Coding and documentation: Medicare severity diagnosis-related groups and present-on-admission documentation

Area of Science:

• Health Policy
• Healthcare Finance
• Medical Coding

Background:

• The Centers for Medicare and Medicaid Services (CMS) revised its payment system on October 1, 2007.
• The previous 538 diagnosis-related groups (DRGs) were updated to 745 Medicare severity diagnosis-related groups (MS-DRGs).
• Reimbursement policies now exclude payment for certain hospital-acquired complications if not documented as present on admission.

Purpose of the Study:

• To inform healthcare providers about the significant changes in the Medicare Inpatient Prospective Payment System.
• To highlight the impact of the new MS-DRG system on hospital reimbursement.
• To outline strategies for hospitals and physicians to adapt to the revised payment methodology.

Main Methods:

• Analysis of the new Medicare severity diagnosis-related groups (MS-DRGs) structure.
• Review of updated reimbursement policies, including those for hospital-acquired complications.
• Discussion of the importance of clinical documentation and coding accuracy.

Main Results:

• The transition to 745 MS-DRGs aims for more accurate severity of illness reflection.
• Hospitals face potential financial losses if documentation does not support diagnoses and complications.
• Proactive strategies and improved documentation are essential for financial viability.

Conclusions:

• The 2007 MS-DRG system mandates a shift towards meticulous clinical documentation.
• Physicians play a critical role in ensuring accurate coding by documenting all relevant diagnoses.
• Hospitals must invest in resources to support documentation improvement and coding specialists to navigate the new payment landscape.