Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital care provided from October 17, 2021, To 
October 25, 2021, billed with Diagnosis Related Group (DRG) 377. 
 
You asked the Plan to pay for inpatient care billed with DRG 377. You say that these services were medically 
necessary and are supported in the record. The Plan denied your request. The Plan says DRG 377 is not appropriate as the diagnosis of acute and chronic respiratory failure with hypoxia (J96.21) is not supported in 
the medical record. The Plan argues that DRG 378 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 377. Our 
reviewer says that the diagnosis of acute and chronic respiratory failure with hypoxia (J96.21) is not supported 
in the medical record for this inpatient admission. Our physician reviewer found  
 
that the enrollee presented to the facility with the chief complaint of dyspnea and cough, with a past medical 
history of chronic obstructive pulmonary disease (COPD), asthma, and chronic hypoxic respiratory failure on 
home oxygen at baseline at up to 4 liters. The emergency provider notes included a physical assessment of 
normal pulmonary effort with no respiratory distress, with rhonchi present and thick cough. Vital signs noted at 
respiratory rate of 25 and saturations of 95-96% on baseline oxygen. History and physical notes supported the 
shortness of breath and cough were likely due to COPD exacerbation, with notations of tachypnea, but no 
change in baseline saturation or nasal cannula use. The enrollees lactic acid levels were associated with 
chronic respiratory failure in the history and physical. The pulmonary consultation confirmed the enrollee had 
COPD at baseline and was on home oxygen at 4 liters, with radiology studies with no acute infiltrate or 
effusion. The assessment by the pulmonary consult was a COPD exacerbation, mild in nature, with a plan to 
address via nebulizer, steroids, and nocturnal continuous positive airway pressure (CPAP) was offered as well. 
While the attending provider progress notes stated "acute" hypoxic respiratory failure, it is unclear as the 
pulmonary consult did not include the diagnosis, with only "mild" COPD exacerbation described. Although the 
enrollee had a transient "desaturation" during the esophagogastroduodenoscopy (EGD), this was noted to 
resolve with a jaw thrust. Further pulmonary consultation notes that same day noted no significant change in 
baseline pulmonary status, on oxygen via cannula and a note the enrollee "does not use" bilevel positive airway 
pressure (BiPAP) as suggested at night with saturations of 96-97% that same day. It is maintained the record 
was without a clear departure of oxygen from baseline levels requiring escalating oxygen above those levels 
used prior to admission. There was no treatment consistent with acute respiratory failure with hypoxia such as 
administration of oxygen 5L or more and provision of BiPAP or mechanical ventilation. The review has 
determined that the medical records did not support the billing of acute and chronic respiratory failure with 
hypoxia (J96.21). 
 
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 377 have not been met. Therefore, we decided 
that the Plan does not have to pay for inpatient hospital care provided from October 17, 2021, To October 25, 
2021, billed with Diagnosis Related Group (DRG) 377.