are assigned.
IPPS (inpatient prospective payment system) which was implemented in 1983 (I believe) is what Medicare uses to reimburse hospitals for inpatient hospital services according to a predetermined rate for each discharge. Each DISCHARGE is categorized into DRG (diagnosis related groups), which is based on the patient's PRINCIPLE and SECONDARY diagnosis (including comorbidities and complications), as well as PRINCIPLE and SECONDARY procedures (if performed). The DRG determines how much payment the hospital receives. DRG's are organized in mutually exclusive categories called MDC's (major diagnostic categories). Each DRG has a payment weight assigned to it based on the average resources used to treat say a Medicare patients in that DRG, and reimbursements can be adjusted according to: DSH (disproportionate share hospital adjustment - say if the hospital treats a high number of low-income Medicare patients), IME (indirect medical education adjustment - usually approved teaching hospitals and the adjustment varies based on residents-to-beds (calculating operating costs) or residents-to-average daily census (to calculate capital costs), or Outliers (hospitals who treat an unusually higher number of costly cases and the additional payment here designed to protect hospitals from large financial losses due to these expensive cases - I work with a few Outliers in Florida and 2 here in NY.
There are several DRG systems used in the US, but Medicare uses the MS-DRGs (medical severity diagnosis related groups) and they have very large PDFs that list the CC/MCC so it's not as convoluted to understand despite how COMPLEX this all may seem. The other 2 major ones are AP-DRGs (all patient diagnosis related groups), and APR-DRGs (all patient refined diagnosis related groups) <-- as an example NY Medicaid uses this (well last I checked they did) my staff does all our billing for our hospital clients but I try to be sufficiently aware of who uses what system. The pdf's MC has helps anyone decide what DX code would affect a certain DRG.
Under the PPS (prospective payment systems) there is the: OPPS (outpatient prospective payment system), and under this is APC (ambulatory payment classification)-used by medicare/other govt programs for hospital outpatient services including ambulatory surgery performed in a hospital outpatient dept and is where a a outpatient hospital is paid a fixed fee based on PROCEDURE performed. The DRG used by Medicare/other govt programs for hospital inpatient cases is where the hospital is paid a fixed fee based on the patients CONDITION and RELATIVE treatment. The RBRVS - used by Medicare/other govt programs for Physician and outpatient services where a unit value is assigned to each PROCEDURE and includes/and or represents things like physician time, skills, practice overhead, and malpractice, etc).
Hospitals are often paid by 3rd party payers either on a case rate, contract rate, flat rate, or per diem - each one you can look up to see what they mean in terms of how a hospital is paid. If the hospital has a contract with a certain payer then they've negotiated and know the fee schedule. Is the same for all these really, even the flat rate, it's all payer determined and hospitals know in terms of commercial payers. But most 3rd party payers will usually use a mix of the aforementioned w/fee-for-service and percentage of accrued charges thrown in, well based on my experience.
I think you also asked about doctors in hospitals. Remember there are PROFESSIONAL and TECHNICAL components with billing of some services. If a Radiologist isn't employed by the hospital and he reads a Bone Scan then he/she bills for the PROFESSIONAL component (interpretation of said scan) and if the hospital owns the equipment, they bill for the TECHNICAL component. The Radiologist would then submit his charges on the 1500 not the UB form. The doctor is usually paid using the RBRVS system and sometimes their fee can be reduced. The reasoning is often they didn't buy or provide supplies, equipment, etc. If the doctor is employed or under contract w/the hospital then the hospital would bill for both components.
RichardP:
Thanks for the response.
--- Quote ---Ugh, I just had a long reply and lost it, so it's shorter than the original, lol.
--- End quote ---
I've done that myself, so I know the feeling.
--- Quote ---Medicare uses the MS-DRGs (medical severity diagnosis related groups) and they have very large PDFs that list the CC/MCC ...
--- End quote ---
I linked to this in my response above. Is this the type of list you are talking about?
http://www.smainformatics.com/pdfs/IPPS_FY2012MSDRG.pdf
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