Can Medicare prospective payment survive the ICD-9-CM disease classification system?

Area of Science:

• Health Economics
• Medical Coding Systems
• Healthcare Policy

Background:

• The Medicare prospective payment system (PPS) revolutionized hospital reimbursement.
• Diagnosis-Related Groups (DRGs) are central to Medicare PPS, modifying payments based on patient classification.
• DRG definitions rely on the International Classification of Disease, 9th Revision, Clinical Modification (ICD-9-CM).

Purpose of the Study:

• To review the ICD-9-CM system for deficiencies impacting Medicare payment equity.
• To identify specific coding issues within ICD-9-CM that affect DRG accuracy.
• To emphasize the need for physician involvement in improving disease coding.

Main Methods:

• Review of the ICD-9-CM coding system.
• Analysis of coding rules and their impact on clinical specificity.
• Assessment of the system's ability to reflect patient attributes and surgical procedures.

Main Results:

• Identified three principal problems with ICD-9-CM: inadequate reflection of patient attributes, coding surgical procedures by outcome instead of approach, and reduced clinical specificity due to coding rules.
• These deficiencies hinder DRGs from accurately distinguishing unique patient types.
• Failure to correct these coding deficits threatens the equity of Medicare payments.

Conclusions:

• The current ICD-9-CM system's limitations undermine the fairness of Medicare payments.
• Improved ICD-9-CM specificity is crucial for equitable DRG-based reimbursement.
• Physicians need greater awareness and involvement in disease coding development and implementation.