Updated on: October 12, 2016

Protecting MS-DRG Integrity in ICD-10

By
Original story posted on: July 28, 2014

One of the most sophisticated reimbursement models in the United States involves hierarchical logic for grouping a coded health record into a designated payment group based upon the Medicare Severity Diagnosis Related Group (MS-DRG).

This is the basis of payment used in the Medicare Inpatient Prospective Payment System (IPPS). The undertaking by the Centers for Medicare & Medicaid Services (CMS) to switch from ICD-9 to ICD-10 is a significant project, and the preliminary results have been described by CMS as having achieved a goal of “payment neutrality” between the two classification systems. 

Based on my experience with various ICD-10 recoding projects, the concept of payment neutrality between ICD-9 and ICD-10 seems legitimate. It is not simply because all cases are grouped into the same ICD-10 MS-DRG as in ICD-9, but because some cases tend to fall into higher-weighted MS-DRGs and some cases fall into lower-weighted MS-DRGs (which, for the most part, balance each other out).

The variable for facilities will be the volume of cases they handle in the specific MS-DRGs. For example, an area of significant potential loss in MS-DRG relative weight falls within the MS-DRG triplet of major small and large bowel procedures (MS-DRG 329-331). If a facility has a high volume of procedures within this group, there will be more of a financial impact than for a facility that does not perform many of the procedures found within this specific MS-DRG triplet. Of course, much of the ability to accurately recode in ICD-10 depends on the quality of the clinical documentation found within the health record. 

However, as diligent as CMS was in the conversion project, we have identified some cases within our ICD-10 recoding projects for which we fail to understand the logic behind the MS-DRG assignment. For example:

  • When coding a transphenoidal pituitary tumor excision utilizing a fat graft harvested from the abdomen on a case without a CC/MCC:
    •  If the graft harvesting is coded to open approach, the resulting MS-DRG is 624, skin grafts and wound debridement for endocrine, nutritional and metabolic disease without CC/MCC, with relative weight (RW) of 0.9635.
    • If the graft harvesting is coded to a percutaneous approach, the resulting MS-DRG is 615, adrenal and pituitary procedures without CC/MCC, with an increased RW of 1.4579.
  • When coding a case with a knee replacement revision without a CC/MCC, the revision is coded with ICD-10 PCS root operations of removal and replacement. The specific code for the replacement will drive the MS-DRG selection:  
    • If the replacement is coded with a qualifier of cemented, the MS-DRG assigned is 465, wound debridement and skin graft except hand, for musculo-connective tissue disease, without CC/MCC, with RW of 1.9199
    • If the replacement is coded with a qualifier of “no qualifier,” which would appear to be less specific than cemented or uncemented, the resulting MS-DRG assigned is 468, revision of hip or knee replacement without CC /MCC, with an increased RW of 2.7624.

{div float:left}{/div}Both of these examples identify cases for which the less intensive approach or less specific qualifier seems to drive the case to an MS-DRG with a higher relative weight. These types of scenarios only can be identified when organizations start to either recode or dual code records in ICD-10. 

This demonstrates the importance for organizations to continue efforts to move ahead with preparation for ICD-10. Only with concentrated efforts in collecting data in ICD-10 and reporting these types of cases through the proper channels can we expect these types of MS-DRG “oddities” to be addressed in future ICD-10 MS-DRG Definition Manual updates.

As ICD-10 stakeholders interested in proclaiming the benefits of the increased ability to define patient populations by specific codes and truly reflect patient severity of illness and quality of care, it is up to all of us to work together to get the data correct.  

About the Author

Lisa Roat, RHIT, CCS, CCDS is manager of HIM Services for Nuance Healthcare.   She has more than 23 years of experience and expertise within the healthcare industry specializing in clinical documentation improvement, coding education, reimbursement methodologies and healthcare quality for hospitals.  She is an American Health Information Management (AHIMA)- Approved ICD-10 CM/PCS Trainer and Ambassador.  Lisa has worked extensively with the development of ICD-10 education and services for Nuance Healthcare.

Contact the Author

To comment on this article go to

Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Lisa Roat, RHIT, CCS, CCDS

Lisa Roat, RHIT, CCS, CCDS is manager of HIM Services for Nuance Healthcare. She has more than 23 years of experience and expertise within the healthcare industry specializing in clinical documentation improvement, coding education, reimbursement methodologies and healthcare quality for hospitals. She is an American Health Information Management (AHIMA)- Approved ICD-10 CM/PCS Trainer and Ambassador. Lisa has worked extensively with the development of ICD-10 education and services for Nuance Healthcare.

Related Stories

  • Things Your Mother Never Told You About HCC: Version 23
    The 2019 CMS risk adjustment model is version 23. The Centers for Medicare & Medicaid Services (CMS) released, in April, the latest update to the CMS-hierarchical condition category (HCC) Risk Adjustment Model (V23).  It applies to payment year 2019.  As…
  • Digesting the Medicare Physician Fee Schedule for 2019
    CMS issued the final rule on Nov. 1. The Centers for Medicare & Medicaid Services (CMS) final rule includes updates to payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (MPFS) on or…
  • “Shock and Awe:” The 2019 MPFS
    CMS released the MPFS on Nov. 1, ending months of turmoil. The Centers for Medicaid & Medicare Services (CMS) released the final rule on the Medicare Physician Fee Schedule (MPFS) and the Quality Payment Program (QPP) on Nov. 1. The…