Appeal type: Inpatient Hospital
Decision: Unfavorable

 
We decided that the Plan does not have to pay for inpatient hospital services provided on February 10, 2021, to 
February 27, 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 the 
medical records support the secondary diagnosis of J96.01 (acute respiratory failure with hypoxia). 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 record, 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 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 secondary diagnosis of J96.01 (acute 
respiratory failure with hypoxia) is not supported by the medical record. Our physician reviewer found the 
enrollee was a then, 70-year-old male with a history of esophageal carcinoma and lung cancer both in 
remission who was directly admitted to the hospital on February 10, 2021, from the radiation oncologists 
office after an oxygen saturation of 70 percent on room air was noted. Supplemental oxygen was initiated at 2 
liters with an increased oxygen saturation to 95-96 percent while in the oncologists office. At the time of 
admission, the oxygen saturation was 98-100 percent on 2 liters of oxygen. The arterial blood gas revealed a 
pH 7.414, pCO2 28.2 and pO2 155 on 3 liters of oxygen. The member was treated with intravenous steroids, 
breathing treatments and supplemental oxygen for an acute exacerbation of chronic obstructive pulmonary 
disease. 
 
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. 
 
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. 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. 
 
Acute hypercapnic respiratory failure develops over minutes to hours; therefore, pH is less than 7.3. Chronic 
respiratory failure develops over several days or longer, allowing time for renal compensation and an increase 
in bicarbonate concentration. Therefore, the pH usually is only slightly decreased. The distinction between 
acute and chronic hypoxemic respiratory failure cannot readily be made on the basis of arterial blood gases. 
The clinical markers of chronic hypoxemia, such as polycythemia or cor pulmonale, suggest a long-standing 
disorder.  
Arterial blood gases should be evaluated in all patients who are seriously ill or in whom respiratory failure is 
suspected. Chest radiography is essential. Echocardiography is not routine but is sometimes useful. Pulmonary 
functions tests (PFTs) may be helpful. Electrocardiography (ECG) should be performed to assess the possibility 
of a cardiovascular cause of respiratory failure; it also may detect dysrhythmias resulting from severe 
hypoxemia or acidosis. Right-sided heart catheterization is controversial. Hypoxemia is the major immediate 
threat to organ function. After the patients 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 persistent respiratory distress/increased work of breathing, 
persistent tachypnea, cyanosis, or persistent or progressive dyspnea over the member's baseline. The physician 
documented in the history and physical and progress notes "no acute distress." Oxygen saturations ranged from 
96 to 100 percent on 0-3 liters supplemental oxygen, throughout stay at the hospital and the member was able 
to be weaned down to room air by day 2 of admission. Listing of acute respiratory failure in the medical record 
was not supported by the documentation. Therefore, the documentation did not support the secondary diagnosis 
of J96.01 (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 February 10, 2021, to February 27, 2021, at the Diagnosis Related 
Group (DRG) originally billed.