Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital care provided from January 7, 221, to 
January 11, 2021, as billed with Diagnosis Related Group (DRG) 640. 
 
You asked the Plan to pay for inpatient care billed with DRG 640. You say that these services were medically 
necessary and are supported in the record. The Plan denied your request. The Plan says DRG 640 is not appropriate as the diagnosis of acute respiratory failure with hypoxia (J96.01) is not supported in the medical 
record. The Plan argues that DRG 641 is more appropriate in this case. 
 
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. 
 
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 inpatient care billed with DRG 640. Our 
reviewer says that the diagnosis of acute respiratory failure with hypoxia (J96.01) is not supported in the 
medical record for this inpatient admission. Our physician reviewer found that the enrollee presented to the 
hospital following a recent emergency department visit with complaints of dyspnea and weakness over three 
days. She was transferred in from an outside hospital for evaluation of shortness of breath. Vital signs at the 
outside facility reportedly had revealed tachypnea to respiratory rate of 23 and oxygen saturation (SpO2) 90%. 
She was placed on 3L of oxygen via nasal cannula with SpO2 improved to 94%. Per admission history and 
physical, the outside hospitals emergency department workup noted the SpO2 of 94% on 3L, with computed 
tomographic angiography (CTA) positive for pulmonary edema and bilateral pleural effusions with additional 
patchy and bibasilar opacities thought to be atelectasis more than pneumonia. She also had cirrhosis with some 
mild ascites and a pericardial effusion. She had received a dose of Lasix as well as Zosyn, Ativan, and 
Combivent prior to transfer into billing hospital. The enrollee was noted to be lethargic on admission to the 
billing hospital with difficulty breathing, with SpO2 93% on 3L O2. Admission history and physical noted the 
diagnosis of acute hypoxic respiratory failure (differential diagnoses: pleural effusion vs. pulmonary edema vs. 
pericardial effusion). The enrollee was also found to be hyponatremic/hypervolemic likely 2/2 cirrhosis. She 
was treated with thoracentesis and diuresis. While the gastroenterology consult identified pulmonary edema to 
be more consistent with congestive heart failure and volume overload than with cirrhosis, an echo with doppler 
was performed and showed normal results with no diastolic dysfunction identified. The condition documented 
as acute hypoxic respiratory failure improved with thoracentesis and IV diuresis. The enrollee reported a 
resolution of her respiratory symptoms and SpO2 at discharge was 97%. She received instructions on discharge 
to take blood pressure and weight measurements daily, to continue home diuresis, and to follow up with 
Cardiology, gastroenterology, and her primary care physician. The review has determined that the medical 
records do not support the billing of acute respiratory failure with hypoxia (J96.01). 
 
We looked at this physician's review, the file, and Medicare rules. Based on this information, we decided that 
Medicare rules for coverage of inpatient care billed with DRG 640 have not been met. Therefore, we decided 
that the Plan does not have to pay for inpatient hospital care provided from January 7, 221, to January 11, 2021, 
as billed with Diagnosis Related Group (DRG) 640.