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Improving DRGs. Use of procedure codes for assisted respiration to adjust for complexity of illness
J S Hughes1, J Lichtenstein, L Magno
1Department of Medicine, Yale University School of Medicine, New Haven, Connecticut.
Abstract:
Medicare's diagnosis related groups (DRGs) payment system has been criticized for not making adequate allowances for severity of illness differences within DRGs. The respiratory diseases major diagnostic category (MDC) has been a particular target; therefore, ability of several procedure codes that identify patients with assisted respiration (temporary tracheostomy, endotracheal intubation, and mechanical respiratory assistance) to identify high-cost patients in that MDC was examined. Total charges were used as the dependent variable in a 10% sample of Medicare hospital discharges from 1985. A consistent and strong association was found between the procedures and total charges for both Medicare "outliers" and "nonoutliers." Patients requiring either intubation or mechanical respiratory assistance had average charges two to three times higher, and patients with tracheostomy four to five times higher than charges for patients without assisted respiration. Patients with assisted respiration tended to resemble each other more than they resembled the other patients in their respective DRGs without assisted respiration. These findings provide the basis for recent revisions in Medicare's classification scheme for the respiratory diseases MDC.
Insights
Medicare's payment system needs improvement for respiratory diseases. Procedure codes for assisted respiration, like tracheostomy and intubation, accurately identify high-cost patients within diagnosis related groups (DRGs).
Area of Science:
- Health Economics
- Medical Informatics
- Respiratory Medicine
Background:
- Medicare's Diagnosis Related Groups (DRGs) payment system faces criticism for inadequate severity of illness adjustments.
- The respiratory diseases major diagnostic category (MDC) is a key area of concern regarding cost variations.
- Accurate patient classification is crucial for equitable healthcare reimbursement.
Purpose of the Study:
- To evaluate the effectiveness of specific procedure codes in identifying high-cost patients within the respiratory diseases MDC.
- To determine if assisted respiration procedures correlate with increased healthcare charges.
- To inform revisions of Medicare's classification scheme for respiratory conditions.
Main Methods:
- Analysis of a 10% sample of Medicare hospital discharges from 1985.
- Utilizing total charges as the dependent variable.
- Examining procedure codes for temporary tracheostomy, endotracheal intubation, and mechanical respiratory assistance.
Main Results:
- A strong association was found between assisted respiration procedures and higher total charges for both Medicare outliers and nonoutliers.
- Patients requiring intubation or mechanical respiratory assistance incurred 2-3 times higher charges.
- Tracheostomy patients exhibited 4-5 times higher charges compared to those without assisted respiration.
Conclusions:
- Procedure codes for assisted respiration are effective indicators of high-cost patients in the respiratory diseases MDC.
- Patients with assisted respiration share more cost similarities with each other than with non-assisted patients in the same DRG.
- Findings support recent Medicare classification revisions for the respiratory diseases MDC.