Trends in Diagnosis Related Groups for Inpatient Admissions and Associated Changes in Payment From 2012 to 2016

[..] There are a total of 761 Medicare Severity–DRGs [Diagnosis Related Group], which are organized into families (eg, heart failure) with 2 or 3 levels, most commonly with a base Medicare Severity–DRG (hereafter referred to as DRG) and 1 or 2 higher-complexity DRGs. Assignment to these latter DRGs occurs if 1 or more complications or comorbidities (CC) or major complications or comorbidities (MCC) are present. Of importance, hospital payment for DRGs with CCs or MCCs is often substantially greater. For example, payment for DRG 291 (heart failure and shock with MCC) is approximately twice that for DRG 293 (heart failure and shock without CC or MCC).

[..] select DRGs have been used to evaluate key quality programs, such as the Hospital Value-Based Purchasing and Readmissions Reduction Programs. Less research as of late has been focused on associations between DRG shifts, case mix, and hospital payment.

[..] Between 2012 and 2016, there were 62 167 976 hospitalizations for the 20 highest-reimbursed DRG families. [..] Ten of the 20 DRG families were procedural; the remaining were medical. The top 2 DRG families, sepsis and lower extremity joint replacement, accounted for approximately one-quarter of the estimated payment.

[..] For 15 of the 20 DRG families (75%), the proportion of DRGs with MCC increased significantly over time. For example, for hip and femur procedures (a 3-level DRG family), 17.1% of admissions in 2012 and 19.4% in 2016 were assigned to a DRG with MCC. Shifts among the 3-level DRG families were most notable for heart failure, chronic obstructive pulmonary disease, and pneumonia. For percutaneous coronary intervention (a 2-level DRG family), 17.9% of admissions were assigned to a DRG with MCC in 2012 compared with 25.2% in 2016.

[..] Commensurate changes in disease severity were not observed over time. Moore comorbidity index scores decreased in 6 DRG families (30%), did not change in 10 (50%), and increased in 4 (20%). A similar pattern was seen with the RAMR [risk-adjusted mortality rates], which significantly decreased in 8 of 19 DRG families (42%), did not change in 9 (47%), and increased in 2 (11%).

[..] For 15 DRG families (75%), payment associated with shifts in DRG coding increased, ranging from $8 per case for vaginal delivery to $2057 per case for extracorporeal membrane oxygenation or tracheostomy. Overall, changes in assigned DRGs accounted for at least $1.2 billion more in payment in 2016 than would have been the case if the 2012 distribution of DRGs remained unchanged.

[..] Shifts among the 3-level DRG families were most notable for heart failure, chronic obstructive pulmonary disease, and pneumonia, all of which are included in the Hospital Readmissions Reduction Program. This finding raises the possibility that some of the shifts may have been associated with greater focus on documentation in the context of financial incentives to improve performance for these particular conditions. There are other potential contributing factors, however. Concurrent with our observation of a shift to DRGs with MCC from 2012 to 2016, hospital adoption of electronic health record systems increased largely in association with meaningful-use incentives under the 2009 Health Information Technology for Economic and Clinical Health Act.26 Hospitals also made substantial investments in clinical documentation improvement programs cognizant of the reimbursement opportunities associated with a shift to more complex DRGs.

Another finding of this study was the absence of a consistent increase in comorbidity burden and largely stable to decreasing RAMRs among admissions assigned to a DRG with MCC over time. Although the presence of only a single CC or MCC leads to a shift in the DRG assigned, the comorbidity assessments performed in our study may provide a more comprehensive measure of patient complexity. As such, our findings call into question whether the observed DRG shifts are a reflection of a more complex patient population or whether they instead reflect efforts by clinical documentation improvement programs to encourage documentation of secondary diagnoses (CCs and MCCs) that result in greater hospital reimbursement.

[..] The CMS could consider moving from the current DRG system, which yields often significantly greater reimbursement by documenting a CC or MCC, to one in which patient risk is assessed more broadly. Support for this change would come from an increasing population of patients with more than 1 comorbidity and acknowledgment that the current DRG system does not adequately capture varying combinations of comorbidities. Most CMS quality and cost measures use a broader array of International Classification of Diseases, Ninth Revision and International Statistical Classification of Diseases and Related Health Problems, Tenth Revision diagnosis codes for both identification and risk adjustment. For example, the model used by CMS to risk adjust its readmission and mortality measures, along with its cost and utilization measures, contains 83 condition categories and basic demographic information.”

Full article, Gluckman TJ, Spinelli KJ Wang M et al. JAMA Network Open 2020.12.7