Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Medicare Payments for DRG 014: 
Specific Cerebrovascular Disorders Except 
Transient Ischemic Attack 
JUNE GIBBS BROWN 
Inspector General 
JULY 1999 
OEI-03-99-00240  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Philadelphia office prepared this report under the direction of Robert A. Vito, Regional 
Inspector General, and Linda M. Ragone, Deputy Regional Inspector General.  Principal OEI 
staff included: 
REGION  HEADQUARTERS 
David Graf, Project Leader  Tricia Davis, Program Specialist 
To obtain copies of this report, please call the Philadelphia Regional Office at (800) 531-9562. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To identify hospitals with atypically high billing patterns for patients with specific 
cerebrovascular disorders except transient ischemic attacks (DRG 014). 
BACKGROUND 
Under Medicares prospective payment system, a hospitals payment amount is 
determined by taking a hospitals individual base payment rate and multiplying it by the 
weight of the diagnosis related group (DRG) assigned to the patient stay.  A DRGs 
weight is determined by the intensity of resources, on average, that are needed to treat that 
kind of case.  The higher the relative weight, the greater the reimbursement. 
Medicare reimbursed hospitals almost $1.9 billion for DRG 014 in 1996.  DRG 014 is 
coded when patients have principal diagnoses that include cerebrovascular accident and 
intracerebral hemorrhage.  This code can trigger a higher Medicare reimbursement 
compared to other codes where patients may exhibit similar symptoms.  DRG 015 
(Transient Ischemic Attack and Precerebral Occlusions) is one such code. 
The Health Care Financing Administration (HCFA) contracts with two Clinical Data 
Abstraction Centers to collect clinical data from hospital medical records.  The 
Abstraction Centers are responsible for validating a random sample of claims from all 
Medicare inpatient hospital discharges.  The results of the 1996 validation work showed 
that 4 percent of DRG 014 discharges sampled should have been coded to a lower-
weighted DRG.  The HCFA estimated that the total overpayment attributable to incorrect 
DRG 014 classifications was $11.9 million. 
For this inspection, we analyzed the Medicare Provider Analysis and Review file to 
identify hospitals with atypically high billings for DRG 014 in fiscal years 1993 to 1996. 
FINDINGS 
Thirty-five hospitals had atypically high Medicare billings for DRG 014 
A relatively small number of hospitals (35 of 4,883) had abnormally high DRG 014 
discharges compared to national figures.  These 35 hospitals were identified based on two 
criteria: (1) a large proportion of DRG 014 discharges to total discharges in 1996, 
1 
Medicare Payments for DRG 014  OEI-03-99-00240  and (2) a significant increase in the proportion of DRG 014 discharges to total discharges 
between 1993 and 1996. 
For the 35 hospitals, DRG 014 discharges increased 73 percent from 2,281 in 1993 to 
3,941 in 1996.  Nationally, DRG 014 discharges increased only 6 percent from 360,354 in 
1993 to 382,130 in 1996.  Between 1993 and 1996, the proportion of DRG 014 
discharges to all discharges for the 35 hospitals increased 57 percent from 3.55 percent to 
5.56 percent.  In contrast, the national proportion increased only 1 percent from 3.23 
percent in 1993 to 3.25 percent in 1996. 
The questionable billing of DRG 014 could have a financial impact on the 
Medicare program 
For the 35 hospitals, the number of DRG 014 discharges exceeded national norms by 
1,403 cases.  Earlier DRG validation work performed by the Office of Inspector General 
(OIG) found an average per discharge difference of $1,716 between DRG 014 and the 
DRG that should have been coded.  Based on this amount, we estimate that potential 
overpayments could be as high as $2.4 million or 14 percent of the $16.6 million paid to 
these hospitals for DRG 014 in 1996. 
The true upcoding error rate can only be determined by undertaking a detailed claims 
review at each hospital.  Therefore, the potential overpayments at each hospital would 
vary according to actual coding error rates. 
NEXT STEPS 
In several recent OIG reports, we recommended that HCFA perform routine monitoring 
and analysis of hospital billing and clinical data to proactively identify aberrant patterns of 
upcoding.  The HCFA agreed with the recommendation and outlined an extensive 
program to respond to it.  We offer the information in this report as insight into another 
possible problem DRG for HCFA to consider when refining its plan.  We recognize that 
only record reviews by trained professionals will establish if incorrect coding has occurred 
at the 35 hospitals identified.  Meanwhile, we have referred the 35 hospitals to our Office 
of Investigations.  We look forward to continuing collaboration with HCFA on this 
matter. 
2 
Medicare Payments for DRG 014  OEI-03-99-00240  T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Atypically high DRG 014 billings at 35 hospitals  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Potential financial impact  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

NEXT STEPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

APPENDICES

A: Clinical Data Abstraction Centers 1996 Validation Work for DRG 014  . . . . . . . . .  11

B: Office of Inspector Generals Validation Work for DRG 014 . . . . . . . . . . . . . . . . . . 12

3 
Medicare Payments for DRG 014  OEI-03-99-00240  I N T R O D U C T I O N  
PURPOSE 
To identify hospitals with atypically high billing patterns for patients with specific 
cerebrovascular disorders except transient ischemic attacks (DRG 014). 
BACKGROUND 
In 1996, Medicare reimbursed hospitals almost $1.9 billion for patients whose cases were 
categorized as DRG 014.  Principal diagnoses under DRG 014 include cerebrovascular 
accident and intracerebral hemorrhage.  Between 1993 and 1994, nine diagnosis codes 
were added and three diagnosis codes were deleted under DRG 014.  Currently, there are 
a total of 17 diagnosis codes that can lead to categorizing a case as DRG 014. 
Hospital Reimbursement for Diagnostic Related Groups 
Diagnostic related groups (DRGs) are categories used to determine Medicare 
reimbursement for patient stays under the prospective payment system established by 
Congress in 1983.  The actual Medicare payment amount is calculated by multiplying the 
individual hospitals base payment rate by the weight of the DRG.  The weight of a DRG 
is determined by the intensity of resources, on average, that are needed to treat that kind 
of case. 
When a patient is discharged, the physician summarizes information on a discharge face 
sheet.  This information includes principal diagnosis, additional diagnoses, and procedures 
performed during the stay.  Hospitals use codes from the International Classification of 
Diseases, Ninth Edition, Clinical Modification (ICD-9-CM) to report diagnosis and 
procedure information.  A coder, trained in medical classification, uses all this information 
to assign the most appropriate ICD-9-CM code.  A patients entire medical record is 
reviewed as part of the coding process. 
A hospital receives payment for treating a Medicare patient by preparing a claim and 
forwarding it to the Medicare fiscal intermediary.  The intermediary processes the claim 
through a series of automated screens.  These screens, called the Medicare Code Editor, 
identify cases that need further review before being classified into a DRG.  Cases are 
classified by the GROUPER software program into the appropriate DRG.  This program 
classifies each case into a DRG based on diagnosis, procedure code, and demographic 
information.  Hospital reimbursement is then calculated by multiplying the weight of the 
assigned DRG by the hospitals individual base payment rate. 
4 
Medicare Payments for DRG 014  OEI-03-99-00240  Reimbursement increases or decreases with the relative weight of the DRG.  Sometimes 
patients exhibit similar symptoms, but their cases are assigned to different DRGs.  A mis
classification of a DRG can result in an overpayment.  For example, the weight of DRG 
014 (Specific Cerebrovascular Disorders Except Transient Ischemic Attack) was 1.2065 in 
1996.  In the same year, the weight of DRG 015 (Transient Ischemic Attack and 
Precerebral Occlusions) was 0.7227.  If a case that should have been DRG 015 was 
incorrectly classified as DRG 014, the overpayment would be approximately $1,700 per 
case. 
The Health Care Financing Administrations DRG Validation Work 
The Health Care Financing Administration (HCFA) contracts with Medicare Peer Review 
organizations (PROs) to ensure that care provided to Medicare patients is reasonable, 
necessary, and provided in the most appropriate setting.  The PROs are required to 
contract out DRG validation efforts to two Clinical Data Abstraction Centers.  The 
Abstraction Centers validation efforts provide HCFA with an overall assessment of DRG 
coding and identifies problematic DRGs. 
The 1996 validation effort found that 4 percent of the sample DRG 014 cases were 
improperly coded.  The sample consisted of 20,152 claims from all Medicare inpatient 
hospital discharges.  There were 682 sample discharges for patients with a diagnosis of 
specific cerebrovascular disorder, and 27 of 682 were improperly coded.  Twenty-four of 
the 682 improperly coded cases resulted in overpayments to hospitals.  These 24 cases 
should have been coded to 10 less expensive DRG codes.  For example, 12 of the cases 
should have been coded as DRG 015.  A complete listing of the appropriate DRG codes 
can be found in Appendix A.  The total estimated overpayment attributable to DRG 014 
discharges in 1996 was $11,906,598. 
The Office of Inspector Generals DRG Validation Work 
In a study entitled, Using Software to Detect Upcoding of Hospitals Bills (OEI-01-97-
00010, August 1998), the Office of Inspector General (OIG) performed DRG validation 
work on a sample of 2,622 Medicare inpatient hospital discharges.  Of the 2,622 
discharges, 129 were for patients with a specific cerebrovascular vascular disorder.  The 
results of this validation showed that 9 percent of the sample DRG 014 discharges (12 of 
129) were improperly coded.  All of the erroneously coded discharges resulted in 
overpayments to the hospitals. 
The erroneously coded DRG 014 discharges should have been coded to seven less 
expensive DRGs.  Six of the erroneously coded discharges should have been coded to 
DRG 015.  A complete listing of the appropriate DRG codes can be found in Appendix B. 
5 
Medicare Payments for DRG 014  OEI-03-99-00240  Other Office of Inspector General DRG Work 
In a follow-up to the Office of Inspector General report just mentioned, the OIG sent an 
advisory report to HCFA entitled, Monitoring the Accuracy of Hospital Coding (OEI-01-
98-00420, January 21, 1999).  We pointed out that the DRG system was vulnerable to 
upcoding, particularly within certain DRGs.  We recommended that HCFA perform 
routine monitoring and analysis of hospital billing data and clinical data to identify aberrant 
patterns of upcoding. 
The OIG has also released three reports focusing on hospital coding patterns over time for 
DRGs 475, 416, and 296.  Medicare Payments for DRG 475: Respiratory System 
Diagnosis with Ventilator Support (OEI-03-98-00560, January 1999), Medicare 
Payments for Septicemia (OEI-03-98-00370, March 1999), and Medicare Payments for 
DRG 296: Nutritional and Miscellaneous Metabolic Disorders (OEI-03-98-00490, April 
1999) found a relatively small number of hospitals with atypically high billings for DRGs 
475, 416, and 296.  The methodology in these reports demonstrated a technique that 
could be used to focus HCFAs limited resources in identifying potential cases of DRG 
upcoding.  This report on specific cerebrovascular disorders provides another example of 
how this technique could be used. 
METHODOLOGY 
We extracted data from the Medicare Provider Analysis and Review (MedPAR) file for 
fiscal years 1993 to 1996.  The MedPAR file contains Medicare DRG discharge 
information for all hospitals.  For each hospital that had at least one DRG 014 discharge 
(4,883 hospitals), we determined the number of DRG 014 discharges and the total overall 
number of discharges by year. 
We calculated the proportion of DRG 014 discharges to total discharges for each hospital 
in 1996.  We found that DRG 014 discharges accounted for more than 4.5 percent of all 
discharges in just 18 percent of hospitals.  We then determined the proportion of DRG 
014 discharges to total discharges for 1993 and compared it to the proportion calculated 
for 1996.  Between 1993 and 1996, the proportion had increased by more than 40 percent 
in 12 percent of the hospitals. 
To identify hospitals with atypically high DRG 014 billing patterns, we selected hospitals 
with the following criteria: (1) DRG 014 discharges accounted for more than 4.5 percent 
of all discharges in 1996, and (2) the proportion of DRG 014 discharges to total 
discharges had increased by more than 40 percent between 1993 and 1996.  We excluded 
hospitals with less than 75 DRG 014 discharges in 1996, hospitals currently under 
investigation by the OIG, and hospitals in the State of Maryland (Maryland hospitals are 
not currently reimbursed under the Prospective Payment System). 
6 
Medicare Payments for DRG 014  OEI-03-99-00240  For the hospitals with atypical billing patterns, we determined a potential overpayment 
amount for 1996.  We first calculated a per discharge overpayment amount.  We based 
this calculation on the recent DRG validation work done by the OIG.  We determined the 
difference between the DRG 014 payment that was inappropriately billed and the payment 
for the DRG code that should have been billed.  We compared the number of DRG 014 
discharges for each of the hospitals identified against the national average of DRG 014 
discharges for all hospitals.  We then multiplied this difference by the estimated per 
discharge overpayment to determine the potential financial impact to the Medicare 
program. 
This inspection was conducted in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
7 
Medicare Payments for DRG 014  OEI-03-99-00240  F I N D I N G S  
Thirty-five hospitals had atypically high Medicare billings for 
DRG 014 
Compared to national figures, a relatively small number of hospitals had abnormally high 
discharges for patients with a specific cerebrovascular disorder.  For 35 hospitals, total 
DRG 014 discharges increased 73 percent from 2,281 in 1993 to 3,941 in 1996.  This 
represents an average increase of 20 percent a year.  Nationally, DRG 014 discharges 
increased only 6 percent from 360,354 in 1993 to 382,130 in 1996. 
Some of the 35 hospitals exhibited unusually high increases in DRG 014 discharges from 
1993 to 1996.  For instance, one hospitals DRG 014 discharges increased from 82 (out of 
2,793 total discharges) in 1993 to 191 (out of 2,726 total discharges) in 1994  a more 
than two-fold increase. 
The 35 hospitals also had atypically high proportions of DRG 014 discharges to total 
discharges as compared to the national average.  As illustrated in the chart below, for the 
35 hospitals, the proportion of DRG 014 discharges to total discharges increased from 
3.55 percent in 1993 to 5.56 percent in 1996.  For all hospitals, this same proportion 
increased slightly from 3.23 percent in 1993 to 3.25 percent in 1996. 
Proportion of DRG 014 Discharges to Total Discharges 
1993 to 1996 
6.50% 
6.00% 
5.50% 
5.00% 
4.50% 
4.00% 
3.50% 
3.00% 
2.50% 
2.00% 
1.50% 
1.00% 
0.50% 
0.00% 
1993  1994  1995  1996 
DRG 014 to Total  3.55%  4.46%  4.83%  5.56% 
(35 Hospitals) 
DRG 014 to Total  3.23%  3.12%  3.18%  3.25% 
(All Hospitals) 
Source: Medicare Provider Analysis and Review file 
8 
Medicare Payments for DRG 014  OEI-03-99-00240  The 35 hospitals were located in 17 States and Puerto Rico.  Fourteen of the hospitals 
were concentrated in just 2 States and Puerto Rico.  Six of these hospitals were in 
California and four hospitals were in Puerto Rico and Texas.  The remaining States had 
between one and two hospitals. 
The questionable billing of DRG 014 could have a financial 
impact on the Medicare program 
For the 35 hospitals, the number of discharges for patients with a specific cerebrovascular 
disorder diagnosis exceeded national norms by 1,403 cases.  Using previous OIG 
validation efforts, we calculated a difference of $1,716 between the DRG 014 payment 
that was inappropriately billed and the payment for the DRG code that should have been 
billed.  Therefore, we estimate that potential overpayments could be as high as $2.4 
million in 1996.  This $2.4 million represents 14 percent of the $16.6 million paid to these 
hospitals for DRG 014 in 1996. 
The true upcoding error rate can only be determined by undertaking a detailed claims 
review at each hospital.  Therefore, the potential overpayments at each hospital would 
vary depending on actual coding error rates. 
9 
Medicare Payments for DRG 014  OEI-03-99-00240  N E X T  S T E P S  
In several recent Office of Inspector General reports, we recommended that the Health Care 
Financing Administration (HCFA) perform routine monitoring and analysis of hospital billing and 
clinical data to proactively identify aberrant patterns of upcoding.  The HCFA agreed with the 
recommendation and outlined an extensive program to respond to it.  We offer the information in 
this report as insight into another possible problem DRG for HCFA to consider when refining its 
plan.  We recognize that only record reviews by trained professionals will establish if incorrect 
coding has occurred at the 35 hospitals identified.  Meanwhile, we have referred the 35 hospitals 
to our Office of Investigations.  We look forward to continuing collaboration with HCFA on this 
matter. 
10 
Medicare Payments for DRG 014  OEI-03-99-00240  APPENDIX A 
Clinical Data Abstraction Centers 1996 

Validation Work for DRG 014

This table shows the results of the 1996 Clinical Data Abstraction Centers validation 
effort for DRG 014 (Specific Cerebrovascular Disorders Except Transient Ischemic 
Attack).  Column one contains the appropriate DRGs for the 24 upcoded DRG 014 
discharges identified in the validation work. 
Number of  Percent of Total 
DRG  DRG  Times DRG  Times DRGs 
Codes  Weights  DRG Definitions 1  was Upcoded  were Upcoded 
015  0.7227  Transient Ischemic Attack & Precerebral  12  50% 
Occlusions 
012  0.9891  Degenerative Nervous System Disorders  2  8% 
024  0.9908  Seizure & Headache Age > 17 with  2  8% 
Complications and Comorbidities 
029  0.6217  Traumatic Stupor & Coma, Coma < 1 Hour  2  8% 
Age > 17 without Complications and 
Comorbidities 
127  1.0302  Heart Failure & Shock  1  4% 
138  0.8049  Cardiac Arrhythmia & Conduction Disorders  1  4% 
with Complications and Comorbidities 
180  0.9240  G.I. Obstruction with Complications and  1  4% 
Comorbidities 
296  0.9166  Nutritional and Miscellaneous Metabolic  1  4% 
Disorders Age > 17 with Complications and 
Comorbidities 
321  0.6104  Kidney & Urinary Tract Infections Age > 17  1  4% 
without Complications and Comorbidities 
463  0.7416  Signs & Symptoms with Complications and  1  4% 
Comorbidities 
24  98% 2 
Source: Clinical Data Abstraction Centers Data 
1	 These definitions were taken from the Diagnosis Related Groups Definitions Manual, version 15.0, as compiled 
by the company, 3M Health Information Systems. 
2  The total for this column does not equal 100 percent due to rounding. 
11 
Medicare Payments for DRG 014  OEI-03-99-00240  APPENDIX B 
Office of Inspector Generals

Validation Work for DRG 014

This table shows the results of the Office of Inspector Generals (OIG) validation work for DRG 
014 (Specific Cerebrovascular Disorders Except Transient Ischemic Attack).  Column one 
contains the appropriate DRGs for the 12 upcoded DRG 014 discharges found in the validation 
work. 
Number of  Percent of Total 
DRG  DRG  times DRG  Times DRGs were 
Codes  Weights  DRG Definitions 1  was Upcoded  upcoded 
015  0.7227  Transient Ischemic Attack & Precerebral  6  50% 
Occlusions 
024  0.9908  Seizure & Headache Age > 17 with  1  8% 
Complications and Comorbidities 
065  0.5162  Dysequilibrium  1  8% 
138  0.8049  Cardiac Arrhythmia & Conduction Disorders  1  8% 
with Complications and Comorbidities 
139  0.4945  Cardiac Arrhythmia & Conduction Disorders  1  8% 
without Complications and Comorbidities 
320  0.9320  Kidney & Urinary Tract Infections Age > 17  1  8% 
with Complications and Comorbidities 
429  0.9537  Organic Disturbances & Mental Retardation  1  8% 
12  98% 2 
Source: OIG, Office of Evaluation and Inspections Data 
1	 These definitions were taken from the Diagnosis Related Groups Definitions Manual, version 15.0, as compiled 
by the company, 3M Health Information Systems. 
2  The total for this column does not equal 100 percent due to rounding. 
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Medicare Payments for DRG 014  OEI-03-99-00240