Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital services provided on April 21, 2021, to 
May 3, 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 these 
services were necessary and were reported correctly. The Plan denied your request. The Plan says the medical 
records do not support the DRG billed, as the diagnosis of acute and chronic respiratory failure with hypoxia 
(J96.21) is not supported in the medical record. 
 
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 acute and chronic respiratory failure with hypoxia 
(J96.21). 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 this diagnosis is not supported in the medical record. Our 
physician reviewer found that the enrollee with a complex medical history was documented to have acute and 
chronic respiratory failure with hypoxemia on admission, and this was noted consistently throughout the 
medical record. This was associated with asthma exacerbation versus congestive heart failure exacerbation, and 
the enrollee did have improvement with diuresis. After an increase in oxygen, it was titrated back down. 
Infection and presumed sepsis were later ruled out, and the initially elevated lactic acid was attributed to 
increased work of breathing. Per Medscape Internal Medicine, 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. 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. 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. In this case, there was no documentation of hypoxic 
respiratory failure. The review has determined that the medical records did not support billing a diagnosis 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 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 April 21, 2021, to May 3, 2021, at the Diagnosis Related Group 
(DRG) originally billed.