Updated on: November 28, 2016

The DRGs: They are Shifting

Original story posted on: April 4, 2016
The MS-DRG methodology was implemented in 1983 as the first version of prospective payment methodology.  Because the amount of money that was to be impacted by the implementation of ICD-10 was a large and very real worry.  

One concern since the implementation of ICD-10 was the Medicare Severity Diagnosis Related Group (MS-DRGs) reimbursement methodology and the ICD-10 version of the methodology.  

This change was the largest change since 2007 when the Centers for Medicare and Medicaid (CMS) adopted MS-DRGs.    Hospitals were concerned if their case mix index (CMI) would significantly change or if the level of reimbursement would change. Anecdotally, hospitals have been reporting an increase in CMI.   


First, there have been changes in the Official Coding and Reporting Guidelines. If a patient has anemia due to a malignancy, the malignancy is now coded first.  Instead of a code for admission for physical therapy (ICD-9-CM V57.1 or V57.89), the condition is now reported as the principal diagnosis due to no code in ICD-10-CM for admission for or encounter for physical therapy.

Second, there are some issues with the ICD-10 version of the MS-DRG algorithm for v33. Some procedures that were not DRG operating room procedures in ICD-9-CM are now impacting the DRG assignment. One example: suture of the nose.    This procedure did not impact the DRG assignment in ICD-9-CM, but is impacting the DRG assignment in some situations under ICD-10. Issues were reported with v32 of the grouper and CMS has corrected the errors. One issue under v32 was the insertion of Cervidil to induce labor was impacting DRG assignment. The error was corrected for v33. It is a safe assumption th.at CMS will continue to make updates that correct some problems with the methodology under ICD-10.

Third, there have been some MS-DRG methodology changes. An example of this change is the requirement of coding rehabilitation procedures (F section) to obtain the DRG 945 or 946 (Rehabilitation with or without CC). Another change is some diagnoses can act as a CC or MCC for itself when it is the principal diagnosis. Two examples of diagnoses that act as their own CC or MCC are third stage pressure ulcer of the elbow (MCC) or coronary artery disease with unstable angina (CC). This situation was never true under ICD-9-CM. 

Fourth, many organizations have focused on documentation education for their providers. It seems that this effort is paying off for many organization. Continued documentation education is encouraged as we continue under ICD-10.

How has your CMI has been impacted by the implementation of ICD-10? Have you noticed any errors in the methodology? The proposed rule for v34 should be released soon so the industry will be anxiously anticipating more changes to this reimbursement methodology.
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.
Laurie M. Johnson, MS, RHIA, FAHIMA AHIMA Approved ICD-10-CM/PCS Trainer

Laurie M. Johnson, MS, RHIA, FAHIMA, AHIMA Approved ICD-10-CM/PCS Trainer is currently a senior healthcare consultant for Revenue Cycle Solutions, based in Pittsburgh, Pa. Laurie is an American Health Information Management Association (AHIMA) approved ICD-10-CM/PCS trainer. She has more than 35 years of experience in health information management and specializes in coding and related functions. She has been a featured speaker in over 40 conferences. Laurie is a member of the ICD10monitor editorial board and makes frequent appearances on Talk Ten Tuesdays.

Related Stories

  • Proposed Biannual ICD-10 Implementation Dates: Weighing the Pros & Cons 
    Understanding the impact on business processes in the event that biannual ICD-10-CM and PCS updates are implemented is essential – as is your feedback.  With a comprehensive agenda covered at the virtual ICD-10 Coordination and Maintenance Committee meeting earlier this…
  • CDC Releases Updated Guidelines
    The guidelines are effective from Jan. 1, 2021 through Sept. 30, 2021. On Dec. 16, 2020, the Centers for Disease Control and Prevention (CDC) released updated ICD-10-CM Official Coding and Reporting Guidelines for 2021. The updated document can be found…
  • ICD-10 Codes Amid the Pandemic and the U.S. Election
    The mood of the country impacts claims. There are a few words that can be associated with the pandemic and the election. These words are the following: Stress – a state of mental or emotional strain or tension resulting from…