Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital services provided on August 2, 2021, to 
August 6, 2021, at the Diagnosis Related Group (DRG) originally billed. 
 You asked the Plan to pay for the inpatient hospital services at the DRG originally billed. You say that 
diagnosis J96.01 (acute respiratory failure with hypoxia) is a valid diagnosis for this hospitalization. The Plan 
denied your request. The Plan says the billed diagnosis of J96.01 (acute respiratory failure with hypoxia) is not 
supported in the medical record, resulting in a lower DRG being paid. 
 
The Plan must follow Medicare rules. Medicare rules say that providers must report services correctly. 
Providers must report inpatient hospital services with the appropriate DRG, which is based, in part, on the 
reported principal and secondary diagnosis codes.   
 
In this case, you billed the inpatient services provided with a diagnosis of J96.01 (acute respiratory failure with 
hypoxia). We asked our physician reviewer to carefully review the case file and apply the relevant Medicare 
rules to determine if the Plan was correct in denying the request to pay for the inpatient hospital services at the 
DRG originally billed. Our reviewer says that the diagnosis of J96.01 (acute respiratory failure with hypoxia) is 
not supported in the medical record. Our physician reviewer found that the documentation indicates that the 
"Attending's Progress notes on 8/5 and 8/6 2 clearly included an impression of acute hypoxic respiratory 
failure, supported by documentation of hypoxia, increased work of breathing with accessory muscle usage and 
daytime requirement for 2-4L supplemental oxygen." However, even though J96.01was coded on the claim, the 
documentation received was inconsistent/unclear regarding this diagnosis and supporting medical record 
documentation was unable to be found. Per the documentation received, the patient did not require 5L or 
greater of supplemental oxygen and/or did not require invasive/non-invasive mechanical ventilation. Further, 
after stabilization in the emergency room, the history and physical notes that the patient has normal air entry 
and the patient was in no acute distress but needed further workup for chronic obstructive pulmonary disease 
(COPD) and was subsequently admitted for COPD exacerbation. Oxygen saturation (SpO2) on admission was 
between 99% and 100% on 3L (2L baseline at night) and was being weaned as tolerated. Respiratory failure is 
a syndrome in which the respiratory system fails in one or both of its gas exchange functions: oxygenation and 
carbon dioxide elimination. In practice, it may be classified as either hypoxemic or hypercapnic. Hypoxemic 
respiratory failure (type I) is characterized by an arterial oxygen tension (PaO2) lower than 60 mm Hg with a 
normal or low arterial carbon dioxide tension (PaCO2). This is the most common form of respiratory failure, 
and it can be associated with virtually all acute diseases of the lung, which generally involve fluid filling or 
collapse of alveolar units. Some examples of type I respiratory failure are cardiogenic or noncardiogenic 
pulmonary edema, pneumonia, and pulmonary hemorrhage. 
 
Hypercapnic respiratory failure (type II) is characterized by a PaCO2 higher than 50 mm Hg. Hypoxemia is 
common in patients with hypercapnic respiratory failure who are breathing room air. The pH depends on the 
level of bicarbonate, which, in turn, is dependent on the duration of hypercapnia. Common etiologies include 
drug overdose, neuromuscular disease, chest wall abnormalities, and severe airway disorders. Respiratory 
failure may be further classified as either acute or chronic. Although acute respiratory failure is characterized 
by life-threatening derangements in arterial blood gases and acid-base status, the manifestations of chronic 
respiratory failure are less dramatic and may not be as readily apparent. Acute hypercapnic respiratory failure 
develops over minutes to hours; therefore, pH is less than 7.3. Chronic respiratory failure develops over several 
days or longer, allowing time for renal compensation and an increase in bicarbonate concentration. Therefore, 
the pH usually is only slightly decreased. 
 
The distinction between acute and chronic hypoxemic respiratory failure cannot readily be made on the basis of 
arterial blood gases. The clinical markers of chronic hypoxemia, such as polycythemia or cor pulmonale, 
suggest a long-standing disorder. Arterial blood gases should be evaluated in all patients who are seriously ill 
or in whom respiratory failure is suspected. Chest radiography is essential. Echocardiography is not routine but 
is sometimes useful. Pulmonary functions tests (PFTs) may be helpful. Electrocardiography (ECG) should be 
performed to assess the possibility of a cardiovascular cause of respiratory failure; it also may detect 
dysrhythmias resulting from severe hypoxemia or acidosis. Right-sided heart catheterization is controversial. 
Hypoxemia is the major immediate threat to organ function. After the patient's hypoxemia is corrected and the 
ventilatory and hemodynamic status have stabilized, every attempt should be made to identify and correct the underlying pathophysiologic process that led to respiratory failure in the first place. The specific treatment 
depends on the etiology of respiratory failure.  
 
We looked at this physician's review, the file, and Medicare rules. Based on this information, we decided the 
medical records do not substantiate the DRG as billed. Therefore, we decided that the Plan does not have to pay 
for inpatient hospital services provided on August 2, 2021, to August 6, 2021, at the Diagnosis Related Group 
(DRG) originally billed.