Basics of Diagnostic Related Grouping in Medical Coding

Medical Coding
Medical Coding

A diagnostic related grouping (DRG) is a system based on which Medicare and other health insurance companies categorize a patient’s hospitalization costs to determine the amount payable for the patient’s hospital stay. Everyone in the medical coding profession should understand the DRG codes that are used to code the in-patient claims so as to maintain the accuracy of all components for hassle-free claim reimbursement. Unlike the other codes where payment is done based on the amount actually spent for a hospitalized patient, Medicare pays a fixed amount to the hospital for cases with the DRG code.

Medical coding professionals also need to know why this system was brought into effect to fully understand its importance and use the appropriate codes. Before this system, hospitals usually sent bills to Medicare and other insurance companies for every kind of product or service provided which included the room charges for the number of days hospitalized.  This in a way prompted hospitals to keep the patients hospitalized for as long as possible to make more money on the room charges and other charges for the number of days a patient is hospitalized. To curb this practice, in the decade of 1980s, the diagnostic related grouping system was brought into effect with an objective of controlling skyrocketing healthcare costs and encouraging hospitals to provide more efficient care. Per this system, instead of paying for the number of days of hospitalization or for each band-aid or alcohol swab used, Medicare pays for a specific amount for a patient’s hospitalization based on the hospital resources that are estimated to be used for clinically similar patients.

Diagnostic related groupings are based on ICD diagnoses, procedures, age, sex, the kind of complication present, etc. Medical coding companies need to properly assess and designate DRG codes for which here given are some basic steps.

Firstly, the principal diagnosis for a patient’s admission has to be determined. Later it has to be determined if there was any surgical procedure done or not. Finally, it has to be determined if any significant comorbid condition or complication is there. A comorbid condition is any additional medical problem (related or unrelated to the principal medical problem) that is being experienced at the same time.

People in medical coding jobs should be really careful with assigning DRG codes because although the steps seem to be simple they are not. One of the crucial aspects in assigning a DRG is arriving at the accurate principal diagnosis when a patient has multiple medical issues at the same time. Medical coding specialists should treat a diagnosis as the principal diagnosis if the condition is established to be chiefly responsible for the patient’s admission in the hospital.  Another important thing to be noted by the coders in medical coding companies is that Medicare differentiates between major comorbid conditions and not-so-major comorbid conditions. There are three possible DRGs for various cases –

  1.  A low-paying DRG covering the principal diagnosis without any comorbid conditions.
  2. A medium-paying DRG covering the principal diagnosis along with a not-so-major comorbid condition. This is also referred to as a DRG with CC.
  3. A high-paying DRG covering the principal diagnosis along with a major comorbid condition which is also referred to as DRG with MCC.

Only with proper information and adequate education can the coders assign accurate medical codes to the procedures performed in hospitals which help in accurate billing and reimbursements later on.

Basics of Diagnostic Related Grouping in Medical Coding
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