Appeal type: Inpatient Hospital
Decision: Favorable

 
We decided that the Plan has to pay for inpatient hospital services provided on June 24, 2022, to June 29, 2022, 
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 
agree with J18.9 Pneumonia Unspecified Organism being the appropriate principal diagnosis code. However, 
J96.01 is supported by the medical record as a secondary diagnosis. The Plan denied your request. The Plan 
says that the billed diagnosis of J96.01 Acute Respiratory Failure with Hypoxia is not supported based on the 
documentation received. The Plan states that a diagnosis of J18.9 Pneumonia Unspecified Organism is the 
appropriate principal diagnosis code. As a result, a lower DRG was 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 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 diagnosis of J96.01 Acute Respiratory Failure 
with Hypoxia is supported by the medical record. Our physician reviewer found the records show that the 
patient was hypoxic and required supplemental oxygen and was documented to have pneumonia. These are 
sufficient to satisfy acute respiratory failure with hypoxia, so diagnosis code J96.01 is supported. The enrollee 
in this case was an 81-year-old patient with a diagnosis of metastatic colon cancer not on supplemental oxygen 
who presented to the with cough and shortness of breath with an oxygen saturation of 87-88% on room air and 
with tachypnea. He was treated with supplemental oxygen and respiratory treatments, antibiotics, and 
corticosteroids for bilateral pneumonia. He required supplemental oxygen throughout the hospital stay; he was 
discharged on 6 liters nasal canula oxygen continuously due to persistent hypoxemia and an oxygen saturation 
as low as 82% in the hospital. The criteria for diagnosis of acute respiratory failure with hypoxemia are met.   
 
We looked at this physician's review, the file, and Medicare rules. Based on this information, we decided the 
medical records do substantiate the DRG as billed. Therefore, we decided that the Plan has to pay for inpatient 
hospital services provided on June 24, 2022, to June 29, 2022, at the Diagnosis Related Group (DRG) 
originally billed.  
 
If the Plan does not agree with our decision, they can ask us to open a case again. We only open a case again 
if we believe there was a mistake or if there is new information to review. The Plan has to show us the mistake 
and/or send us the new information. This does not happen often. If we decide to open the case again, we will 
send you a letter.