# Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and FY 1995 Rates; Final Rule DEPARTMENT OF HEALTH AND HUMAN SERVICES

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A94-21488

## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** September 1, 1994

## Text

SUMMARY: We are revising the Medicare hospital inpatient prospective
payment systems for operating costs and capital- related costs to
implement necessary changes arising from our continuing experience with
the system. In addition, in the addendum to this final rule, we are
describing changes in the amounts and factors necessary to determine
prospective payment rates for Medicare hospital inpatient services for
operating costs and capital-related costs. These changes are applicable
to discharges occurring on or after October 1, 1994. We are also
setting forth rate-of-increase limits for hospitals and hospital units
excluded from the prospective payment systems. Finally, we are revising
the criteria used by the Medicare Geographic Classification Review
Board (MGCRB) to decide on applications by hospitals for geographic
reclassification for prospective payment purposes.

DATES: Effective Date: This final rule with comment period is effective
on October 1, 1994, except that the changes to Sec. 412.230 (concerning
the geographic reclassification criteria used by the MGCRB) are
effective on September 1, 1994.
Comments: Comments on the revisions to the criteria for geographic
reclassification by the MGCRB will be considered if we receive them at
the appropriate address, as provided below, no later than October 31,
1994. We will not consider comments concerning any other issues.

ADDRESSES: Mail written comments (1 original and 3 copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-802-FC, P.O. Box 7517,
Baltimore, MD 21207-0517.
If you prefer, you may deliver your written comments (1 original
and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,
MD 21207.

Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-802-FC. Comments received timely will be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(phone: (202) 690-7890).
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FOR FURTHER INFORMATION CONTACT: Lana Price, (410) 966-4529.

SUPPLEMENTARY INFORMATION:

I. Background

A. Summary

Under section 1886(d) of the Social Security Act (the Act), a
system of payment for the operating costs of acute hospital inpatient
stays under Medicare Part A (Hospital Insurance) based on
prospectively-set rates was established effective with hospital cost
reporting periods beginning on or after October 1, 1983. Under this
system, Medicare payment for hospital inpatient operating costs is made
at a predetermined, specific rate for each hospital discharge. All
discharges are classified according to a list of diagnosis-related
groups (DRGs). The regulations governing the hospital inpatient
prospective payment system are located in 42 CFR part 412. On September
1, 1993, we published a final rule with comment period (58 FR 46270) to
implement changes to the prospective payment system for hospital
operating costs beginning with Federal fiscal year (FY) 1994.
For cost reporting periods beginning before October 1, 1991,
hospital inpatient operating costs were the only costs covered under
the prospective payment system. Payment for capital-related costs had
been made on a reasonable cost basis because, under sections 1886(a)(4)
and (d)(1)(A) of the Act, those costs had been specifically excluded
from the definition of inpatient operating costs. However, section
4006(b) of the Omnibus Budget Reconciliation Act of 1987 (Public Law
100-203) revised section 1886(g)(1) of the Act to require that, for
hospitals paid under the prospective payment system for operating
costs, capital-related costs would also be paid under a prospective
payment system effective with cost reporting periods beginning on or
after October 1, 1991. As required by section 1886(g) of the Act, we
replaced the reasonable cost-based payment methodology with a
prospective payment methodology for hospital inpatient capital-related
costs. Under the new methodology, effective for cost reporting periods
beginning on or after October 1, 1991, a predetermined payment amount
per discharge is made for Medicare inpatient capital-related costs.
(See subpart M of 42 CFR part 412, and the August 30, 1991, final rule
(56 FR 43358) for a complete discussion of the prospective payment
system for hospital inpatient capital-related costs.)

B. Summary of the Provisions of the May 27, 1994 Proposed Rule

On May 27, 1994, we published a proposed rule in the Federal
Register (59 FR 27708) to amend the prospective payment systems for
operating costs and capital-related costs as follows:
We proposed changes for FY 1995 DRG classifications and
weighting factors as required by section 1886(d)(4)(C) of the Act. This
section requires that we adjust the DRG classifications and relative
weights at least annually.
We proposed to revise the methodology for computing the
wage index and to update the wage data. Specific issues addressed
included updating the wage index for FY 1995, changes in the reporting
of hospital wage index data, revising the wage index based on hospital
redesignations, the impact of the revised hospital wage index,
occupational mix adjustment, research on refinements to labor market
areas, and State labor market options.
We discussed several provisions of the regulations in 42
CFR parts 412, 413, 485, and 489 concerning the prospective payment
system for inpatient operating costs. The proposed changes concerned
the following:

--Definition of and payment for transfer cases.
--Review of DRG assignments.
--National average standardized amounts for FY 1995.
--Outliers.
--Rural referral centers.
--Determination of number of beds in determining the indirect medical
education adjustment.
--Disproportionate share adjustment.
--Changes affecting essential access community hospitals (EACHs) and
rural primary care hospitals (RPCHs).
--Clarification of payments to rural referral center/EACH hospitals.
--Direct graduate medical education payment.
--Other technical changes.

We discussed several provisions of the regulations in 42
CFR parts 412 and 413 concerning the prospective payment for capital-
related costs. The proposed changes concerned the following:

--Evaluation of provisions relating to obligated capital for hospitals
subject to lengthy certificate-of-need (CON) process.

--Specific adjustment for taxes to the capital prospective payment
system federal rate.
--Revision of provision relating to exceptions payments.
--Extraordinary circumstances exceptions payments.
--Funding of depreciation.

We discussed changes to the regulations at 42 CFR parts
412 and 413 for hospital units excluded from the prospective payment
system. The proposed changes concerned the following:

--New requirements for certain long-term care hospitals excluded from
the prospective payment systems.

--Removal of the 1986 malpractice rule.
--Related technical changes.

In the addendum to the proposed rule, we set forth
proposed changes to the amounts and factors for determining the FY 1995
prospective payment rates for operating costs and capital-related
costs. We also proposed new update factors for determining the rate-of-
increase limits for cost reporting periods beginning in FY 1995 for
hospitals and hospital units excluded from the prospective payment
system.

In Appendix A of the proposed rule, we set forth an
analysis of the impact that the proposed changes described in the
proposed rule would have on affected entities.
In Appendix B of the proposed rule, we set forth the
technical appendix on the proposed FY 1995 capital acquisition model
and budget neutrality adjustment.
In Appendix C of the proposed rule, we set forth our
initial estimate of a recommended update factor for FY 1995 for both
prospective payment hospitals and hospitals excluded from the
prospective payment system, as required by section 1886(e)(3)(B) of the
Act.
In Appendix D of the proposed rule, we provided our
recommendation of the appropriate percentage change for FY 1995, as
required by sections 1886(e)(4) and (e)(5) of the Act, for the
following:

--Large urban, other urban, and rural average standardized amounts (and
hospital-specific rates applicable to sole community hospitals) for
hospital inpatient services paid for under the prospective payment
system for operating costs.
--Target rate-of-increase limits to the allowable operating costs of
hospital inpatient services furnished by hospitals and hospital units
excluded from the prospective payment system.

In Appendix E of the proposed rule, we set forth a
preliminary framework for developing the annual update factor for
inpatient hospital capital-related costs.
In the May 27, 1994 proposed rule, we also discussed in detail the
March 1, 1994 recommendations made by the Prospective Payment
Assessment Commission (ProPAC). ProPAC is directed by section
1886(e)(2)(A) of the Act to make recommendations on the appropriate
percentage change factor to be used in updating the average
standardized amounts. In addition, section 1886(e)(2)(B) of the Act
directs ProPAC to make recommendations regarding changes in each of the
Medicare payment policies under which payments to an institution are
prospectively determined. In particular, the recommendations relating
to the hospital inpatient prospective payment systems are to include
recommendations concerning the number of DRGs used to classify
discharges, adjustments to the DRGs to reflect severity of illness, and
changes in the methods under which hospitals are paid for capital-
related costs. Under section 1886(e)(3)(A) of the Act, the
recommendations required of ProPAC under sections 1886(e)(2)(A) and (B)
of the Act are to be reported to Congress not later than March 1 of
each year.
We printed ProPAC's March 1, 1994 report, which includes its
recommendations, as Appendix F of the proposed rule. The
recommendations, and the actions we proposed to take with regard to
them (when an action is recommended), were discussed in detail in the
appropriate sections of the preamble, the addendum, or the appendices
of the proposed rule.
Set forth below in sections II, III, IV, V, VI, VII, and VIII of
this preamble, the addendum to this final rule, and the appendices, are
detailed discussions of the May 27, 1994 proposed rule, the public
comments received in response to the proposed rule, and the responses
to those comments, as well as any changes we are making.
We note that the proposed rule included an extensive discussion of
our research concerning refinements to the labor market areas that are
used to construct the hospital wage index. Comments on this issue were
due on August 31, 1994, and we intend to discuss the comments and
respond to them in the FY 1996 prospective payment system proposed
rule.

C. Public Comments Received in Response to the May 27, 1994 Proposed
Rule

A total of 1339 items of correspondence containing comments on the
May 27, 1994 proposed rule were received timely. The main areas of
concern addressed by commenters were the following:
Changes in the reporting of hospital wage index data.
Definition of and payment for transfer cases.
New exclusion criteria for long-term care hospitals.
Revisions to the capital exceptions policy.
Requests for changes in DRG classifications and relative
weights.

II. Changes to DRG Classifications and Relative Weights

A. Background

Under the prospective payment system, we pay for inpatient hospital
services on the basis of a rate per discharge that varies by the DRG to
which a beneficiary's stay is assigned. The formula used to calculate
payment for a specific case takes an individual hospital's payment rate
per case and multiplies it by the weight of the DRG to which the case
is assigned. Each DRG weight represents the average resources required
to care for cases in that particular DRG relative to the average
resources used to treat cases in other DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
annually. These adjustments are made to reflect changes in treatment
patterns, technology, and any other factors that may change the
relative use of hospital resources. The changes to the DRG
classification system and the recalibration of the DRG weights for
discharges occurring on or after October 1, 1994 are discussed below.

B. DRG Reclassification

1. General
Cases are classified into DRGs for payment under the prospective
payment system based on the principal diagnosis, up to eight additional
diagnoses, and up to six procedures performed during the stay, as well
as age, sex, and discharge status of the patient. The diagnosis and
procedure information is reported by the hospital using codes from the
International Classification of Diseases, Ninth Edition, Clinical
Modification (ICD-9-CM). The Medicare fiscal intermediary enters the
information into its claims system and subjects it to a series of
automated screens called the Medicare Code Editor (MCE). These screens
are designed to identify cases that require further review before
classification into a DRG can be accomplished.
After screening through the MCE and any further development of the
claims, cases are classified by the GROUPER software program into the
appropriate DRG. The GROUPER program was developed as a means of
classifying each case into a DRG on the basis of the diagnosis and
procedure codes and demographic information (that is, sex, age, and
discharge status). It is used both to classify past cases in order to
measure relative hospital resource consumption to establish the DRG
weights and to classify current cases for purposes of determining
payment. The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights.
Currently, cases are assigned to one of 491 DRGs in 25 major
diagnostic categories (MDCs). Most MDCs are based on a particular organ
system of the body (for example, MDC 6, Diseases and Disorders of the
Digestive System); however, some MDCs are not constructed on this basis
since they involve multiple organ systems (for example, MDC 22, Burns).
In general, principal diagnosis determines MDC assignment. However,
there are four DRGs to which cases are assigned on the basis of
procedure codes rather than first assigning them to an MDC based on the
principal diagnosis. These are the DRGs for liver and bone marrow
transplant (DRGs 480 and 481, respectively) and the two DRGs for
tracheostomies (DRGs 482 and 483). Cases are assigned to these DRGs
before classification to an MDC.
Within most MDCs, cases are then divided into surgical DRGs (based
on a surgical hierarchy that orders individual procedures or groups of
procedures by resource intensity) and medical DRGs. Medical DRGs
generally are differentiated on the basis of diagnosis and age. Some
surgical and medical DRGs are further differentiated based on the
presence or absence of complications or comorbidities (hereafter CC).
Generally, GROUPER does not consider other procedures; that is,
nonsurgical procedures or minor surgical procedures generally not
performed in an operating room are not listed as operating room (OR)
procedures in the GROUPER decision tables. However, there are a few
non-OR procedures that do affect DRG assignment for certain principal
diagnoses, such as extracorporeal shock wave lithotripsy for patients
with a principal diagnosis of urinary stones.
We proposed to make several changes to the DRG classification
system for FY 1995. These proposed changes and the comments we received
concerning them, as well as our responses to those comments and the
final DRG changes, are set forth below.
2. MDC 2 (Diseases and Disorders of the Eye)
When a case is coded with a principal diagnosis of subcorneal
pustular dermatosis (diagnosis code 694.1), it is classified to MDC 2
(Diseases and Disorders of the Eye), where it is assigned to DRGs 46,
47, and 48 (Other Disorders of the Eye).\1\ As discussed in the
proposed rule, we received a suggestion from the public that we should
review the DRG classification of subcorneal pustular dermatosis because
it is a dermatological condition and is not a disease or disorder of
the eye.
---------------------------------------------------------------------------

\1\A single title combined with two DRG numbers is used to
signify pairs. Generally, the first DRG is for cases with CC and the
second is for cases without CC. If a third number is included, it
represents cases of patients who are age 0-17. Occasionally, a pair
of DRGs is split on age >17 and age 0-17.
---------------------------------------------------------------------------

Since this issue involves a possible medical misclassification of a
diagnosis, we asked our medical consultants to evaluate the condition.
They determined that subcorneal pustular dermatosis is indeed a
dermatological condition and not an eye condition. Based on their
determination and recommendations, we proposed to remove diagnosis code
694.1 from its current classification in MDC 2 and assign it to MDC 9
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast).
In order to determine the appropriate DRG assignment in MDC 9, we
first made a clinical evaluation of the medical DRGs. Based on the
current MDC 9 configuration, the only possible DRGs appear to be DRGs
272 and 273 (Major Skin Disorders) or DRGs 283 and 284 (Minor Skin
Disorders). After reviewing the average standardized charges and the
types of costs assigned to DRGs 272 and 273, we believe the best
assignment for 694.1 is DRGs 283 and 284. The proposed FY 1995 relative
weights of DRGs 46, 47, and 48 (0.7573, 0.4330, and 0.4182,
respectively) were approximately equal to those of DRGs 283 and 284
(0.7142 and 0.4358, respectively). Therefore, we proposed to move
diagnosis code 694.1 to DRGs 283 and 284. We received only one comment
on this proposal, which supported our change. Thus, we are
incorporating our proposal in this final rule.
3. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period)
In the September 1, 1993 final rule (58 FR 46283), we stated that
we would evaluate the newborn and neonate DRG classifications and
relative weights for possible improvements. Because of the low volume
of cases in these DRGs in the MedPAR file, we stated that we intended
to rely on data bases outside the Medicare claims file to supplement
our data. We expect that any major reclassification changes to MDC 15
will be based on an evaluation of actual neonate case data, including
charges and clinical information.
In the proposed rule, we stated that we had not yet completed this
evaluation, so we did not propose MDC 15 revisions for FY 1995.
However, we discussed several suggestions from the public concerning
improvements for the neonate DRG classifications. Some commenters
suggested that we reevaluate the diagnoses that are currently
considered significant problems in determining the assignment of a
neonate case to DRG 390 (Neonate with Other Significant Problems)
rather than DRG 391 (Normal Newborn). These commenters believe that
many of the diagnoses currently assigned to DRG 390 are not truly
significant clinically and in terms of resource use. These commenters
also identified specific diagnoses within this group that are
problematic. Even though we are not ready to proceed with a
comprehensive proposal for revising MDC 15, we did ask our medical
specialists to evaluate the specific conditions that were identified as
problematic in the assignment of newborns to DRG 390.
Currently, cases of otherwise normal newborns with one of the
following diagnoses are assigned to DRG 390 rather than DRG 391:

752.5 Undescended testicle
795.4 Other nonspecific abnormal histological findings
V05.3 Need for prophylactic vaccination against viral hepatitis
V05.4 Need for prophylactic vaccination against Varicella
V20.1 Other healthy infant or child receiving care

All of these diagnoses were identified by the commenters as
nonsignificant conditions that either are not problems or require only
minimal diagnostic work-up, no treatment, and result in the consumption
of minimal or no additional resources. For these reasons, the
commenters believe that these diagnoses should be added to the list of
conditions that may be found as secondary diagnoses for DRG 391.
Specifically, a healthy newborn with undescended testicles requires
only a minimal diagnostic work-up and no treatment at the time of
birth. In addition, the conditions that are assigned to diagnosis code
795.4 (Other nonspecific abnormal histological findings) are
nonsignificant problems and require no additional resources to treat.
Commenters also pointed out that it has become standard practice to
inoculate newborns against viral hepatitis, and that a prophylactic
vaccination against Varicella is normal and routine and does not
indicate a problem with the newborn. Diagnosis code V20.1 is generally
used to identify a healthy infant that remains in the hospital for an
extended period of time because of maternal illness, and should not be
considered a significant problem.
All of the conditions listed above were reevaluated on a clinical
basis by our medical specialists, who determined that these diagnoses
are not significant problems in neonates. Therefore, we proposed to add
them to the list of secondary diagnoses that would assign an otherwise
normal newborn to DRG 391.
We also reevaluated perinatal jaundice (diagnosis codes 774.0
through 774.7) and its DRG assignments in response to suggestions we
received. Currently, all of these diagnosis codes except 774.6
(unspecified fetal and neonatal jaundice) are considered major problems
and are assigned to DRGs 387 (Prematurity with Major Problems) and 389
(Full Term Neonate with Major Problems). Diagnosis code 774.6 is not
considered a significant problem and is assigned to DRG 388
(Prematurity without Major Problems) and DRG 391. Some did not believe
that 774.6 should be assigned to DRG 391 when all the other perinatal
jaundice codes are considered major problems. Others believe that some
of the perinatal jaundice diagnoses that are currently considered major
are really not that resource intensive.
Our medical specialists reevaluated these perinatal jaundice
conditions, and, based on their determinations, we proposed several
revisions to the neonatal DRG assignments. First, the following
diagnosis codes would be removed from the major problems list in DRGs
387 and 389 and would be added to the significant problems list:

774.0 Perinatal jaundice from hereditary hemolytic anemias
774.1 Perinatal jaundice from other excessive hemolysis
774.2 Neonatal jaundice associated with preterm delivery

Thus, a premature newborn with one of these codes would be assigned to
DRG 388 and a full-term newborn with one of these codes would be
assigned to DRG 390.
The following diagnosis codes would be removed from the major
problems list in DRGs 387 and 389 and would not be added to the
significant problems list:

774.30 Neonatal jaundice due to delayed conjugation, cause unspecified
774.31 Neonatal jaundice due to delayed conjugation in diseases
classified elsewhere
774.39 Other neonatal jaundice due to delayed conjugation from other
causes
774.5 Perinatal jaundice from other causes

Therefore, a premature newborn with one of these conditions would be
assigned to DRG 388 and a full-term newborn with one of these
conditions would be assigned to DRG 391.
The following diagnosis codes would remain on the major problems
list and continue to result in assignment to DRGs 387 and 389:

774.4 Perinatal jaundice due to hepatocellular damage
774.7 Kernicterus not due to isoimmunization

Finally, diagnosis codes 774.6 (Unspecified fetal and neonatal
jaundice) would continue to be considered a nonsignificant condition
and result in assignment to DRGs 388 and 391.
We note again that these proposals were based only on clinical
considerations and responded to specific requests made by the public.
We will continue our work on a more comprehensive evaluation of the MDC
15 DRGs and will announce our proposal when that evaluation is
completed.
Comment: We received two comments regarding these proposed changes.
One commenter supported all of the changes; the other commenter
supported the reassignment of diagnosis codes 752.5, 795.4, V05.3,
V05.4, and V20.1 from DRG 390 to DRG 391, but disagreed with the
proposed changes to the classification of the perinatal jaundice codes.
This commenter stated that perinatal jaundice frequently involves
significant testing and prolonged hospitalization and that
classification changes to these diagnoses should be delayed until HCFA
completes the evaluation of the newborn and neonate DRGs.
Response: Under our proposal, two perinatal jaundice diagnoses
remain on the major problems list (codes 774.4 and 774.7) and three
remain on the significant problems list (codes 774.0, 774.1, and
774.2). The diagnoses that have been redesignated from the major and
significant problems list are conditions that are not considered to be
clinically significant. That is, our medical staff do not believe that
these conditions require the expenditure of significant additional
resources by the hospital for treatment.
We note that under the New York All-Patient (AP) DRGs, the only
perinatal jaundice conditions considered to be major problems are 774.4
and 774.7. This is consistent with our proposal. In addition, of the
remaining codes, only 774.2 is considered a significant problem. The
remaining perinatal jaundice codes are not considered problems for
newborns under the AP-DRGs. Since New York uses the AP-DRGs to classify
and pay hospitals for the treatment of an all-patient population, we
believe that their classification of neonate diagnosis codes is a
reliable reflection of the actual resources used.
Since there is agreement with the AP-DRGs on the major problems and
we have included additional codes under the Medicare significant
problem DRGs, we are confident that our proposal is supportable.
Therefore, we are incorporating our proposed changes as final. As a
part of our analysis of the MDC 15 DRGs, we will evaluate our revisions
to verify that we have appropriately classified the perinatal jaundice
diagnoses. We note again that these changes are made in response to
public request and do not have a significant impact on the Medicare
population. In FY 1993, there were 25 cases classified in DRGs 387
through 391.
4. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. It is therefore necessary to have a decision rule by which
these cases are assigned to a single DRG. The surgical hierarchy, an
ordering of surgical classes from most to least resource intensive,
performs that function. Its application ensures that cases involving
multiple surgical procedures are assigned to the DRG associated with
the most resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibration, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications, to determine if the ordering of classes coincided
with the intensity of resource utilization, as measured by the same
billing data used to compute the DRG relative weights.
A surgical class can be composed of one or more DRGs. For example,
in MDC 5, the surgical class ``heart transplant'' consists of a single
DRG (DRG 103) and the class ``coronary bypass'' consists of two DRGs
(DRGs 106 and 107). Consequently, in many cases, the surgical hierarchy
has an impact on more than one DRG. The methodology for determining the
most resource-intensive surgical class, therefore, involves weighting
each DRG for frequency to determine the average resources for each
surgical class. For example, assume surgical class A includes DRGs 1
and 2 and surgical class B includes DRGs 3, 4, and 5, and that the
average charge of DRG 1 is higher than that of DRG 3, but the average
charges of DRGs 4 and 5 are higher than the average charge of DRG 2. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weight the average
charge of each DRG by frequency (that is, by the number of cases in the
DRG) to determine average resource consumption for the surgical class.
The surgical classes would then be ordered from the class with the
highest average resource utilization to that with the lowest, with the
exception of ``other OR procedures'' as discussed below.
This methodology may occasionally result in a case involving
multiple procedures being assigned to the lower-weighted DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER searches for the procedure in the
most resource-intensive surgical class, which may sometimes occur in
cases involving multiple procedures, this result is unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average relative
weight is ordered above a surgical class with a higher average relative
weight. For example, the ``other OR procedures'' surgical class is
uniformly ordered last in the surgical hierarchy of each MDC in which
it occurs, regardless of the fact that the relative weight for the DRG
or DRGs in that surgical class may be higher than that for other
surgical classes in the MDC. The ``other OR procedures'' class is a
group of procedures that are least likely to be related to the
diagnoses in the MDC but are occasionally performed on patients with
these diagnoses. Therefore, these procedures should only be considered
if no other procedure more closely related to the diagnoses in the MDC
has been performed.
A second example occurs when the difference between the average
weights for two surgical classes is very small. We have found that
small differences generally do not warrant reordering of the hierarchy
since, by virtue of the hierarchy change, the relative weights are
likely to shift such that the higher-ordered surgical class has a lower
average weight than the class ordered below it.
Based on the preliminary recalibration of the DRGs, we proposed to
modify the surgical hierarchy as set forth below. As discussed in
section II.C of this preamble, the final recalibrated weights are
somewhat different from those proposed, since they are based on more
complete data. Consequently, we have further revised the hierarchy in
this final rule using the principles set forth above.
In MDC 2 (Diseases and Disorders of the Eye), we proposed
to reorder Extraocular Procedures Except Orbit (DRGs 40 and 41) above
Intraocular Procedures Except Retina, Iris and Lens (DRG 42).
In MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth
and Throat), we proposed to reorder Rhinoplasty (DRG 56) above Salivary
Gland Procedures Except Sialoadenectomy (DRG 51).
We received no comments concerning the proposed surgical hierarchy.
In addition, based on a test of the proposed changes using the most
recent MedPAR file and the revised GROUPER software, we find that the
changes are still supported by the data and are adopting the proposals
in this final rule. However, based on the final MedPAR file, we need to
make another change in the surgical hierarchy for MDC 3. In MDC 3, in
addition to reordering DRG 56 above DRG 51, we will also reorder DRG 56
above DRG 50 (Sialoadenectomy). Therefore, the final revised hierarchy
for these three DRGs is as follows:

Rhinoplasty (DRG 56)
Sialoadenectomy (DRG 50)
Salivary Gland Procedures Except Sialoadenectomy (DRG 51)
5. Refinement of Complications and Comorbidities List
There is a standard list of diagnoses that are considered
complications or comorbidities (CCs). We developed this list using
physician panels to include those diagnoses that, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. In preparing the original CC list, a substantial CC was
defined as a condition that, because of its presence with a specific
principal diagnosis, would increase the length of stay by at least 1
day for at least 75 percent of the patients.
In previous years, we have made changes to the standard list of
CCs, either by adding new CCs or deleting CCs already on the list. For
FY 1995, we did not propose to make any changes to the current CC list.
In the September 1, 1987 final notice concerning changes to the DRG
classification system (52 FR 33143), we modified the GROUPER logic so
that certain diagnoses included on the standard list of CCs would not
be considered a valid CC in combination with a particular principal
diagnosis. Thus, we created the CC Exclusions List. We made these
changes to preclude coding of CCs for closely related conditions, to
preclude duplicative coding or inconsistent coding from being treated
as CCs, and to ensure that cases are appropriately classified between
the complicated and uncomplicated DRGs in a pair.
In the May 19, 1987 proposed notice concerning changes to the DRG
classification system (52 FR 18877), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another (as subsequently corrected
in the September 1, 1987 final notice (52 FR 33154)).
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for a condition should not be considered CCs for
one another.
Conditions that may not co-exist, such as partial/total,
unilateral/bilateral, obstructed/unobstructed, and benign/malignant,
should not be considered CCs for one another.
The same condition in anatomically proximal sites should
not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. The FY 1988 revisions were intended to be
only a first step toward refinement of the CC list in that the criteria
used for eliminating certain diagnoses from consideration as CCs were
intended to identify only the most obvious diagnoses that should not be
considered complications or comorbidities of another diagnosis. For
that reason, and in light of comments and questions on the CC list, we
have continued to review the remaining CCs to identify additional
exclusions and to remove diagnoses from the master list that have been
shown not to meet the definition of a CC stated above, as appropriate.
(See the September 30, 1988 final rule for the revision made for the
discharges occurring in FY 1989 (53 FR 38485), the September 1, 1989
final rule for the revision made for discharges occurring in FY 1990
(54 FR 36552), the September 4, 1990 final rule for the revision made
for discharges occurring in FY 1991 (55 FR 36126), the August 30, 1991
final rule for the revision made for discharges occurring in FY 1992
(56 FR 43209), the September 1, 1992 final rule for the revisions made
for discharges occurring in FY 1993 (57 FR 39753), and the September 1,
1993 final rule for the revisions made for discharges occurring in FY
1994 (58 FR 46278).)
We proposed a limited revision of the CC Exclusions List to take
into account the changes that will be made in the ICD-9-CM diagnosis
coding system effective October 1, 1994. (See section II.B.7, below,
for a discussion of these changes.) These proposed changes were made in
accordance with the principles established when we created the CC
Exclusions List in 1987.
In addition, upon review of our current CC Exclusions List, we
found that there are some diagnosis codes that do not exclude
themselves as CCs. In the September 1, 1987 final notice, we noted that
a very few codes were not excluded from themselves because they may
signify the bilateral occurrence of a particular condition (for
example, diagnosis code 730.02 (acute osteomyelitis of upper arm)) (52
FR 33154). However, we found some diagnosis codes that do not meet this
criterion. Therefore, we proposed to add the following diagnosis codes
to the CC Exclusions List as excluding themselves when they are
secondary diagnoses:

710.0 Systemic lupus erythematous
710.1 Systemic sclerosis
710.3 Sicca syndrome
710.4 Dermatomyositis
710.8 Other specified diffuse diseases of connective tissue

Based on a comment we received, we also proposed to exclude
diagnosis code 707.1 (Ulcer of lower limb, except decubitus) as a CC
when the principal diagnosis is 440.23 (Atherosclerosis of the
extremities with ulceration). The commenter believes that this
exclusion is similar to the current exclusion of 785.4 (Gangrene) when
the principal diagnosis is 440.24 (Atherosclerosis of the extremities
with gangrene), and we agree with the commenter's assessment.
Finally, it was brought to our attention by another commenter that
when a patient's principal diagnosis is complication of a transplant
condition (diagnosis codes 996.71 and 996.8x), the diagnosis codes used
to denote transplant status (V42.x) should not be considered CCs. Thus,
for the following principal diagnoses, we proposed to delete the
indicated status code:
For code 996.71 (Complications due to heart valve
prosthesis) delete code V42.2 (Heart valve transplant influencing
health status) as a CC.
For code 996.80 (Complications of unspecified organ
transplant) delete code V42.0 (Kidney transplant influencing health
status), V42.1 (Heart transplant influencing health status), V42.6
(Lung transplant influencing health status), V42.7 (Liver transplant
influencing health status), V42.8 (Other specified organ or tissue
transplant influencing health status) as CCs.
For code 996.81 (Complications of kidney transplant)
delete code V42.0 (Kidney transplant influencing health status) as a
CC.
For code 996.82 (Complications of liver transplant) delete
code V42.7 (Liver transplant influencing health status) as a CC.
For code 996.83 (Complications of heart transplant) delete
code V42.1 (Heart transplant influencing health status) as a CC.
For code 996.84 (Complications of lung transplant) delete
code V42.6 (Lung transplant influencing health status) as a CC.
For code 996.86 (Complications of pancreas transplant)
delete code V42.8 (Other specified organ or tissue transplant
influencing health status) as a CC.
For code 996.89 (Complications of other specified organ
transplant) V42.8 (Other specified organ or tissue transplant
influencing health status) as a CC.
Comment: We received one comment that supported our revision of the
CC Exclusions List. However, another commenter, while agreeing that
transplant status (V42.x) is implied in the organ-specific complication
codes (996.8x), disagreed with one of our revisions. Specifically, the
commenter believes that code V42.8 (Other specified organ or tissue
transplant influencing health status) should not be excluded for cases
in which the principal diagnosis is 996.86 (Complications of pancreas
transplant) or 996.89 (Complications of other specified organ
transplant). The commenter notes that code V42.8 includes transplants
other than pancreas (for example, intestines). Therefore, to exclude as
a CC a code that is not organ specific means that, for example, a
pancreatic transplant patient experiencing a complication with an
intestinal transplant would not have the V42.8 code associated
classified as a CC.
Response: We agree with the commenter that the fact that all the
complication codes (996.8x) and the status codes (V42.x) are not
perfectly matched in organ specificity occasionally leads to the
inability to code certain otherwise allowable CCs. However, we believe
the problem is extremely limited in the Medicare population, who do not
tend to have multiple transplanted organs. The problem with leaving
V42.8 (a ``not elsewhere classified'' code) as a CC for 996.86 and
996.89 is that it opens the door for incorrect coding in order to gain
a higher DRG assignment.
If hospitals followed correct coding guidelines concerning the V
status codes, we would not have had to make the proposed changes to the
CC Exclusions List. That is, it is not correct to code the status code
for an organ transplant when the principal diagnosis is complication of
the same organ transplant. However, based on the information in the
MedPAR file, hospitals were following this incorrect procedure and were
gaining an inappropriate financial advantage. Therefore, we believe
that leaving V42.8 off the exclusion list for 996.86 and 996.89 would
cause more incorrect DRG assignments than including it on the list. We
note that when a transplant complication is coded as the principal
diagnosis, hospitals may code the actual complication and any other
secondary diagnoses documented by the physician.
Tables 6f and 6g in section V of the addendum to this final rule
contain the final revisions to the CC Exclusions List (including the
change for V42.8) that will be effective for discharges occurring on or
after October 1, 1994. Each table shows the principal diagnoses with
the changes to the excluded CCs. Each of these principal diagnoses is
shown with an asterisk and the additions or deletions to the CC
Exclusions List are provided in an indented column immediately
following the affected principal diagnosis.
CCs that are added to the list are in Table 6f--Additions to the CC
Exclusions List. Beginning with discharges on or after October 1, 1994,
the indented diagnoses will not be recognized by the GROUPER as valid
CCs for the asterisked principal diagnosis.
CCs that are deleted from the list are in Table 6g--Deletions from
the CC Exclusions List. Beginning with discharges on or after October
1, 1994, the indented diagnoses will be recognized by the GROUPER as
valid CCs for the asterisked principal diagnosis.
Copies of the original CC Exclusions List applicable to FY 1988 can
be obtained from the National Technical Information Service (NTIS) of
the Department of Commerce. It is available in hard copy for $84.00 and
on microfiche for $20.50, plus $3.00 for shipping and handling. A
request for the FY 1988 CC Exclusions List (which should include the
identification accession number, (PB) 88-133970) should be made to the
following address: National Technical Information Service; United
States Department of Commerce; 5285 Port Royal Road, Springfield,
Virginia 22161; or by calling (703) 487-4650.
Users should be aware of the fact that all revisions to the CC
Exclusions List (FYs 1989, 1990, 1991, 1992, 1993, and 1994) and those
in Tables 6f and 6g of this document must be incorporated into the list
purchased from NTIS in order to obtain the CC Exclusions List
applicable for discharges occurring on or after October 1, 1994.
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with HCFA, is
responsible for updating and maintaining the GROUPER program. The DRG
Definitions Manual, Version 12.0, which includes the changes set forth
in this final rule, is available for $195.00, which includes $15.00 for
shipping and handling. These manuals may be obtained by writing 3M/HIS
at: 100 Barnes Road; Wallingford, Connecticut 06492; or by calling
(203) 949-0303. Please specify the revision or revisions requested.
6. Review of Procedure Codes in DRGs 468, 476, and 477
Each year, we review cases assigned to DRG 468 (Extensive OR
Procedure Unrelated to Principal Diagnosis), DRG 476 (Prostatic OR
procedure Unrelated to Principal Diagnosis), and DRG 477 (Nonextensive
OR Procedure Unrelated to Principal Diagnosis) in order to determine
whether procedures are properly assigned among these DRGs.
DRGs 468, 476, and 477 are reserved for those cases in which none
of the OR procedures performed is related to the principal diagnosis.
These DRGs are intended to capture atypical cases, that is, those cases
not occurring with sufficient frequency to represent a distinct,
recognizable clinical group. DRG 476 is assigned to those discharges in
which one or more of the following prostatic procedures are performed
and are unrelated to the principal diagnosis:

60.0 Incision of prostate
60.12 Open biopsy of prostate
60.15 Biopsy of periprostatic tissue
60.18 Other diagnostic procedures on prostate and periprostatic tissue
60.2 Transurethral prostatectomy
60.61 Local excision of lesion of prostate
60.69 Prostatectomy NEC
60.81 Incision of periprostatic tissue
60.82 Excision of periprostatic tissue
60.93 Repair of prostate
60.94 Control of (postoperative) hemorrhage of prostate
60.95 Transurethral balloon dilation of the prostratic urethra
60.99 Other operations on prostate

All remaining OR procedures are assigned to DRGs 468 and 477, with
DRG 477 assigned to those discharges in which the only procedures
performed are nonextensive procedures that are unrelated to the
principal diagnosis. The original list of the ICD-9-CM procedure codes
for the procedures we consider nonextensive procedures if performed
with an unrelated principal diagnosis was published in Table 6C in
section IV of the addendum to the September 30, 1988 final rule (53 FR
38591). As part of the final rules published on September 4, 1990,
August 30, 1991, September 1, 1992, and September 1, 1993, we moved
several other procedures from DRG 468 to 477. (See 55 FR 36135, 56 FR
43212, 57 FR 23625, and 58 FR 46279, respectively.)
a. Adding Procedure Codes to MDCs. We annually conduct a review of
procedures producing DRG 468 or 477 assignments on the basis of volume
of cases in these DRGs with each procedure. Our medical consultants
then identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical DRGs for the MDC in which the diagnosis falls. On
the basis of this review, we proposed the following DRG classification
changes in order to reduce unnecessary assignment of cases to DRG 468
or 477.
MDC 1 (Diseases and Disorders of the Nervous System).
We have observed that surgical pacemaker procedures are being
performed with increasing frequency for anatomical nerve problems
associated with heart block. These diagnoses, diagnosis codes 337.0
(Idiopathic peripheral autonomic neuropathy), 742.8 (Other specified
anomalies of nervous system), and 742.9 (Unspecified anomaly of brain,
spinal cord, and nervous system), are assigned to MDC 1, but the
surgical pacemaker procedures are not. Consequently, when a pacemaker
procedure is performed on a patient with one of these diagnoses, the
case is assigned to DRG 468. Therefore, we proposed to add the
following procedure codes to DRGs 7 and 8 (Peripheral and Cranial Nerve
and Other Nervous System Procedures):

37.74 Insertion or replacement of epicardial lead (electrode) into
epicardium
37.75 Revision of lead (electrode)
37.76 Replacement of transvenous atrial and/or ventricular lead(s)
(electrode)
37.77 Removal of lead(s) (electrode) without replacement
37.79 Revision or relocation of pacemaker pocket
37.80 Insertion of permanent pacemaker, initial or replacement, type
of device not specified
37.85 Replacement of any type pacemaker device with single-chamber
device, not specified as rate responsive
37.86 Replacement of any type pacemaker device with single-chamber
device, rate responsive
37.87 Replacement of any type pacemaker device with dual-chamber
device
37.89 Revision or removal of pacemaker device

In addition, during our review of DRG 468 cases, we found that
there are several hundred cases of lower limb amputation procedures
with a principal diagnosis from MDC 1. Patients with diabetes often
develop complications that require the performance of a lower limb
amputation. Although the majority of the diagnosis codes for diabetes
are assigned to MDC 10 (Endocrine, Nutritional and Metabolic Diseases
and Disorders), cases with a principal diagnosis of diabetes with
neurological manifestations (diagnosis codes 250.60, 250.61, 250.62 and
250.63) are assigned to MDC 1. Therefore, we proposed to move the
following procedures to DRGs 7 and 8:

84.11 Amputation of toe
84.12 Amputation through foot
84.13 Disarticulation of ankle
84.14 Amputation of ankle through malleoli of tibia and fibula
84.15 Other amputation below knee
84.16 Disarticulation of knee
84.17 Amputation above knee

Two commenters wrote concerning the proposal to add pacemaker and
amputation procedures to DRGs 7 and 8.
Comment: One commenter noted that pacemaker procedure codes that
are not recognized by the GROUPER unless they are paired with their
related codes were excluded from the list of codes to be moved to DRGs
7 and 8. The commenter recommends that all pacemaker procedures with a
principal diagnosis assigned to MDC 1 be added to DRG 7 and 8.
Response: The pacemaker codes we proposed to move to DRGs 7 and 8
are only those codes considered to be OR procedures. The pacemaker
procedures that are considered to be non-OR procedures were not moved.
Coding the initial implantation of a permanent cardiac pacemaker
requires that one lead and one device code must be used in combination
for DRG assignment. Coding of revision and replacement pacemaker
procedures does not require combined codes to be assigned to DRGs.
The pacemaker procedure codes that are non-OR procedures are not
recognized by the GROUPER unless they are combined with their related
codes. That is, they are considered for DRG assignment only if they
occur in pairs. Otherwise they are treated as other non-OR procedures
and do not affect DRG assignment. These non-OR procedures are as
follows:

37.70 Initial insertion pacemaker lead, not otherwise specified
37.71 Initial insertion of transvenous lead into ventricle
37.72 Initial insertion of transvenous leads into atrium and ventricle
37.73 Initial insertion of transvenous lead into atrium
37.81 Initial insertion of single-chamber device, not specified as
rate responsive
37.82 Initial insertion of single-chamber device, rate responsive
37.83 Initial insertion of dual-chamber device

These non-OR procedures were not included in the list of pacemaker
codes that we proposed to move from DRGs 7 and 8 when they occurred
with an MDC 1 principal diagnosis.
However, we agree with the commenter that these non-OR pacemaker
procedure codes, when accompanying an MDC 1 principal diagnosis, should
be assigned to DRGs 7 or 8 rather that DRG 468 when they are paired
with the related procedure code. Therefore, we are adding the following
pacemaker codes, when they occur in combination, to DRGs 7 and 8:

37.70 & 37.81 Initial insertion pacemaker lead and single-chamber
device, non-rate responsive
37.70 & 37.82 Initial insertion pacemaker lead and single-chamber
device, rate responsive
37.71 & 37.81 Initial insertion of transvenous lead into ventricle and
single-chamber device, non-rate responsive
37.71 & 37.82 Initial insertion of transvenous lead into ventricle and
single-chamber device, rate responsive
37.72 & 37.83 Initial insertion of transvenous leads into atrium and
ventricle & dual-chamber device
37.73 & 37.81 Initial insertion of transvenous lead into atrium and
single-chamber device, non-rate responsive
37.73 & 37.82 Initial insertion of transvenous lead into atrium and
single-chamber device, rate responsive

We emphasize that procedure codes 37.70, 37.71, 37.72, 37.73,
37.81, 37.82, and 37.83 are not considered by the GROUPER unless used
in combination with their related codes. If used singularly, these
codes will be ignored for the purpose of DRG assignment. The pacemaker
codes originally proposed may occur alone or in pairs, and will be
assigned to DRG 7 or 8 when they occur with a principal diagnosis in
MDC 1 as proposed.
We are adopting the changes in the proposed rule, with the
revisions discussed above.
Comment: We received a comment that objected to the placement of
pacemaker procedures and lower limb amputation procedures in DRGs 7 and
8. The commenter stated that unless clinical evidence supported the
assignment of these pacemaker cases to DRG 7 or 8, it would be more
reasonable to move these cases to DRG 115 (Permanent Cardiac Pacemaker
Implant with AMI, Heart Failure, or Shock) or DRG 116 (Other Permanent
Pacemaker Implant or AICD Lead or Generator Procedures) in MDC 5
(Diseases and Disorders of the Circulatory System). It was also
suggested that the amputation cases be assigned to DRGs in MDC 10
(Endocrine, Nutritional, and Metabolic Diseases and Disorders), where
diabetic patients with manifestations are classified.
Response: The DRGs were developed as a patient classification
scheme consisting of classes of patients who were similar clinically
and in terms of their consumption of hospital resources. The concept of
clinical coherence requires that the patient characteristics included
in the definition of each DRG relate to a common organ system or
etiology and that a specific medical specialty should typically provide
care to the patients in the DRG. Each case is assigned to a DRG,
usually within an MDC. The MDCs are generally based on a common organ
system that is identified by principal diagnosis.
Thus, the proposed assignment of procedures from DRG 468 was based
on the principal diagnosis that is currently assigned to the DRGs in
question. For example, a patient may have a principal diagnosis of
idiopathic peripheral autonomic neuropathy (diagnosis code 337.0) and a
secondary diagnosis of congestive heart failure (diagnosis code 428.0)
that requires the insertion of a pacemaker lead and a single chamber
device (procedure codes 37.70 and 37.82, respectively). Cases with the
principal diagnosis code 337.0 are assigned to MDC 1; however, the
pacemaker procedures have not been assigned to this MDC. Therefore,
this case would be grouped to DRG 468. We have proposed to place the
pacemaker procedures, when occurring with a principal diagnosis found
in MDC 1, to the most appropriate DRG within that category. It would be
inappropriate to assign the pacemaker procedures, when they occur with
a principal diagnosis classified to MDC 1, to a DRG in MDC 5 or any
other unrelated MDC. In the past, these cases have been assigned to DRG
468 because the procedure performed is unrelated to the principal
diagnosis.
This is true, also, for the amputation procedures. The principal
diagnoses defining diabetes with neurological manifestations are found
in MDC 1, although the procedures were not. Clinical experts concurred
with the classification of the neurological manifestations of diabetes
to MDC 1 as sharing a common body system rather than to MDC 10, which
relates to the endocrine and metabolic manifestations of the condition.
MDC 5 (Diseases and Disorders of the Circulatory System).
Closed endoscopic biopsy of lung (procedure code 33.27) and open
biopsy of lung (procedure code 33.28), diagnostic tools for vascular
tumors, are often performed on patients with a principal diagnosis of
228.00 (Hemangioma of unspecified site) or 228.09 (Hemangioma of other
sites). Although these principal diagnoses are assigned to MDC 5, the
diagnostic procedures are not. Thus, if they are included together on
the same claim, the case will be assigned to DRG 468. Therefore, we
proposed to assign procedure codes 33.27 and 33.28 to DRG 120 (Other
Circulatory System OR Procedures) in MDC 5.
In addition, we identified the following nonextensive OR procedures
(that is, procedures assigned to DRG 477) as appropriate to move to MDC
5:

40.11 Biopsy of lymph structure
40.19 Other diagnostic procedures on lymphatic structures
40.21 Excision of deep cervical lymph node
40.23 Excision of axillary lymph node
40.24 Excision of inguinal lymph node
40.29 Simple excision of other lymphatic structure
40.3 Regional lymph node excision

These procedures are commonly performed with a variety of diagnoses
found in MDC 5 such as disorders of the peripheral vascular system
(diagnosis codes 747.60 and 747.69) and peripheral angiopathy
(diagnosis code 443.81), as well as a number of heart conditions
including malignant neoplasm of the heart (diagnosis code 164.1), and
coxsackie carditis, coxsackie pericarditis, coxsackie endocarditis, and
coxsackie myocarditis (diagnosis codes 074.20, 074.21, 074.22, 074.23,
respectively). We note that these commonly performed diagnostic
procedures are assigned to virtually every other MDC because they are
associated with many diagnoses. Therefore, we proposed to move these
procedures to DRG 120.
We also note that hemangioma and anomalies of the peripheral
vascular system may require open rectal biopsy (procedure code 48.25)
or excision of the rectal lesion (procedure code 48.35) as part of
their treatment. At the present time, neither of these procedure codes
classify to MDC 5. Thus, we proposed to move procedure codes 48.25 and
48.35 to DRG 120.
MDC 6 (Diseases and Disorders of the Digestive System).
A total splenectomy (procedure code 41.5) may be performed on
patients with a principal diagnosis of secondary malignant neoplasm of
other digestive organs and spleen (diagnosis code 197.8). This
diagnosis is included in MDC 6, but the procedure is not, resulting in
the assignment of cases to DRG 468. Thus, we proposed to add procedure
code 41.5 to DRG 170 and 171 (Other Digestive System OR Procedures) in
MDC 6.
Comment: One commenter, while concurring with the proposed
assignment of procedure codes from DRG 468 to relevant MDCs, did not
agree with several of our proposed DRG classifications. This objection
was based on the DRG relative weight differential between the relative
weight of the proposed DRG and the relative weight of other DRGs to
which these procedures are already assigned. This commenter believes
that new DRGs should be created within the MDCs for the procedures we
proposed to move out of DRG 468 with weights similar to the weights
they command in other DRG assignments. If we cannot do this, the
commenter requested that these cases remain in DRG 468.
Specifically, this commenter agreed with the assignment of
pacemaker codes, as well as lower limb amputation associated with
diabetes, to MDC 1 but disagreed with their assignment to DRGs 7 and 8.
Further, this commenter supported the addition of the lung biopsy codes
33.27 and 33.28 to MDC 5, but objected to their assignment to DRG 120
because the weights of DRG 75 (Major Chest Procedures) and DRG 76 and
77 (Other Respiratory System OR Procedures) in MDC 4 (Diseases and
Disorders of the Respiratory System) to which procedure 33.27 and 33.28
are classified, respectively, have a higher relative weight than DRG
120.
Nor did this commenter agree with the assignment of procedure code
41.5 to DRGs 170 and 171 because the weights of these DRGs do not
reflect the resources used in these cases. Again, the commenter
believes that a new DRG should be created within MDC 6 for this
procedure with a relative weight similar to that of DRG 392
(Splenectomy Age > 17) in MDC 16 (Diseases and Disorders of the Blood,
Blood Forming Organs and Immunological Disorders), to which these
procedures are also assigned, or the cases should remain in DRG 468.
Response: We do not believe it is appropriate to compare the DRG
relative weights for the proposed DRG assignments to other DRGs in
which the same procedures may be classified. Each surgical DRG
classification is determined by a combination of principal diagnosis,
secondary diagnoses, surgical procedures, age, and sex. To compare
procedure classifications and relative weights without taking into
consideration the principal diagnosis and other factors is
inappropriate and results in misinterpretation and misleading
comparisons.
Many of the procedures we have proposed to move from DRG 468 are
assigned to multiple DRGs, depending on the principal diagnosis. Thus,
to compare lung biopsies (procedure codes 33.27 and 33.28) to DRG
assignments in MDC 4 fails to take into account the principal diagnosis
responsible for the MDC assignment. Procedure code 33.28 is currently
assigned to 7 DRGs in 4 MDCs, with FY 1995 weights that range from
0.9529 to 3.0551. (The FY 1995 weights for DRGs 7 and 8 are 2.5005 and
0.9185, respectively). Similarly, to compare splenectomy procedures
with a principal diagnosis of secondary malignant neoplasm of other
digestive organs and spleen (diagnosis code 197.6), for example, to a
splenectomy performed in conjunction with a principal diagnosis
assigned to DRG 392 in MDC 16 is specious. To interpolate from a DRG
assignment with one set of related principal diagnoses to one with
another set of related principal diagnoses significantly underestimates
the role of principal diagnosis in determining resource intensity.
As noted above, one of the basic principles of DRG classification
is that cases assigned to each DRG should be similar both clinically
and in resource utilization. As the first step in ensuring clinical
coherence, we subject all DRG modifications under consideration to
careful, thorough medical judgment and evaluation. Total charges,
submitted by hospitals on inpatient claims, serve as a proxy measure of
resource use. Similar resource use does not mean identical resource
use, but, rather, that the resources used to treat a range of patients
within one DRG classification will be relatively consistent and that
this level of variation is known and predictable. Thus, although the
procedures we have proposed moving from DRG 468 to more specific DRGs
may have charges slightly higher or lower than the average for the DRG
to which they are assigned, this variation is well within the expected
range and can be accurately predicted.
In each MDC there is usually a surgical class referred to as
``other surgical procedures.'' The ``other'' classes are not as
precisely defined from a clinical perspective and include diagnoses or
procedures which are infrequently encountered or not well defined
clinically. The ``other'' surgical category contains surgical
procedures which, while infrequent, could still reasonably be expected
to be performed for a patient in the particular MDC. We note that the
procedures we proposed to move from DRG 468 to specific MDCs are all
assigned to the ``other'' surgical class DRG or DRGs. We believe it is
appropriate to assign cases to the DRG that contains clinically similar
cases within the most specific MDC possible. DRG 468 exists for those
patients who receive surgical procedures that are completely unrelated
to the MDC to which the patient was assigned. For the procedures
identified to be assigned to specific MDCs, the principal diagnosis was
appropriate for the proposed MDC assignment, the cases occurred in
sufficient volume and were clinically similar enough to those existing
in the proposed DRG assignment to justify our decision to move them.
The ``other'' category exists within each MDC for this express purpose:
to classify those cases that are sufficiently related to be assigned to
the MDC, but are not clearly defined or occur in low volume. We believe
the procedures we have recommended for MDC assignment meet these
criteria.
We do not believe it would be prudent policy to create new DRGs
within the relevant MDCs to cover the procedures being reassigned from
DRG 468. This would represent a departure from the process of defining
the surgical classes within MDCs by organizing a DRG based on
procedures more appropriately categorized in the ``other'' surgical
class. DRG classification requires physician judgment, statistical
analysis, and historical data. Until we have sufficient data to
determine the performance of these procedures within the relevant DRGs,
we can not justify creating additional DRGs. We will continue to review
and evaluate these procedures to determine the appropriateness of DRG
assignment. Until we have data documenting the need for further
modification, we are adopting the DRG assignment of the procedures as
proposed with revisions as discussed.
b. Reassignment of Procedures Among DRGs 468, 476, and 477. For the
proposed rule, we also reviewed the list of procedures that produce
assignments to each of DRG 468, 476, and 477 to ascertain if any of
those procedures should be moved to one of the other DRGs based on
average charges and length of stay. Generally, we move only those
procedures for which we have an adequate number of discharges to
analyze the data. Based on our review this year, we proposed to move a
limited number of procedures.
In reviewing the list of OR procedures that produce DRG 468
assignments, we analyzed the average charge and length of stay data for
cases assigned to that DRG to identify those procedures that are more
similar to the discharges that currently group to either DRG 476 or
477. We identified three procedures that are significantly less
resource intensive than the other procedures assigned to DRG 468.
Therefore, we proposed to move the following procedures to the list of
procedures that result in assignment to DRG 477:

24.5 Alveoloplasty
53.61 Incisional hernia repair with prosthesis
53.69 Repair of other hernia of anterior abdominal wall with
prosthesis

We conducted a similar analysis of the procedures that assign cases
to DRG 477 to determine if any of those procedures might more
appropriately be classified to DRG 468. Again, we analyzed charge and
length of stay data to identify procedures that were more similar to
discharges assigned to DRG 468 than to those classified in DRG 477. We
did not identify any procedures in DRG 477 that should be assigned to
DRG 468.
We received no comments on the proposed reassignments to DRG 477,
therefore, they are adopted as final and will be effective with
discharges beginning on or after October 1, 1994.
7. Changes to the ICD-9-CM Coding System
As discussed above in section II.B.1 of this preamble, the ICD-9-CM
is a coding system that is used for the reporting of diagnoses and
procedures performed on a patient. In September 1985, the ICD-9-CM
Coordination and Maintenance Committee was formed. This is a Federal
interdepartmental committee charged with the mission of maintaining and
updating the ICD-9-CM. That mission includes approving coding changes,
and developing errata, addenda, and other modifications to the ICD-9-CM
to reflect newly developed procedures and technologies and newly
identified diseases. The Committee is also responsible for promoting
the use of Federal and non-Federal educational programs and other
communication techniques with a view toward standardizing coding
applications and upgrading the quality of the classification system.
The Committee is co-chaired by the National Center for Health
Statistics (NCHS) and HCFA. The NCHS has lead responsibility for the
ICD-9-CM diagnosis codes included in Volume 1--Diseases: Tabular List
and Volume 2--Diseases: Alphabetic Index, while HCFA has lead
responsibility for the ICD-9-CM procedure codes included in Volume 3--
Procedures: Tabular List and Alphabetic Index.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding fields, such
as the American Health Information Management Association (AHIMA)
(formerly American Medical Record Association (AMRA)), the American
Hospital Association (AHA), and various physician specialty groups as
well as physicians, medical record administrators, health information
management professionals, and other members of the public to contribute
ideas on coding matters. After considering the opinions expressed at
the public meetings and in writing, the Committee formulates
recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes at public
meetings held on May 6, August 5, and December 2, 1993, and finalized
the coding changes after consideration of comments received at the
meetings and in writing within 30 days following the December 1993
meeting. The initial meeting for consideration of coding issues for
implementation in FY 1996 was held on May 5, 1994. Copies of the
minutes of these meetings may be obtained by writing to one of the co-
chairpersons representing NCHS and HCFA. We encourage commenters to
address suggestions on coding issues involving diagnosis codes to: Sue
Meads, Co-Chairperson; ICD-9-CM Coordination and Maintenance Committee;
NCHS; Rm. 9-58; 6525 Belcrest Road; Hyattsville, Maryland 20782.
Questions and comments concerning the procedure codes should be
addressed to: Patricia E. Brooks, Co-Chairperson; ICD-9-CM Coordination
and Maintenance Committee; HCFA, Office of Coverage and Eligibility
Policy; Rm. 401 East High Rise Building; 6325 Security Boulevard;
Baltimore, Maryland 21207.
The ICD-9-CM code changes that have been approved will become
effective October 1, 1994. The new ICD-9-CM codes are listed, along
with their DRG classifications, in Tables 6a and 6b (New Diagnosis
Codes and New Procedure Codes, respectively) in section IV of the
addendum to this final rule. As we stated above, the code numbers and
their titles were presented for public comment in the ICD-9-CM
Coordination and Maintenance Committee meetings. Both oral and written
comments were considered before the codes were approved. Therefore,
comments were solicited only on the proposed DRG classification.
Further, the Committee has approved the expansion of certain ICD-9-
CM codes to require an additional digit for valid code assignment.
Diagnosis codes that have been replaced by expanded codes, other codes,
or have been deleted are in Table 6c (Invalid Diagnosis Codes). The
invalid diagnosis codes will not be recognized by the GROUPER beginning
with discharges occurring on or after October 1, 1994. The
corresponding new or expanded codes are included in Tables 6a and 6b.
The committee did not delete any procedure codes effective for October
1, 1994. Revisions to diagnosis and procedure code titles are in Tables
6d (Revised Diagnosis Code Titles) and 6e (Revised Procedure Code
Titles), which also include the proposed DRG assignments for these
revised codes.
The comments we received regarding the ICD-9-CM coding changes fall
into three general categories: Spelling or other technical errors in
our Tables 6a through 6e; disagreement with the assignment of a new
code or revised code; and comments about coding policy.
Based on the comments and our own review, we have corrected
misspellings, added omitted codes, and corrected phrasing in the code
descriptions in Tables 6a, 6c, and 6d. The codes for which changes have
been made are as follows: Table 6a: 709.01, 760.76, 996.04, V12.00, and
V57.22. Table 6c: 305.10, 305.11, 305.12, and 305.13 were added. Table
6d: 440.24.
The remaining comments are addressed below.
Comment: We received one inquiry regarding our assignment of
procedure code 998.81 (Emphysema resulting from a procedure) to DRGs
452 and 453 (Complications of Treatment). The commenter suggested that
the code be assigned to DRGs 101 and 102 (Other Respiratory System
Diagnoses) in MDC 4 (Diseases and Disorders of the Respiratory System).
Response: Procedure code 998.81 is one of three new codes that are
5th-digit expansions of the existing 998.8 category of codes for
specific complications of procedures, not elsewhere classified. The new
code 998.81 is to be used for a systemic condition, subcutaneous
emphysema, that results from a procedure rather than one of the more
specific emphysema conditions assigned to a DRG in MDC 4. Therefore, we
are not changing its designation in this final rule.
We note that the current 4-digit code 998.8 is assigned to DRGs 452
and 453. Our usual practice is to continue to assign 5th-digit
expansions of a code to the same DRGs to which the 4-digit code was
assigned unless there is a compelling or practical reason to make a
different assignment. As noted by the commenter, we did assign code
998.82 (Cataract fragment in eye following cataract surgery) to DRGs
46, 47, and 48 (Other Disorders of the Eye) in MDC 2 because of the
specificity of the coded condition and the similarity of the new code
to the other complication codes currently assigned to DRGs 46 through
48. However, this is a very isolated case of change in DRG assignment.
Comment: We received one comment regarding the DRG assignment of
code 440.24 (Atherosclerosis of native arteries of the extremities with
gangrene). The commenter requested that the code be assigned to DRG 387
(Prematurity with Major Problems) in addition to DRGs 130 and 131
(Peripheral Vascular Disorders) as is indicated in Table 6d.
Response: The DRG assignment of code 440.24, which has a revised
title for FY 1995, has not been changed. It continues to be considered
a ``major problem'' for purposes of assignment to DRG 387 and we have
corrected this oversight in Table 6d.
Comment: A commenter questioned why we assigned new diagnosis code
677 (Late effect of complication of pregnancy, childbirth, the
puerperium) to DRG 469 (Principal Diagnosis Invalid as Discharging
Diagnosis) rather than DRGs 373 (Vaginal Delivery without Complicating
Diagnoses), 376 (Postpartum and Post Abortion Diagnoses without OR
Procedure), and 384 (Other Antepartum Diagnoses without Medical
Complications).
Response: This code was created by the National Center for Health
Statistics, the group responsible for revisions to the ICD-9-CM
diagnosis codes, for use as an epidemiologic tool to trace the
physical, long-term effects of childbearing. It should not be used as a
principal diagnosis. Rather, the specific complication that has
occasioned the inpatient stay should be coded as the principal
diagnosis. Code 677 should be included as a secondary diagnosis.
Therefore, if 677 is coded as principal, the case will group to DRG
469.
Comment: We received two comments requesting that we reconsider our
non-OR designation for new procedure code 41.04 (Autologous
hematopoietic stem cell transplant). The commenters both believe that
this should be considered an OR procedure based on the resource use
associated with it. In addition, one commenter has requested that the
code be assigned to DRG 481 (Bone Marrow Transplant) along with the
other codes in category 41.0 (Bone marrow transplant).
Response: Currently, these stem cell transplant procedures are
included in procedure code 99.73 (Therapeutic erythrocytapheresis), a
non-OR procedure. As noted above, our practice is to assign a new code
to the same category as its predecessor code. One compelling reason for
this practice is our inability to move the cases associated with a new
code to a new DRG assignment as a part of DRG reclassification and
recalibration. Because we cannot separately identify the stem cell
transplant cases from the other cases coded with 99.73 in order to
reclassify them and their charges to a new DRG, we are unable to
predict the new weights of both the DRGs in which this code currently
is classified and the new DRG to which it would be assigned. Therefore,
we are prevented from redesignating code 41.04 as an OR procedure.
Regarding the request that this code be reassigned to DRG 481, we
note that the procedure represented by this code is not a bone marrow
transplant procedure. While it may consume hospital resources similar
to those transplant procedures, we will be unable to verify that
assumption until we can evaluate the newly coded stem cell transplant
cases in the FY 1995 MedPAR file. That file will be available in
calendar year 1996 and we will analyze the cases with procedure code
41.04 as a part of our DRG agenda for FY 1997.
Comment: One commenter requested that we publish revised diagnosis
code category headings when a formerly valid diagnosis code is made
invalid due to a revision of the codes in that group to require a
fourth or fifth digit.
Response: We publish the ICD-9-CM coding system changes in the
proposed and final rules in order to display our CC and DRG assignments
of new and revised codes. We also publish an informational list of
invalid codes that will no longer be recognized by the Medicare
GROUPER. The proposed and final prospective payment rules are not a
replacement for ICD-9-CM coding manuals. We publish only that coding
information that is necessary for public understanding and
implementation of the DRG classification system. Therefore, we do not
believe that we should publish the information requested by the
commenter.
Comment: We received one comment expressing disappointment in the
very minor changes made to Volume 3 of the ICD-9-CM (the procedure
codes) for FY 1995. The commenter recommends that we do much more to
update and revise Volume 3.
Response: There are severe physical space constraints that limit
the number of changes that can be made to the procedure codes in Volume
3. HCFA is aware that this Volume does not contain the most current
codes to match changing technology, but, due to its current
configuration, Volume 3 is limited to 4-digit codes. We have begun the
process to revise this Volume, but that work will require several years
for completion and implementation.
We again encourage commenters to address questions, comments, and
suggestions on issues involving diagnosis codes to Sue Meads and those
concerning procedure codes to Patricia E. Brooks at the addresses set
forth above.
8. DRG Refinements
For several years, we have been analyzing major refinements to the
DRG classification system to compensate hospitals more equitably for
treating severely ill Medicare patients. These refinements, generally
referred to as severity of illness adjustments, would create DRGs
specifically for hospital discharges involving very ill patients who
consume far more resources than do other patients classified to the
same DRGs in the current system. This approach has been taken by
various other groups in refining the DRG system, most notably the
research done for Yale, the changes incorporated by the State of New
York into its all patient (AP) DRG system, and the all-patient refined
(APR) DRGs, which are a joint effort of 3M/HIS and the National
Association of Children's Hospitals and Related Institutions.
In the proposed rule, we announced the availability of a paper we
have prepared that describes our proposed severity DRG classification
system as well as the analysis upon which our proposal was formulated.
Comments are due to HCFA by September 30, 1994.
Our plan is to incorporate comments and suggestions we receive and
to consider proposing the complete revised DRG system as part of the FY
1996 prospective payment system proposed rule, which will be published
in the spring of 1995. However, as the final rule published on
September 1, 1992 (57 FR 39761) indicates, we would not propose to make
significant changes to the DRG classification system unless we are able
either to improve our ability to predict coding changes by validating
in advance the impact that potential DRG changes may have on coding
behavior, or to make methodological changes to prevent building the
inflationary effects of the coding changes into future program
payments.
Besides the mandate of section 1886(d)(4)(C)(iii) of the Act, which
provides that aggregate payments may not be affected by DRG
reclassification and recalibration changes, we do not believe it is
prudent policy to make changes for which we cannot predict the effect
on the case-mix index and, thus, payments. Our goal is to refine our
methodology so that we can fulfill, in the most appropriate manner,
both the statutory requirement to make appropriate DRG classification
changes and to recalibrate DRG relative weights (as mandated by section
1886(d)(4)(C) of the Act) as well as to make DRG changes in a budget
neutral manner.
One approach to this problem would be to maintain the average case
weight at 1.0 after recalibration, thereby eliminating the process of
normalization. In other words, after recalibration, we would not scale
the new relative weights upward to carry forward the cumulative effects
of past case-mix increases. We would, instead, make an adjustment or
include in the annual update factor a specific allowance for any real
case-mix change that occurred during the previous year. This is a
relatively simple and straightforward system for preventing the effects
of year-to-year increase in the case-mix index from accumulating in the
DRG weights. It could be done in a budget neutral fashion.
In addition to the severity changes, we also intend to improve the
classification and relative weights of the DRGs that apply to newborns,
children, and maternity patients. The Medicare population does not
include many of these individuals. The original DRG classification
system was developed from analysis of claims data representative of the
total inpatient population. When we calculated the original Medicare
weights for the DRGs to which newborn, children and maternity patients
are classified, we used non-MedPAR discharge records from Maryland and
Michigan hospitals because there were either no MedPAR cases or too few
cases assigned to these DRGs to provide a reasonably precise estimate
of the average cost of care. (See the September 1, 1983 prospective
payment final rule with comment period (48 FR 39768).) Since that time,
because of the lack of MedPAR data, these low-volume DRGs have not been
analyzed and refined, and the relative weights assigned to them may no
longer be entirely reflective of the resources needed to treat the
patients. We again intend to rely on data bases outside the MedPAR file
to supplement our data.
We received some comments on the proposed revisions to the DRGs to
incorporate a measure of severity. We do not intend to answer any of
the specific comments at this time, but rather answer all the comments
in the document that sets forth our final proposal. There were,
however, two general types of comments that we will respond to in this
document.
Comment: Several commenters requested that HCFA make more
information available to the public so that they can more easily assess
some of the changes in case-mix value that result from implementation
of the revised DRGs. One commenter noted that it appears that 10
percent of the Medicare inpatient payments are shifted from rural to
urban hospitals.
Response: The data we have made available to the public on the
severity DRG proposal are similar to the data we make available during
the annual rulemaking process addressing changes to the prospective
payment system. These include a complete MedPAR file with the current
and revised DRG designations, a revised case-mix index file, a revised
DRG Table 5, and the AOR/BOR File. We believe that these data, coupled
with the description of the changes in the paper, the list of revised
CC designations of all diagnosis codes, and the impact analysis are
sufficient to allow analysis of our proposal. Since the available
MedPAR file lists every case and its revised DRG assignment and the new
weights are listed in Table 5, we believe that those who are interested
can evaluate why the case-mix index value for specific hospitals or
groups of hospitals has changed.
Concerning the commenter's contention that there is a shift of 10
percent of Medicare payments from rural to urban hospitals, we note
that the impact analysis of the refined DRGs shows that rural hospitals
overall lose 0.6 percent of their payments, other urban hospitals lose
0.3 percent, and large urban hospitals gain 0.2 percent.
Comment: We received several comments concerning the proposal to
recalibrate the DRG weights to 1.0. Some commenters believe that this
will eliminate all real case-mix index increase as well as coding
``creep.'' Other commenters stated that HCFA should not pursue this
policy as there currently is no way to measure satisfactorily real
case-mix index change.
Response: We did not include a proposal to recalibrate the DRG
weights to 1.0 in the proposed rule. We presented it as one solution to
our current problem of being unable to make DRG reclassification
changes in a budget neutral fashion. We agree with commenters that it
is important to develop a mechanism to accurately distinguish real
case-mix increase from that attributable merely to changes in coding.
As noted above, we would make an additional adjustment to include real
case-mix change in Medicare payments. We intend to continue to analyze
possible solutions to this problem.
9. Other Issues
a. Lung Transplants.
Comment: We received comments urging that we create a new DRG
solely for lung transplants. The commenters state that, even though
HCFA has not made a national coverage determination for these
procedures, Part A fiscal intermediaries are approving some lung
transplant cases for coverage. Because there is no specific lung
transplant DRG, these cases are classified to DRG 75 (Major Chest
Procedures), which the commenters argue results in a DRG payment that
is woefully inadequate to cover the costs of the procedure. In
addition, one of the commenters understands that HCFA is in the process
of approving a national coverage determination for lung transplants
that will be effective in the very near future. Therefore, the
commenter believes that HCFA should not delay in having a DRG in place
for the procedure. This commenter also recommends that heart/lung
transplants be assigned to the new DRG.
Response: Because we are considering making a Medicare national
coverage determination on lung transplants in the near future, we are
establishing a new DRG for lung transplants as a part of this final
rule. As noted by the commenters, these cases currently are assigned to
DRG 75 in MDC 4 (Diseases and Disorders of the Respiratory System).
Cases will be assigned to the new DRG 495, Lung Transplant, based
on the presence of the procedure code for lung transplants (33.5) and
will not first be assigned to an MDC based on the principal diagnosis.
This is the same procedure we follow for liver and bone marrow
transplants.
As is our current policy for organ acquisition costs for kidney,
heart, and liver transplant cases paid under Medicare, lung acquisition
costs will be paid on a reasonable cost basis and are not included in
the prospective payment amount. We are revising Secs. 412.2(d)(4) and
412.113(d), which describe payment for organ acquisition costs as a
reasonable cost payment, to include lung acquisition costs.
The relative weight assigned to DRG 495 is based on the lung
transplant cases in the FY 1993 MedPAR file. When the weight of DRG 495
was initially calculated, the weight was less than the weight of DRG
483, Tracheostomy Except for Face, Mouth and Neck Diagnoses. Since
several lung transplant cases also received tracheostomies, we removed
these cases from DRG 495 and classified them to DRG 483 to receive the
higher payment assigned to that DRG. We note that each of these cases
had an average standardized charge that was much higher than the
average for all lung transplants. Thus, the final DRG 495 weight of
12.8346 is based on 105 cases of lung transplants in which no
tracheostomy was performed in the FY 1993 MedPAR file. This weight
places DRG 495 after DRGs 480, 483, and 481 (Bone Marrow Transplant) in
the pre-MDC surgical hierarchy. For a detailed discussion of surgical
hierarchy, see section II.B. 4 of this preamble.
Regarding the commenter's request that we include heart/lung
transplants with lung transplants in the new DRG, we note that heart/
lung transplants remain covered on a case-by-case basis as determined
by the fiscal intermediaries. Therefore, we do not believe we should
move them from their current classification in DRG 103, Heart
Transplant. We note that, for FY 1995, the relative weight for DRG 103
(13.5495) is actually higher than the weight for DRG 495.
b. Cochlear Implants (DRG 49).
Comment: We received two comments regarding cochlear implants. Both
commenters expressed concern that the cost incurred by cases receiving
the implant device far exceeds the Medicare payment these cases receive
under DRG 49 (Major Head and Neck Procedures) to which they are
assigned. According to these commenters, the cost of the device itself
represents more than the total DRG payment and, thus, is not subject to
traditional hospital cost control techniques. One commenter noted that
the economic facts regarding the costs of this implant procedure
require a more expeditious and effective adjustment than has been
granted in the past. This commenter suggests that the payment weight
assigned to cochlear implants should be appropriately adjusted, either
by assignment to a different DRG or by creation of a new DRG
specifically for cochlear implants. The other commenter requests that
cochlear implant procedures be assigned to DRG 1 (Craniotomy Age > 17
Except for Trauma) in MDC 1 (Diseases and Disorders of the Nervous
System).
Both commenters noted that, although we agreed in the September 1,
1993 final rule (58 FR 46273) to continue monitoring cochlear implant
cases, we did not discuss them in the proposed rule. One of the
commenters requested that we review the FY 1994 data for DRG 49, as
this would be the first data to reflect the change in DRG 49 weight as
a result of moving a lower cost procedure to another DRG.
In addition to the issue of inadequate payment, one commenter
observes that the number of Medicare cochlear implant cases continue to
decline. The commenter attributes this decrease to hospitals
determining that the financial loss suffered in providing the cochlear
implant to the Medicare population precludes a viable ongoing cochlear
implant program. This commenter is concerned that cochlear implants may
not exist for the Medicare population in the future.
The commenter also observes that the number of extraordinarily low
charges submitted by hospitals for the cochlear implant procedure has
decreased substantially and may be an indication that our instructions
to intermediaries on proper coding for this implant is having an
effect.
Response: Cochlear implants were first covered by Medicare in 1986
and were assigned to DRG 49 (Major Head & Neck Procedures), the highest
weighted surgical DRG in major diagnostic category (MDC) 3 (Diseases
and Disorders of the Ear, Nose, Mouth and Throat). Since that time, the
cochlear industry has contended that the weight of DRG 49 is too low
and does not adequately reflect the resources necessary for the
cochlear implant procedure. In response to these concerns, we have
analyzed Medicare data every year since 1986.
Effective October 1, 1993, in an effort to improve the homogeneity
of resource use in cases within DRG 49, we moved the lowest charge
procedure, partial glossectomy, from DRG 49 to DRGs 168 and 169 (Mouth
Procedures). This resulted in a slight increase in the average charge
for DRG 49. We have evaluated the remaining procedures in DRG 49 to
determine if further reclassification is appropriate. However, there
are no other low charge procedures remaining in DRG 49 that occur in
sufficient volume to justify further DRG shifts. We note that FY 1994
does not end until September 30, 1994, so we will not be able to
evaluate thoroughly the impact of the modification to DRG 49 until
after that date.
We note also that although we do not always publish the results of
our analysis in the Federal Register, this does not mean we have failed
to honor our commitment to continue monitoring the cochlear implant
procedures. On the contrary, we have reviewed and analyzed these data
annually. We did not include our results in the May 1994 proposed rule
because they did not vary from previous findings and we had nothing new
to add to our prior discussions. However, we will present them now.
Using FY 1993 Medicare claims data, we identified a total of 81
cochlear implant cases. These cases represent 3.5 percent of all cases
in DRG 49, and incurred an average charge of $22,386 compared to an
average charge of $15,679 for all cases in DRG 49. While there is a
higher charge for the 81 cochlear cases than for the other cases in DRG
49, we note that the cases are distributed across 54 hospitals, with no
more than 7 cases at any one hospital. The majority of hospitals (70
percent) treated only one case (38 of 54 hospitals).
We have repeatedly addressed the recommendation that we assign
cochlear implants to DRG 1, most recently in the September 1993 final
rule (58 FR 46274). Our objection to this suggestion is that the
diagnosis associated with cochlear cases (diagnosis code 389 (Hearing
loss)) is not clinically coherent with the diagnosis codes assigned to
MDC 1. A basic premise of DRG classification is the assignment of
clinically similar discharges within categories based on a common body
system or organ system. To reassign cochlear implant cases to MDC 1, we
would have to move the principal diagnosis code 389 from MDC 3, which
would move all cases with this diagnosis to a clinically inappropriate
MDC.
We acknowledge that the Medicare payment for cochlear implant
patients has been an issue for several years. However, we find no
justification for creating a special DRG for cochlear implants. We have
consistently classified clinically similar patients in DRGs who use
approximately the same amount of hospital resources. In addition, we
prefer to maintain DRGs with enough cases to ensure a normal
distribution and relative stability over time. We continue to believe
that the low volume of these cases does not justify the establishment
of a new DRG specific to cochlear implants. Nor do we generally create
DRGs that are specific to a single technology, especially those
available through a single source manufacturer.
Although some new technologies may engender a certain amount of
fixed costs, and thus, do not lend themselves readily to cost control
techniques, there are other occasions within the hospital's performance
that are responsive to cost containment. Thus, the incentive is for the
hospital to treat a mix of patients and to manage its operations in
such a way to offset losses on cases where payment is less than cost
with gains on cases where the payment is in excess of cost.
In response to the commenter's concern that cochlear implants may
not be available to Medicare beneficiaries in the future, we note that
a hospital may not refuse to provide a covered service to a Medicare
beneficiary if it provides that service to other patients.
Specifically, the Medicare regulations at 42 CFR 489.53(a)(2) provide
that HCFA may terminate a hospital's Medicare provider agreement if it
finds that the hospital places restrictions on the persons it accepts
for treatment and fails to apply them to Medicare beneficiaries the
same as to all other persons seeking care.
c. Epilepsy (DRGs 24, 25, and 26).
Comment: We received several comments addressing the classification
in DRGs 24, 25, and 26 (Seizure and Headache) of patients with
intractable epilepsy, particularly those admitted for neurodiagnostic
monitoring. The commenters believe that it is critical that a revision
be made to these DRGs for the intractable epilepsy patients to account
for the greater resource use and length of stay compared to all other
patients admitted under the same DRGs. The commenters state that the
financial risk is greatest to the small number of specialized epilepsy
centers that treat the majority of these complex patients.
The commenters refer to an analysis conducted by HCFA that reviewed
the FY 1993 average charges for all cases with a diagnosis of
intractable epilepsy where video/radio-telemetered monitoring
(procedure code 89.19) was performed. The commenters believe that the
results of the HCFA study support the need for a change in the DRG
classification system for certain cases, to be implemented in FY 1995,
using the following criteria:
A diagnosis of intractable epilepsy (diagnosis codes
345.0-345.9 with a 5th digit of 1).
The performance of video/radio-telemetered monitoring
(procedure code 89.19).
Patient age under 60.
Finally, one commenter believes that we need to address the
appropriate diagnosis code to use for patients who receive
neurodiagnostic monitoring whose seizures are not epileptic. These
patients are currently coded under 780.3 (Convulsions). The commenter
would prefer to include these patients under the unspecified
intractable epilepsy code of 345.91 so that they can be included in any
new DRG we create.
Response: The epilepsy treatment community has for some time
expressed concern that the resources used to treat the intractable
epilepsy patients far exceeded those needed for other patients in the
same DRGs, and that Medicare payment is inadequate to meet these costs.
We have previously addressed the issue of Medicare payment for
intractable epilepsy cases, most recently in the September 1, 1993
final rule (58 FR 46287). As a result of our previous analyses, we have
concluded that although intractable epilepsy patients incur higher
average charges than other patients in the same DRGs, there is not a
sufficient differential nor a sufficient volume to warrant a DRG
change.
In order to respond to the comments, we updated our most recent
study and evaluated the June 1994 update of the FY 1993 MedPAR file. We
identified 2,284 intractable epilepsy cases with an average charge of
$8,820 compared to an average charge of $7,602 for all patients in the
same DRGs. Nonintractable epilepsy cases incurred an average charge of
$7,423, for 13,412 cases. The incidence of inpatient admissions for all
cases of epilepsy has decreased by nearly 30 percent, with intractable
inpatient admissions down 19 percent from the FY 1992 data (2,817 to
2,284 cases). The following table summarizes our most recent epilepsy
analysis findings, comparing the average charges between epilepsy and
other cases assigned to the same DRG (the number of cases is included
in parentheses):

------------------------------------------------------------------------
Intractable Nonintractable All
DRG epilepsy epilepsy epilepsy All cases
------------------------------------------------------------------------
24................... $10,605
(1,152) $8,525
(9,595) $8,748
(10,747) $8,630
(57,041)
25................... $7,003
(1,132) $4,654
(3,811) $5,192
(4,943) $4,738
(20,456)
26................... 0 $4,003
(6) $4,003
(6) $5,912
(43)
All Cases............ $8,820
(2,284) $7,423
(13,412) $7,626
(15,696) $7,602
(77,540)
------------------------------------------------------------------------

Focusing our analysis on intractable epilepsy patients with and
without video-telemetered monitoring (procedure code 89.19) confirms
our earlier findings; that is, intractable epilepsy patients who
receive the neurodiagnostic monitoring do in fact incur charges greater
than those of other intractable epilepsy cases and of all other
patients in the same DRGs. Although, in the past, there has been a
problem with the underreporting of procedure code 89.19 and an
inability to identify the extent of use of this procedure, we note that
there has been a substantial increase in reporting in the FY 1993 data.
The number of cases now appears to more accurately match the volume
predicted in the past by the epilepsy treatment centers. The results of
this analysis are summarized in the following table:

------------------------------------------------------------------------
Intractable Nonintractable
DRG epilepsy epilepsy
------------------------------------------------------------------------
24 with 89.19.............................. $13,493
(104) $9,711
(28)
24 w/o 89.19............................... $10,318
(1,048) $8,521
(9,567)
25 with 89.19.............................. $10,178
(359) $9,544
(77)
25 w/o 89.19............................... $5,529
(773) $4,553
(3,734)
26 with 89.19.............................. 0 0
26 w/o 89.19............................... 0 $4,003
(6)
------------------------------------------------------------------------

The commenters recommend that, in revising the DRGs, we target the
under age 60 patients who are hospitalized with intractable epilepsy
and receive a neurodiagnostic work-up with video-telemetered
monitoring. We used age 65 rather than age 60 in our analysis because
that is a natural age break in the Medicare patient population. That
is, patients under age 65 who receive Medicare benefits qualify on the
basis of disability rather than on the basis of age. We do not believe
the difference in age break is significant.
Our analysis identified 335 cases of intractable epilepsy with
video-telemetered monitoring in DRG 25 that were under age 65. (We
concentrated on DRG 25 as suggested by the commenters because patients
admitted for neurodiagnostic monitoring must be relatively healthy and,
thus, do not usually have any complicating conditions.) The average
charge for all intractable epilepsy patients in DRG 25 with procedure
89.19 was $10,178. When age less than 65 was taken into account, the
average charge was $10,368, compared to an average of $7,527 for the 24
patients age 65 and over. The following table summarizes the DRG 25
average charges for intractable epilepsy patients under age 65 compared
to other patients:

------------------------------------------------------------------------
DRG 25 Age 65 All Ages
------------------------------------------------------------------------
All Cases........................... $4,740
($7,422) $4,737
(13,034) $4,738
(20,456)
Intractable Epilepsy Cases.......... $7,323
(952) $5,313
(180) $7,003
(1,132)
Intractable Epilepsy Cases with
89.19.............................. $10,368
(335) $7,527
(24) $10,178
(359)
Intractable Epilepsy Cases w/o 89.19 $5,670
(617) $4,973
(156) $5,529
(773)
Nonintractable Epilepsy Cases with
89.19.............................. $10,078
(58) $7,913
(19) $9,544
(77)
Nonintractable Epilepsy Cases w/o
89.19.............................. $4,180
(1,520) $4,808
(2,214) $4,553
(3,734)
------------------------------------------------------------------------

While we concur with the commenters that the average charges for
intractable epilepsy receiving video-telemetered monitoring are indeed
greater than those who do not, our findings indicate that this is more
a function of the procedure than age of the patient. The highest
charges of any group are those intractable epilepsy cases with
procedure 89.19 in DRG 24 ($13,493 for 104 cases). The average charge
for all intractable epilepsy cases with procedure code 89.19 is
$10,922, while those under 65 in DRG 24 have average charges of $13,452
and those under 65 in DRG 25 average $10,368. Thus, based on the FY
1993 data, the majority of the intractable epilepsy cases under age 65
who receive video-telemetered monitoring classify to DRG 25 (79
percent; 335 cases of 423). However, the highest average charges for
this age group and procedure are found in DRG 24. In addition, the
nonintractable epilepsy patients under age 65 who receive procedure
code 89.19 in DRG 25 averaged charges of $10,078, only slightly lower
than the average charge for the intractable epilepsy cases in the same
DRG and age category.
At the request of one commenter, we reviewed the number of cases
with diagnosis code 780.3 (Convulsions) and found this diagnosis
accounted for 61 percent of the total cases in DRGs 24 through 26
(47,340 of 77,540 cases). Intractable epilepsy was reported as a
secondary diagnosis in only 10 of these cases, with an average charge
of $3,502; nonintractable epilepsy was a secondary diagnosis in 81
instances, with an average charge of $6,351. We note that, in response
to the commenter's suggestion that these cases would be more
appropriately coded to diagnosis 345.91, the coding notes for 345.91
specifically excludes conditions coded to 780.3. We agree with the
commenter this change in coding be pursued through the ICD-9-CM
Coordination and Maintenance Committee.
As a result of our analysis, we note that, as a group, the
intractable epilepsy cases are not the most resource-intensive set of
cases assigned to DRGs 24 through 26. The highest volume of epilepsy
cases are coded 345.3 (Epilepsy, Grand Mal status), with 5,708 cases
reported in the FY 1993 MedPAR and an average charge of $12,324. Of the
epilepsy diagnoses, the average charge for grand mal epilepsy is
exceeded only by intractable epilepsy partialis continua (diagnosis
code 345.71) with an average charge of $13,346 but only 47 cases.
In response to the commenter's contention that epilepsy centers are
at financial risk, we also evaluated the distribution of epilepsy cases
across hospitals. We found 830 hospitals admitted patients with
intractable epilepsy; 3,141 hospitals treated patients with
nonintractable epilepsy. Of those hospitals treating intractable
epilepsy cases, only 5 percent of these hospitals (44) treated 10 or
more cases, while 2.3 percent treated 20 or more cases. The vast
majority (86 percent) treated 3 or fewer cases (711 of 830 hospitals).
As in our prior analyses, we found that among the high volume
hospitals, charges for these cases were normally distributed, with
approximately 50 percent above the average charge and 50 percent below
the average.
Of the 30 recognized epilepsy treatment centers, only 23 reported
any intractable epilepsy discharges in FY 1993. The remaining epilepsy
centers are either children's hospitals and are excluded from the
prospective payment system or did not treat intractable epilepsy
patients in FY 1993. Approximately 70 percent (16 of 23 centers)
treated 10 or more cases; less than 2 percent treated fewer than 4
intractable epilepsy cases. However, of the total 2,284 intractable
epilepsy cases, less than 18 percent (405 cases) were admitted to
epilepsy treatment centers. The average charge per intractable epilepsy
case treated at an epilepsy treatment center was $9,546, only slightly
higher than the $8,820 average charge at all hospitals.
Although the distribution of intractable epilepsy patients across
hospitals tends to minimize the impact of higher charges on any one
hospital, we acknowledge that, even though the volume of hospitals is
small, many hospitals treating high numbers of intractable epilepsy
patients may incur charges above the average. This is particularly true
for the specialized treatment centers. However, we note that these
hospitals are for the most part large urban or teaching hospitals or
both and, as such, receive some of the highest Medicare payment rates.
We are not recommending any DRG modification for epilepsy cases at
this time. Although the intractable epilepsy cases, especially those
using procedure 89.19, result in higher charges than other cases in the
same DRGs, the difference is neither clearly defined by age category or
DRG nor of sufficient volume to justify a separate DRG for these
patients. Therefore, we do not accept the commenters' recommendation
that we create a DRG for intractable epilepsy patients, under age 60,
using video-telemetered monitoring.
Comment: Another commenter expressed concern that the current
Medicare payment policy may be having an adverse effect on patient
access for those intractable epilepsy cases requiring neurodiagnostic
monitoring.
Response: As noted above, in our response to cochlear implant
comments, hospitals may not refuse to offer a covered service to
Medicare patients if they provide this same service to other patients.
d. Heart Assist Devices.
Comment: We received several comments concerning the DRG assignment
of and payment for the implantation of ventricular assist devices. The
commenters believe that the current assignment of this procedure
(procedure code 37.62) to DRGs 110 and 111 (Major Cardiovascular
Procedures) was made based on outdated data and does not reflect
current practice.
The commenters note that only one heart assist device, the BVS 5000
biventricular support system, has received approval from the Food and
Drug Administration (FDA) and is covered by Medicare when used in
patients suffering from postcardiotomy ventricular dysfunction. (See
section 65-15 of the Medicare Coverage Issues Manual (HCFA Pub. 6).)
One of the commenters, the manufacturer of the BVS 5000, submitted the
results of a study it commissioned to analyze the current Medicare
payments for that device.
The study analyzed the hospital bills for 36 cases of implantation
of the heart assist device that were performed at 13 hospitals. Using
the information on the hospital bills, total hospital charges were
calculated for each of the 36 cases and then standardized using
Medicare formulas and adjustment factors. (The 36 cases are a sample of
all patients receiving the BVS 5000 and are not restricted to Medicare
beneficiaries.) The results of the study indicated that the average
standardized charge for the 36 cases was consistently much higher than
the average standardized charge for each of the nine DRGs to which
these cases would have been assigned. Overall, the average standardized
charge for the 36 cases was $155,396, compared to an estimated average
DRG payment of $30,488, exclusive of capital and outlier payments.
Using the average standardized charge of $155,396, the study
imputes a DRG weight of 19.3803 for these cases. Even if the cases that
would group to DRG 103 (Heart Transplant) and DRG 483 (Tracheostomy
Except for Face, Mouth, and Neck Diagnoses) are excluded, the average
standardized charge is still $114,299, implying a weight of 14.2548.
Based on this result, the study recommends that the BVS 5000 cases be
reassigned from DRGs 110 and 111 to DRG 103, which, with an FY 1994
weight of 14.0215, is the most appropriate DRG assignment in MDC 5
(Diseases and Disorders of the Circulatory System). In addition, from a
clinical perspective, both patients assigned to DRG 103 and those who
receive a BVS 5000 are seriously ill, have cardiac dysfunction that
cannot continue to sustain life, and require lengthy and intensive
hospital care.
Finally, one commenter expressed concern that the volume of cases
in the FY 1993 MedPAR file with procedure code 37.62 (406 cases)
indicates that many of the Medicare patients are receiving nonapproved
heart assist devices that should be excluded from Medicare payment. The
commenter suggested that hospitals should be directed to use code 37.62
only for procedures involving FDA-approved and Medicare-covered
devices.
Response: Our analysis of the FY 1993 MedPAR file identified 406
cases with a procedure code of 37.62. Approximately 10 percent of these
cases (38 cases) were assigned to DRGs outside of MDC 5, with the
highest volume (25 cases) classified to DRG 483. Of the remaining 368
cases, 266 were assigned to DRGs other than DRGs 110 and 111.
Therefore, there were only 102 cases (approximately 25 percent of the
total) that were assigned to a DRG based on the presence of a heart
assist device (96 cases to DRG 110 and 6 cases to DRG 111). In DRG 110,
the average standardized charge for cases with procedure code 37.62 was
$39,038 and the average for all cases in that DRG was $32,939. For the
6 cases assigned to DRG 111, the average standardized charge was
$57,375 compared to $18,259 for all cases in that DRG.
Based on the results of our analysis, we do not believe that the
cases of implantation of a heart assist system assigned to DRG 110 are
vastly underpaid. In fact, the average charge for those cases is only
$6,000 higher than the other cases in the DRG and is well within the
normal range of charges for DRG 110. In addition, although the average
charge for the 6 cases assigned to DRG 111 is much higher than the
overall average (almost $40,000 more), the exclusion of one extremely
expensive case (standardized charge of $258,172) results in an average
charge of $17,218 for the remaining 5 cases, which is below the DRG 111
average charge. We note that the expensive case would have received a
large outlier payment in addition to its operating and capital DRG
payments.
Unlike the manufacturer's study, which identified specific cases
using the FDA-approved device, we are not able to distinguish the
approved device from other devices which are still investigational.
Based on the volume of cases in the FY 1993 data, we are certain that
several different devices are being captured by the 37.62 code for
heart assist implants. We note that the cases in this file were all
discharged prior to the date the BVS 5000 was approved for coverage
(October 1, 1993). Therefore, with the exception of those limited cases
in which contractor discretion has been exercised, there are no covered
devices in the FY 1993 MedPAR file, including the BVS 5000 cases. The
manufacturer of the BVS 5000 declined to honor our request for a list
of the hospitals that purchase and implant its device. A list of
identified hospitals could help us to narrow our analysis to cases that
are likely to be covered under Medicare.
Because of our inability to identify specifically the FDA-approved
device, we cannot determine the DRG distribution nor the charges
attributable to the implant of the BVS 5000. Nor is it possible to
identify those cases where the heart assist device is used as a bridge
to heart transplant, for which it is not covered under Medicare policy.
Therefore, at this time, we do not believe that we have enough
information to recommend any change in DRG classification for this
device. Based on the data available, it does not appear that DRGs 110
and 111 are inappropriate designations for procedure code 37.62.
We cannot advise hospitals that they may use procedure code 37.62
only for those devices that are approved and covered under Medicare.
The ICD-9-CM procedure codes are not the exclusive domain of Medicare
payment policy. These codes are used by many other organizations and
agencies for various health-related purposes. We suggest that the
commenters contact Patricia E. Brooks, co-chairperson of the ICD-9-CM
Coordination and Maintenance Committee, concerning the feasibility of
creating a procedure code specific to implant of the FDA-approved
biventricular support system. Ms. Brooks' address is set forth in
section II.B.7 of this preamble.
e. Automatic implantable cardioverter defibrillator (AICD)
procedures (DRG 116). For several years, we have received
correspondence concerning the appropriate DRG assignment of certain
procedures involving automatic implantable cardioverter defibrillators
(AICDs). When a patient whose principal diagnosis is classified to MDC
5 (Diseases and Disorders of the Circulatory System) receives a total
AICD system implant or replacement (procedure code 37.94), the case is
assigned to DRG 104 or 105 (Cardiac Catheterization). However, prior to
October 1, 1992, if a procedure was performed that involved the
implantation or replacement of only part of the AICD system (that is,
replacement or implant of either the leads or pulse generator only),
the case was assigned to DRG 120 (Other Circulatory System OR
Procedures). Effective with discharges occurring on or after October 1,
1992, these procedures were assigned to DRG 116 (Other Permanent
Cardiac Pacemaker Implant or AICD Lead or Generator Procedure).
Although we proposed no further changes to this DRG assignment for FY
1995, we received several comments.
Comment: Commenters requested that we change the DRG assignment for
procedures in which replacement or implantation of only part of the
AICD system (either the leads or pulse generator) is performed from DRG
116 to DRG 115 (Permanent Cardiac Pacemaker Implantation with AMI,
Heart Failure or Shock). The relevant procedure codes are the
following: 37.95 (Implantation of automatic cardioverter/defibrillator
lead(s) only), 37.96 (Implantation of automatic cardioverter/
defibrillator pulse generator only), 37.97 (Replacement of automatic
cardioverter/defibrillator lead(s) only), 37.98 (Replacement of
automatic cardioverter/defibrillator pulse generator only).
The commenters expressed concern that, even with the revised
classification to DRG 116, hospitals are not adequately compensated for
these procedures. Based on the results of an August 1992 study
commissioned by the only AICD manufacturer at that time, the commenters
estimate that these procedures should be assigned to a DRG with a
relative weight of 3.7300. (The FY 1995 relative weights for DRGs 115
and 116 are 3.5936 and 2.4514, respectively.) Therefore, the commenters
assert that assignment of AICD cases to DRG 115 would be more
equitable.
Response: As explained in detail in the September 1, 1992 final
rule (57 FR 39749), the current clinical composition and relative
weights of the surgical DRGs in MDC 5 do not offer a perfect match with
the AICD cases. After reviewing the current DRGs in terms of clinical
coherence and similar resource use, we determined that DRG 116 was the
best fit possible.
Since reassignment of these procedures to DRG 116, we have annually
reanalyzed the cases based on the most recent data. Based on data in
the 1993 MedPAR file, the average standardized charge for AICD cases
was $27,999 for the 1,933 cases assigned to DRG 116. The average
standardized charge for all cases in DRG 116 was $19,456 and, for DRG
115, $29,001. Although the $8,543 difference between the average charge
for AICD cases in DRG 116 and all cases in DRG 116 is within the normal
range of charges for that DRG, the difference in charges has grown over
the last 2 years.
The average length of stay for these AICD cases is 4.6 days
compared to 4.6 for all cases in DRG 116. However, the length of stay
for cases in DRG 115 is 12.8 days. In general, the patients classified
to DRG 115 are seriously ill and the long length of stay supports this
contention. We believe that even though the average charge for an AICD
case is closer to the average charge in DRG 115 than that of DRG 116,
clinically, the AICD patients are much more similar to the patients
classified to DRG 116 than those in DRG 115. Thus, it is the cost of
the AICD device that is responsible for the high average charge for
these cases and not the intensity of hospital services required to
treat the patient.
Although originally there was only one AICD device on the market,
others have b

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-21488. Public record. Not legal advice.