Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital services provided on December 7, 2020, to 
December 13, 2020, 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 you 
disagree with the Plan's DRG downgrade because the diagnosis of J96.01 (acute respiratory failure with 
hypoxia) was reported correctly. The Plan denied your request. The Plan says the billed secondary diagnosis of 
J96.01 (acute respiratory failure with hypoxia) is not supported in the medical records, 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 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 the inpatient hospital 
services at the DRG originally billed. Our reviewer says that the billed secondary diagnosis of J96.01 (acute 
respiratory failure with hypoxia) is not supported in the medical records. Our physician reviewer found the 
enrollee was a 97-year-old female with a past medical history of hyperlipidemia, hypertension, and stage 3 
chronic kidney disease who presented to the Emergency Department via ambulance following an unwitnessed 
fall, striking her head. She had also complaints of shoulder pain. Her vital signs on arrival to the Emergency 
Department (ED) were temperature of 98.4, pulse rate of 76, respiratory rate of 18-24, blood pressure of 
217/90, and SpO2 of 92%-96% on room air. Radiology studies supported a first and second rib fracture and 
humeral fracture without surgical intervention required. The patient's hypertension was noted to be 
uncontrolled while exhibiting elevated levels of pain. The patient had required oxygen at one liter per nasal 
cannula, saturating well into the mid-nineties. The provider's plan of care included, "Encourage the use of 
incentive spirometry and continue with pain control, continue to wean off as tolerated." The documentation 
appears to explain the reasons in dips of the oxygen saturations such as "O2 saturation dropped after 
Morphine administration." Then, it is noted, "Sats down to mid-80's while sleeping on one liter per nasal 
canula." In both of these examples, the oxygen administration level remained unchanged. Documentation states 
"Has been requiring one liter per nasal cannula, saturating well." 
 
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 (eg, asthma and 
chronic obstructive pulmonary disease [COPD]). 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. In this case there was no clinical or laboratory evidence of acute respiratory failure with 
hypoxia.  
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 December 7, 2020, to December 13, 2020, at the Diagnosis Related 
Group (DRG) originally billed.