Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital care provided from September 4, 2021, to 
September 8, 2021, at the Diagnosis Related Group (DRG) originally billed. 
 You asked the Plan to pay for inpatient care at the DRG originally billed. You say that J96.01 (acute respiratory 
failure with hypoxia) is a valid secondary diagnosis for this encounter. The Plan denied your request. The Plan 
says the secondary diagnosis of J96.01 (acute respiratory failure with hypoxia) is not supported in the medical 
record, so the DRG was appropriately changed. 
 
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 secondary 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 inpatient care at the DRG 
originally billed. Our reviewer says that the secondary diagnosis of J96.01 (acute respiratory failure with 
hypoxia) is not supported in the medical record. Our physician reviewer found the patient presented to the 
facility with the chief complaint of hypotension with episode of weakness and a productive cough. The patient 
was noted to have a past medical history of chronic obstructive pulmonary disease, diabetes and hypertension 
as well as chronic pain. Review of systems included a cough and shortness of breath, with vitals signs noted to 
reflect a respiratory rate 17-22, with "effort normal. No respiratory distress" documented in the physical 
assessment. The history and physical assessed an upper respiratory tract infection in the setting of chronic 
obstructive pulmonary disease (COPD) with a plan to check sputum, imaging and medications in 
bronchodilators and antibiotics. Saturation levels were 89% however immediately responded to low flow 
oxygen at 2 liters, and no distress was noted. The progress notes were acknowledged to state "COPD 
exacerbation", with diffuse wheezing noted, however on low flow oxygen saturations were 95%. In the setting 
of COPD exacerbation, the use of low flow oxygen with consistent patient and provider endorsement of no 
respiratory distress or increased pulmonary effort is unclear. The home oxygen evaluation noted resting 
saturations were greater than 94%, and only with ambulation did the saturations decrease for which the patient 
was to discharge with oxygen for activity. The provider notes stated the patient was "not hypoxic" on low flow 
cannula in the emergency department and remained with saturations greater than 90% on flow rates of less than 
5 liters per minute. Provider documentation also did not support accessory muscle use, tachypnea over 30 
breaths per minute, arterial blood gas values, or persisting saturations following initial treatment of less than 
90%.  
 
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 care provided from September 4, 2021, to September 8, 2021, at the Diagnosis Related 
Group (DRG) originally billed.