'& 
DRG 416: 
SEPTICEMIA 
V'c's. 
'i 
"""'JQ 
. OFFICE 
OF INSPECTOR GENERAL 
OFFICE OF ANALYSIS AND INSPECTIONS 
AUGUST 1989  Ofice of Inspector General 
The mission of the Offce of Inspector Genera (OIG) is to promote the effciency, effective
ness, and integrty of progrs in the United States Deparent of Health and Human Ser
vices (HS). 
It does this by d-:yeloping methods to detet and prevent fraud
, waste, and
abuse. Created by statute in 1976, the Inspetor General keeps both the 
Secreta and the Con
gress fully and curently informed about programs or management 
problems and recommnds
corrtive 
action. The OIG performs its mission by conducting audits, investigations, and in
spections with approximately 1 300 sta strategically 
located around the countr. 
Ofice of Analysis and Inspections 
This report is prouced by the Offce 
of Analysis and Inspections (OAI), one of the the
major offces within the OIG. The other two are the Offce of Audit and the 
Office of Inves
tigations. The OAI conducts inspections which ar 
determe progr  , tyically, short-term studies designed to
effectiveness, effciency, and vulnerability to fraud or abuse. 
Entitled "DRG 416: Septicemia,
" this inspetion was conducted to analyze the 
charcteritics
of discharges paid as DRG 416. The report was prepared by BOTEC Analysis of Cabridge 
MA under contrt HHS-l 00-88-00 19 and the Office of Analysis and Inspetions 
Branch. The following people paricipated in this project.  , Health Car
David Stone, M.  , BOTEC Analysis 
Marcia Meyers, M.  A., BOTEC Analysis 
Mark Kleiman, Ph.  , BOTEC Analysis 
Jeremy Schutte, BOTEC Analysis 
Fiona Le, M.Ed., BOTEC Analysis 
David Hsia, J.  , M.  , M.  , Health Care Branch 
Mark Krshat, M. A., Health Cae Brach  DRG 416: SEPTICEMIA 
RICHARD P. KUSSEROW 
INSPECTOR GENERAL 
OAI. 12-81180 ; 
AUGUST 1989  Contract Information

Contractor

Project Officer 
BOTECS Atnratly
 sis Corpo;ation
 David Hsia, J.  , M.  , M.P.H.

36 JFK  Health Car Brach

Cabridge, MA02l38  Office of Inspetor General

330 Independence Ave., SW 
Washington, D.C. 20201 
Contract 
HHS-l00-88-0019  EXECUTIVE SUMMARY 
BACKGROUND 
Septicemia is a bacterial infection of the bloo. Pathologically, the microorganisms multiply 
briskly in the rich medum, secrete toxins, and rapidly overwhelm the patient's defenses. 
Gram negative organisms pose parcular mecal dagers. The prolonged, complex hospita 
course cares a high relative weight. The National DRG Validation Study suggested a high 
rate of overpayments for diagnosis related group (DRG) 416. This 
inspetion fuher quan
tifies the initial work. 
FINDINGS 
Discharges biled as DRG 416 have a 40.5 percent rate of actually grouping to a 
different DRG. This rate significantly excee the 20.8 percent for all DRGS. 
The hospital overpaid itself in 91.9 percent of codng errors. This proporton
significantly excee the 59. 2 percent for all DRGs. 
These mis-assignments project to $69 millon in overpayments anualy. 
One-hal of the incorrtly paid discharges in this sample should have ben 
biled to an alternative DRG within Major Diagnostic Category (MDC) 11 
uriar 
(kdney and  tract) or MDC 18 (infectious disease). Parcularly common 
errrs involved mis-assigning discharges gruping to fever of unkown origin 
uriar 
(DRG 419) or  tract infection, site not speified (DRG 320). 
Patients reeived por qualty of care in 15.3 percent of hospitaizations. This 
rate signifcantly exceeds the 5.5 percent for all DRGs. 
RECOMMENDATIONS 
Ca 
The Health  Financing Admnistrtion (HCFA) should diect the per
review organizations (PROs) to review prospectively all DRG 416 discharges 
for both codg 
accuracy and poor quality car. This action would reover $69 . 
milion annually.  The I:CFA should diect the PROs to 
educate physicians and codrs about the 
proper assignment of DRG 416, and about method' nf uistinguishing septicemia 
from fever of unknown origin and uriar tract infection , site not speified.  .. .. . ... 
TABLE OF CONTENTS
EXECUTIVE SUMMARY.  . . . 0 0 . . . 0 . . . . 0 . . . . . . . . . . . . . . . . . . . . . . . 0 . . 0 . . .  --i-
INTRODUCTION.  . . . . 0 . . . . . . . . . . . 0 . . . . . 0 . . . . . . . . 0 . . . 
. . . . . 0 . . 0 0 . . . . . 
Background. . . 
0 . . . . . 0 . . . 0 . . 0 0 . . . . . . . . . . . . . . . 0 . . 0 . 
PPS vulnerabilities. . .  . . . . . . 0 . . 0 . . 0 0 . . 0 .
0 . . . . . . . 0 . . . . . . . 0 . . . . . . . . . . . . . . . 0 . .
0 . . . . . . 0 . . . . 
PPS clais proessing. 
. . . 0 . . . 0 . . 0 . . . 0 . . . . . . . . . 0 . . 0 . 0 . . . 0 .
0 0 . . . 0 0 . . 0 . 
DRG 416 . . . . . . . . 
0 . . . . . . . . . . . . . . . 0 0 . . . . . . 0 . . . . . . . . . .
0 . 0 0 . . . . . . 0 . . . . 
Methodology. . . 
0 0 0 . . 0 . . . 0 . ; . 0 . . 0 0 . . 0 0 . . 0 . 0 . 0 0 . . . . .
0 . . 0 0 . 0 . . . 0 0 . . . 0 . 
0....... 
FINDINGS  0 0 . . . 0 . . . . . . 0 . . 0 . . . 0 . . . . . . 0 . . 0 . . . . . 
0 . 0 . . . 0 . . . . . . 
Sample charcteristics. 0 
. . . 0 0 . 0 0 . . 0 . . . . 0 . . . 0 . . 0 0 . 0 0 . . 0 . . . . . 
. . . 0 0 0 . . 0 . . 
DRG assignment 
errrs. 0 
. . . . 0 0 . . 0 . . . 0 . . 0 0 . . 0 . . . 0 . . 0 . . . 0 . . 0 .
Dirtion of errrs .  . 0 0 . 0 0 . . 0 .
0....... 0 0.. 0....... 0...... 0.. 0... 0..... 0... 0..... 
Deparent makng errrs. 
0 . . . 0 0 . . 0 . . . 0 . . . . . . . . . . 0 . . 0 . . 0 . . . . . 
ReasonsforDRG4l6assignmenterrrs 0...  . . . . 0 . . 0 .
0....... o. 0... 0.. o. 0 0.. 0 0.. o.
Financial effects. . . . . 
0 . . . . 0 . . . 0 . . . . . . 0 . . 0 . . . 0 0 . . . . 0 . . . 0 . 
Corrt  . 0 . . 0 0 . 0 0 . . 0
DRG assignments. . . 
0 . . . 0 . . 0 0 . . . . . . . . . 0 . . 0 . . . . . . 0 . . 0 . . . 
Clinical review results. 0  . . . 0 . 0 .
. . 0 . . . . 0 . . 0 . . 0 0 . . . . . . . . . 0 . . 0 . . 0 . . 0 . 
. 0 . . 0 . . . . . . 
RECOMMENDATIONS.  . . 0 .. 0 . .. .. 0 0 .. . . 0 . .. .. . 0 . . .. 0 . . 0 .. .. 
Appendix A-I: DRG 416 discharges frm al PPS hospitals.. 
0 . o. . 0.. o. 0 
..... 0 0 . 0 . A-
Appendix A-2: DRG 416 sampling frame 
0.. 0 0 0 . o. 0 o. 0 o. ... '" o. 0 0 . . .. 0 o. 0.. 0 . A-
AppendixA-3: DRG416hospitademogrphy . 0... 0.. o. 0.0.0. o. 
0 o. 0.. o. 0 o. 0.. o 
Appendix A-4: DRG 416 hospita demogrphy comparson o. 
0 . . 0 . 0 0 . 0 . 0 . . . . . 0 . . 0 . 
DRG 416 patient demography. 
Appendix  S: 
-A 0 . . 0 . 0 . . . . 0 . . 0 . 0 0 . 0 0 0 . . 0 0 . 0 . . 0 . . 0
Appendix A-6: DRG 416 patient demography comparson. . 
0 . 0 0 . 0 . 0 0 . 0 . 0 0 . . . . 0 . . 0 A-
Appendix B-1: DRG 416 assignment errors. 
. 0 .. . . . . . . . 0 . . . . . . .. B-
... .. .. . ... . .. 0 
Appendix B.2: DRG 416 assignment errrs comparson. 
0 .. o. . . . . . 0 .. . . 0 . . 0 0 0 . . o. B-
Appendix B-3: DRG 416 assignment 
errrs by patient demography.. . 
0 . 0 0 0 o. 0 . . . . . . B-
l: 
Appendix C- DRG 416 diection of error 0.. 0 .. . . . .. .. .. . . . . . 
. .. .. .. ... 0 . . . . . C-
Appendix C-2: DRG 416 diection of error comparson 
0... o. o. o. . . . . o. . . . 0 . 0 . . . 0 C- ............................. .
... ...  ... .....   ... ..  .. ..  ..  ..  ... ......   ....  ....  ..  ..  
. .. . ..  ..  ..  .. ... . ...  .. . .... . ...   ..  .. 
Appendix C-3: DRG 416 diection of error by patient demoV":,"
y ................. C-
l: 
Appendix D- DRG 416 hospita deparment makg error. . . 
. . . . . . . . . . . . . . . . . . . . D-
Appendix D.2: DRG 416 hospita deparment makg error comparson. . . . . . . . . . . . . D-
Appendix D-3: DRG 416 hospita deparent makg  demogrphy. . . 
error by patient  . D-
l: 
Appendix E.  DRG 416 reasons for errors 
....................... '"'''''''''' E-
Appendix E-2: DRG 416 reasons for errors by hospita demography. 
. .. ... . E-

Appendix E-3: DRG 416 reasons for errors comparson. . . . . 
. . . . . . . . . . . . . . . . . . . . . E-
Appendix E-4: DRG 416 reasons for errors by patient demography. . . . . . . . . . . . . . . . . E-
Appendix F-l: DRG 416 corrte relative weights. 
. . . . .. F-
AppendixF-2: DRG416corrtedreimburement 
.............................. F-
Appendix F-3: DRG 416 estimate cost of errrs by 
year. .. . . . . . . . . . . . . . . . . . . . . . . F-
AppendixG-l: Corrt MDCs forDRG416 errors 
Appendix G-2: Corrt DRGs for DRG 416 errrs. . ... ... .. .. . 
.. .. G-
l: 
Appendix H- DRG 416 clinical review.. . .. .. . . .. . . 
. .. ... H-
Appendix H-2: DRG 416 clinical review comparson. 
.. .. ... H- INTRODUCTION

Background 
On October 1, 1983 , the Health Car Financing Admistration (HCFA) began implementing a
new system of payment for inpatient hospital servces under the 
Medcar 
program. The new
prospetive payment system (PPS) replaced the cost-
base reimbursement system. Congrss
mandated this change becau e of rapid growt in health care 
costs, parcularly inpatient ex
penses under Medcare. 
Under PPS, hospitals reeived a pre-established payment for each discharge
, base upon the
diagnosis related group (DRG) to which the 
dischare is assigned. The PPS classified dischar
ges into cliically coherent grups which used 
similar amounts of hospita resources
, based on
varables such as diagnosis; evaluation and 
tratment proedurs; and patient age, sex, and dis
cbarge status. Each of the 475 DRGs had an associate relative weight
, which represented the
average cost for hospital care provided to patients with diagnoses 
gruping to that DRG as a
proporton of the cost of the average patient. The hospita received this payment
, independent
of the actual 
lengt of hospitaization or cost of tratment for the individual patient. With cer
tan exceptions, the hospita retaned any surlus 
frm patients consumig less than the ex
peted amount of resources
, and suffere losses on those patients consuming more. 
The shift from cost-based, retrospetive reimbursement to prospetive 
paymnt constitute
one of the most dramtic changes in heath care reimbursement since 
the cration of Medcare.
A fixed paymnt per discharge induced hospitals to implement 
economies and reuce unneces
sar servces. The tota payments to the hospitas provide the sam 
fiancial resources for 
patient car. In effect
, PPS reversed the financial incentives for hospitas. 
Where the cost-
reimbursement system rewared longer hospita stays and 
more costly tratments, PPS
rewared earlier dischares and less 
costly procedures. 
PPS vulnerabilties 
The advent of PPS create new 
ti revenues from M
 edcar patieopnptosr. tTnoit pireos tefcotr  thmaen iinptuelgarttiyo no fo rP P"Sg aamndn g" to incre hospi-
maitan quality of
car Congrss established the peer review organizations (PROs) to monitor hospita activities. 
The Offce of the Inspector General (OIG) 
conducte the National DRG Validation 
Study to
surey the genera accuracy of DRG assignment and quality of 
car performed by hospitals
under PPS. Its examation of over 7,
00 medcal reord established that assignment errrs
resulte in $300 milion in overpaymnts to hospitas 
and that the majority of overpaymnts
could be trced to assignment errrs afecting a small number 
of DRGs. This report is one in .
a series examing assignment accuracy of one of the DRGs identified as having the highest 
impact on overpayments under PPS and the gratest 
potential for cost recovery.  PPS gaming taes two principal forms: optimization 
"rod creep. "Optimization" strtegies ad-
here to codng rules, but maximize hospita reimbur'''lI",nts by selecting the 
most expensive
among viable alternative principal diagnoses or adding more secondar diagnoses. The PPS 
permts optimization , which flows frm the basic incentive 
strctue of the PPS system. 
DRG crp" results from codg practices which do not conform to codng rules. 
Sources of
DRG crp include: 
Misspecijcation:  The attending physician wrtes an incorrt principal diagnosis
(defined by the Uniform Hospita Discharge Data Set (UDS) 
as " that condition
established after study to be chiefly responsible for occasioning the 
adssion of the
patient to the hospita for care ), seconda diagnoses, or proedures on the attstation
sheet. 
The hospita assigns 
Miscollng:  incorrt numeric codes to diseases or proedures 
correctly atteste to by the attending physician. 
The hospita substitutes a seonda 
Resequencing:  diagnosis for the 
corrct principal
diagnosis. 
Auditig and review practices seek to curail crep by identifying discharges in which codg
rules are misapplied or ignore. 
Claims processing 
Under PPS, the hospita files a 
clai for Medcare reimburment upon diScharging the
beneficiar. At the time of discharge, the attnding physician attests to the principal diagnosis
which caused the patient s admssion to the hospita, seconda  procurs
diagnoses, and 
(diagnostic and therapeutic) 
provide The hospita translates the 
nartive diagnoses of the
physician s attestation statement into numeric 
cods bas on 
the International Classification
of Dis  ases, Ninth Revision, Clinical Modcation (ICD-
CM), and prepars a claim. Fiscal
intermedar (F 
organizations, workng under 
contrct with HCFA, enter 
into the GROUPER computer progr  hospita' s codes
which assigns the appropriate DRG for reimbursement 
Hospita reimbursement is calculate by multiplying the "
relative weight" of each DRG
category by a stadaze amunt, as moded by certn hospita-speific 
factors. The rela
tive weight of each DRG vares above or below the mean relative weight for all DRGs (ap
00) 
proximtely 1. accordng to the average amount of hospita 
resoures use by patients in
that diagnostic group. The higher the relative weight
, the greater the reimbursement. Mis-as
signment of the ICD- CM categories, or errneous assignment or sequencing of pati 
noses, can thus have significant financial implications.  nt diag" '" 
.,..  . .
'" /
-..-.
~-~-: ~-;~- ~;-~~ - ~--~- ~--~- ~--:-:-_-:-: _- ---  -- -- -- ----  .-.;-  .--.-----;-- -:- ;-- -.--,- -,-- =--  --:;--::-- -;---;-:;  - -- --;---:-  -,;--:-: ;-:- :--:  ,.-- ~_-- --~. --~. --: ~- :--.~_----- ---:-_ -  ---- ---;---: --_----.--  .-..-..-.(-)-..-....
DRG 416 
This study examines erroneous assignment and gaming in a single DRG: 416, "
septicemia
age;: = 18. " In septicemia or "bloo poisoning," bacteria infect the bloostream. 
A varety
of pathogens can invade the bloo. They can enter thugh skin wounds, gastrintestinal "
trct, intrvenous catheters, intrvenous 
drg abuse, or other 
ports. The microorganisms
reprouce rapidly in the rich cultu medum. Most septicemias car a 
grave prognosis.
DRG 416 does not include bloo 
infections that derive from anatomic defects of the hear val
ves (endocarditis: DRGs 135-7) or vessel walls (thombophlebitis: DRGs 130 and 131). 
Relative Weight 
8 - n - -. n n hn - -. n - -. m-m - n n - ._  - n  Diecherge. (10 K) 
Chrges ($100 M) 
6 - -
Paymnt ($100 M) 
4 - -
Men p-"ay-m4e.-n.t. (.$ 1 K)
2 - -
1964  1985  1986  1997 
Rsesl Year 
Figure 1: DRG 416 -- Septicemia 
The invadg bacteria may seete toxins that cause the clinical symptoms of septicemia:
fever, chis, skin eruptions, and gastrintestinal abnormalities. Diagnosis depends upon multi
ple bloo cultues, but these tests may repeatedy fail to identify a causal organism. Therapy 
involves fluid support and parentera antibiotics. Use of steroids remans controversial. Com
mon complications include metastatic infection to the joints, 
bran, and abscesses; and septic
shock. 
A varety of other diseass have similar 
symptoms. In parcular, uncontrolled 
urnar trct in
fections can induce systemic symptoms such as fever. However
, a urne analysis or cultu
will reliably identiy the location of the infection. A continuous fever for th 
weeks with
daly temperatus exceeng 10 
1 degrs 
Falnheit and which remans undiagnose 
week of intensive hospita workup comprises a " after 1
fever of unkown origi" orFUO. 
Septic
patients would not normally linger for so long a period (Le. 
, surve) without 
the underlying
cause delarng itself. Prper 
diagnostic testing should distinguish 
FUOs from septicemia.  urnar trt ineciions and-
The incidence ofDRG 416 and charges for it have risen steadly since the inception of PPS. 
Their rates of incrase outpace the genera escalation 
in PPS costs.  .:.:.:.:.:.:.:.:
Methodology 
This study use a strtified two-stage sampling design base on hospitals to select medcal 
reords for review. The fist stage tuhse  simple random sampling without replacement to
select up to 80 hospitas in each of  be-size strata: less than 100 be (small), 100 to
299 bes (medum), and 300 or more beds (large). The seond stage of the design 
employed
systematic radom sampling to select 25 DRG 416 bils frm each strta for Medicar 
dischar 
ges between October 1, 1984 and March 31  1985. 
"'00 bed. 
'0029 be.
30+ bes
DRG 416 All DRGs
Rgure 2: Sampling frame
The OIG contrted with the Health Data Institute (HI) of Lexingtn, Massachusett to
reabstrt the mecal reord. 
Upon reeipt; the contrctor "blinded" the ICD- CM codes
by covering them, and assigned an identification number to each  Accte
reord. An 
Record Techncian or Registere Record  cog
Admnistrtor proficient in ICD-
CM 
reviewed the 
enti reord to substatiate the principal diagnosis, other diagnoses, 
and proc
durs indicate by the attndig physician in the nartive attestation form. Any rerds .
which did not support the assigned DRG classification were 
referr to physicia reviewers. 
The physician reviewers designate the 
corrt Uniform Hospita Dischare Data Set pricipal
diagnosis, and 
adtional diagnoses and/or proedurs which were substatite by the patient
reord. The GROUPER computer progr proesse the rebstrcte ICD-9-CM cods to 
determne corrt DRGs. A full discussion of the methodology and fmdings of the 
contrctor
reord review is available in the fmal report of the National DRG Validation Study (available 
frm OIG Public Affai).

DRG 416 was chosen for this inspetion because of its high error rate and relative 
weight
(1.5343). The eIG contrte 
with BOTEC Analysis of Cabridge, MA to exame data for
DRG 416 in grater deta, to identify soures of coding errrs
, and to make reommendations
for reovery of overpaymnts.  ' ' ~~~
FINDINGS
Sample
In FY 1985, 65,237 of the 8.3 milion prospetive payment discharges (0.
8 percent) groupe
to DRG 416. The National DRG Valdation Study estimates that the majority came 
frm
medum size hospitas, with the remaider split evenly 
between the other strta. In the fist 
half of FY 1985, the 239 hospitas selected in stage one of the sample design (the sampling
fre) 
biled for 222 396 discharges of which 1,493 came frm DRG 416 (0.7 percent). The 
fist stage of the sample design therefore over-represents large hospitas. 
Ves  W",""'i
DRG 416: Urban 
r%t1Miff.ftlfWMi.4H
All DRGs: Urban 
UtitftrHW4Wtlt.&ttil
DRG 416: reschlng
 IitFftt.tnW.&!itflhWJ.*giifMtEifj.1Wt**ll
All DRGs: reschlng 
tf1mWIWi\WdtJ(4t1tUtftlf:WlJR_!1;z1tgflt%?1t\K4J
DRG 416: Protl  M.tf.l*WWR%f$t  1t?Jkf.?&jjt4&a,li11M$fM.4W1Whf.tfh\i:
All DRGs: Protl  tflWi
t*r1Jn%li% jfWPN*Jf:g4tBf.f$iftMffwrfgJt:Wtg*.* 
Pornt  100
Rgure 3: Hospital demography 
Addtionally, the two-stage sample design permts caculation 
of separte results for Medcar
beneficiares (the probabilty of something happenig to a person) and hospitas (the 
od of
parcul 
an event at a 
hospita). The appendices, table, and char therefor repo 
individual 
totas weighte by both discharges and hospita. 
The sample design intentionally distrbutes its dischares evenly between smal
, medum, and
large hospitas (Ch-squar 0.
03, df I, P 0: 0.75). Like the National DRG Validation Study, the
majority of DRG 416 discharges came from urban (Mantel-
Haenszel chi-square 0.
df I , P 0: 0.9), nonteaching (Matel-Haenszel chi-squar 0.08, df I, P 0: 0.75), and nonprofit
(Mantel-Haenszel chi-squar 0.  , df I, P 0: 0.9) hospitas. 
Weighted by dischare, patients assigned DRG 416 
averaged 79. 3 year of age, 
alost 6 year 
older than National DRG Validation Study dischares (T-test 2.  , df 72, Po: 0.05). The
former saple s higher proporton of dIales did not attn 
statistical signifcance (Mantel-
Haenszel chi-
squar 0.57, df I, Po: 0.5). Dischares biled as DRG 416 
had an average lengt

of stay 2.3 days longer than National DRG Validation Study discharges. Payment for patients 
discharged as DRG 416 averaged nearly $1
200 more per patient than the average report in  --------------------------------------------------- --------------------------------------------------
the National DRG Validation Study. Discharges adgned to DRG 416 died nearly five times 
as often as the average for all DRGs as reported  i::  :.':: lIational DRG Validation Study. The 
high mortity rate 
reflects the grve prognosis assocIate with septicemia. 
DRG416  f"""%"'f  : I1D'RG 
C 30
"100  10029  30+
Bed size
Figure 4: Assignment errrs 
Coding mis-assignments 
Overal, 40.5 percent of discharges paid as DRG 416 changed to a 
err  dierent DRG after
reabstrtion. Th 
rate of  is more than twce that report in 
the National DRG Valida 
tion Study (Mtel-
Hanszel chi-squar r2u0.,5 4, df I, P -= 0.(01). Weighte by discharge, DRG
416 errrs ocur mor fruently in  nonteachig, and nonprofit hospitas. When 
compar to the National DRO Valdation Study, assignment errrs ocur 
more fruently
in al hospita tys  err
except for-profit hospitas. In each be size categor, the rate of 
DRG 416 roughly doubles that in eah category for the National DRG Valdation Study. 
Within the sample, errrs were mo liely in smal and large hospitas than in mid-size
hospitas (Chi-squar 0.49, df 2, P 
-= 0. 5). 
Patient demogrphics, weighte by 
discharge, indicate that DRO 416 discharges assigned in 
corrtly were older, more likely male, and enjoyed a lower mortity rate 
than discharges as-
signed corrtly. The lattr fmding 
contrts the grve prognosis of septicemi with the better
outcomes expeted for less serious 
diseases miscoded into DRG 416. Lengt of stay and
average reimburement did not differ significantly between 
corrtly and incorrtly assigned
discharges.
Direction of errors 
Weighte by dischare, 91.9 
percent of errrs in DRG 416 resulted in overpayments to the
hospitas. This rate significantly excee the 59.7 percent overpayments in the National DRG
Valdation Study (Matel-
Hanszel chi-squar 18.9, df  P -= 0.(01). Examned by hospita  ".....  
... 
.. 
.......  ....................   .......  ..... ."..'.  ..............    
------------------------.-...-. ...--.....- .  --::---..-,;-- .----":--,.--"-:.-". -"-:---, ..:-- -.--,--.----.:---;---.::----.:--:--.-:--;- :---------------------------------------------------------------.--.."-.--..-,-.-.-.-.-.-. --- -----------------------------:-:-:----:--:--:---:-:---:--:--:---::----:--:- ------------------------------------------- ---..-.:. ..-:--.:.-... -  -----------------------------.--.----.---.---.---.---.------------------------
demogrphy, in all categories but for-profit institutions, the rate of overpayment measur
higher for DRG 416 dischares than in the National DRG Valdation Study. The 91.9 percent 
overpaymnt rate for DRG 416 when combined with the 40.5 
pertchnt  etrriosr r ate for DRG 416
yielde an effective overpayment rate of 36.9 percent, more than  that of the Na- 
tional DRG Validation Study (11. percent). The proporton of overpayments for DRG 416 ~ 
was highest among large hospitas (100.0 percent) and lowest among mid-siz hospitas
(778 percent) (Chi-squar 1.2, df2, P.. 0.75). 
DRG 416 underpeld 
""0""Iii -n"---.-"-.--"--'-.-n- ---- - 1,1 -------- DRG4160verpaid 
no..  n...... 
.m.. --------- --- m.".m"."...n... --- ItN;$1  NDRGVS underpaid
..m.  .h'''m... .
:::. _h :::  _n_n_n :::- n- n--_n_- :::. ---___nnn 
f:-:'O:':':':'O:'1NDRGVS overpaid 
m. ---------
:f -
"'100  10029  30+ 
Bed siz 
Figure 5: Direcion of errors 
Errrs resultig in overpayments to hospitas (discharge weighted) occur at 
the highest rate
in urban (96.2 percent), nontehing (88.
5 percnt), and nonprofit (93. 2 pe'Xnt) hospitas.
The restrcte size of 
the underpayment subsample lints comparon of patient
demogrphics. 
Department responsible for error 
The vast majority (93.2 percnt) of errrs in DRG 
co 
 416 discharges occur when the medca
rerd deparent incorrtly  the dischare as DRG 416 and the hospita 
biled it ac
cordigly. Only two of 30 errrs 
resulted when medcal reord deparnts corrtly

selecte a different diagnosis, but the hospita adnistrtion incorrtly biled 
it as DRG 416

anyway. Ths rate closely approximated 
the 91.2 percent of the National DRG Validation
Cog deparnt 
Study. 
errors cause the majority of errors in all sampling strata.  ----- ---------- ------------ ------ --- -- ------------------------ -------------- --:-:-:-:-::-:-:-::-:-:-:- ::---::-:-:-:-\-:--::-j-- --------------------------------------- -- ---------- --------------- ---- ------------------------------ ------------------ ---------
Misspocitcation 
MlscOlng 
Resuencing 
Otr 
DRG416  All DRGs 
Figure 6: Reasons for errors
Reasons for errors 
Mis-speification errrs by the attndig 
physician, in wrting down the wrng diagnosis or
procedur, cause 14 of the 30 assignment errrs in DRG 416. When 
examned using an ex 
clusive analysis (identifyng the fit error to occur chrnologicaly), physicians mis-sped
the pricipal diagnosis in 46.7 percnt of discharges. Reseuencing of the principal and 
da  secon 
diagnoses by the hospita accounte for one-third of the errors in the DRG 416 sample.
These propoons lagely parleled the 
results of the National DRO Valdation Study. 
Financial effects

Appendix F-l shows the averge and 
aggrgat change in relative weight for DRG 416 dis 
charges followig reabstrction. 
Mter reb3trction, the average relative weight for DRO 416
discharges changed 13.2 percent (discharge weighte) 
frm 1.5343 to 1.033. For the 73 dis 
charges in this sample, this aggrgate to a tota decas in 
relative weight of 16.
8630 (15.
percent unweighte). 
198  198  19B  1987  198  198  199
F1 
Year 
Figure 7: Projeced overpayments  Extrapolate to the 
enti Medcar population, if the net rate of overpayment remained con 
stant, mis-assignment of DRG 416 cause $38. 1 millon in overpayments during the study 
year. The projecte erroneous payments incras steadly to $69.9 miion annually. 
Correct DRGs 
DRG 416 falls into Major Diagnostic Category 
(MC) 18: infectious diseass. Appendix G-
reveals that the majority of discharges incorrectly assigned to DRG 416 came 
frm only two
MDCs. 
MDC 18: Infectious diseases 
MDC 11: Kidney and urnar trct 
disease 
Reviewers reassigned 26.7 percnt of the dichares to MDC 18 
(but to DRGs other than 416)
and 23.3 percent of the dischares to MDC 11. 
In adtion, five of the eight discharges reassigned to MDC 18 came 
frm DRG 419 (fever of
unkown origin) and five of the seven reassigned to MDC 11 came 
frm DRG 320 
(kdney
and urnar trct infections, age 70 and/or complicating conditions). Both of these DRGs 
have substatialy lower relative weights for 
the 
purse of reimburment (DRG 419:
8583, DRG 320: 0.8039). Within each of these two DRGs, al changes derive 
frm a 
ICD- CMcod. In DRG 419, all five discharges reassigned to ICD  single
cod 780.6 (pyrxi of
unkown origin). In DRG 
fection, site not  320, al five discharges rcesoisgn ed to ICD 599.0 (urnar trt in 
speifed). The vagueness of these  suggests inaduate diagnostic
workup, in adtion to physician misunderstading of the ICD-
CM taonomy. The
remander of incorrt DRG assignents spread amng eight MDCs. 
Clinical review 
In ths sample, patients assigned to DRG 416 exhibited no cass 
of unnecssar adssions. '
However, dichares paid as DRG 416 reorded 13 cases 
with quality of car problems.
Smal hospitas had the highest  th 
incidence of cases (25.0 percnt), totang alost 
the average number report in  times
the National DRG Validation Study. Only one cas 
tu 
occur.  of prema 
discharge  ------------------------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DRG416 
!"":iiH  All DRGs 
:W%iWWM,?1 
Unneeded admissions 
Poo quality care 
Premature discharges 
Figure 8: Clinical incidents  RECOMMENDATIONS
dit 
The HCFA should 
the PROs to review DRG 416 discharges for both Codng
accurcy and por quality car. 
dit 
The HCFA should 
the PROs to educate physicians and coders about the proper
assignment of DRG 416, and about methods of distinguishing septicemia from fever of
unkown origi and urnar tract infection 
, site not speifed. 
The HCFA reuested more 
informtion about the fIrst  agr
reommndation and 
seond reommendation. The OIG 
moded the draf  with the
of this inspetion to accommodte the
HCFA's comments and continues to believe that full implementation of its 
could save $69.  reommendations 
9 millon annually.  Appendix A-1: DRG 416 discharges from all PPS hospitals 
Fiscal Year  1984  1985  1986  1987 
Relative weight 5504  1 .  5708  6182 
Number of discharges
 605  273  374  85,929 
Total charges ($000)
 205 955  446,283  373,582  697 250 
Total reimbursement ($000)
 144 328  288,988 .  601 396  411 624 
Average reimbursement ($)

171  4,427  591  790 
Appendix A-2: DRG 416 sampling frame

Bed size 
",100  100-299  300+  Total
Medicre population 
184  033  16,056  65,273
Sampling frame  140  417  936  493
Sampled
Sa"1ling fraction (%) 
17.
Appendix A- demography
3: DRG  416 hospital 
Number
Bed size 
Weighted percentage 
(Percent) ",100  100-299  300+  Total  Sample  Discharge  Hospijal 
RUurbraaln  186 ((2755..   196( (3664..   22 2(9(81..   (60.  ((7246. .)  (48.
139. 
TNeoanctheiancghing 0(0.  7(28.  12 (50.  (26.  136.  (17.
24 (100)  18 (72.  12 (50. 
(74.  (63.  183.) 
prom
5 (20.  114.  114. 
Nonprofit 19 (79.  196.  23195.  (9(09.. 4)  (9(36..   (12.
187. 
Total
24 (100)  25 (100)  24(100)  (100)  (100)  (100) Appendix A-4: DRG 416 hospital demography 
comparison 
Percent  Bed size  rcenta 
hted 
distribuion  ",100  100-299  300+  Sample  Discharge  Hospital 
Urban  DRG 416  25.  64.  91.  60.  74.  48. 
NDRGVS  - 19.  . 70.  94.  62.  71.  48. 
Rural  DRG 416  75.  36.  39.  26.  51. 
NDRGVS  80.  29.  38.  28.  52. 
Teaching  DRG 416  28.  50.  26.  36.4  17. 
NDRGVS  18.  55.  25.  31.  16. 
Non- DRG 416  100.  72.  50.  74.  63.  83.
teaching  NDRGVS  97.  81.2  44.  74.  68.  83. 
Profit  DRG 416  20. 
12. 
NDRGVS  17. 
10. 
Nonprofit  DRG416  79.  96.  95.  90.  93.  87.
NDRGVS  90.  82.  97.  90.  90.  89. 
Appendix A-5: DRG 416 patient demography 
Bed size 
Weighted average
",100  100-299  300+  Sample Discarge 
Hospital 
Age  (years)  77.  77.  80.  78.  79.  77.
SLOexS ( (%da mysa)l e)  41.  44.  62.  49.  54.  45.
11. 
Payment ($)  3045  4636  4027  430  3732
Mortality (%)  33.  28.  29.  30.  29.  30.  ((%$))  
Appendix A- demography comparison 
6: DRG 416  !i':!1t 
Bed size  Weighted average 
0:00  1 QO,299  300+  Sample  Discharge  Hospttal 
Age  DRG 416  77.  77.  80.  78.  79.  778 
(years)  NDRGVS  ' 76.  74.  72.  74.  73.  74. 
Sex  DRG 416  41.  44.  62.  49.  54.  45.
(%ma/e)  NDRGVS  43.  45.  48.  45.  46.  44. 
LOS  DRG 416  11. 
(days)  NDRGVS 
Payment  DRG 416  3045  4384  4636  4027  430  3733 
NDRGVS  1849  2923  3807  2860  3115  2508 
Mortaltty  DRG 416  33.  28.  29.  30.  29.  30. 
NDRGVS  Appendix B-1: DRG 416 assignment errors 
Number  Bed size 
Weighted percentage 
(Rate)  ,,100  100-299  300+  Total  Sample  Discarge  Hospital 
Urban  2 (25.  8(50.  8(36.  (40.  (39.  (35.
Rural  9 (50.  1 (11.  21100.  (41.4)  (65.  (45. 
Teaching  3(42.  4133. 
136.  (39.  (39.
Nonteaching  11 (45.  6(33.  6(50.  (42.  (44.  (42. 
Profit 
2 (40.  0 (0.  0 (0.  (28.  (5.  (20.
Nonprofit 
9 (47.4)  9 (37.  10 (43.  (42.4)  (42.  (43. 
Total  11 (45.  9 (36.  10 (41.  (41.  (40.  (42. 
Appendix B-2: DRG 416 assignment errors comparison 
Rate 
Bed size 
Weighted percntage 
,,100  100-299  300+  Sample  Discharge  Hospital 
Urbn 
DRG 416  25.  50.  36.  40.  39.  35.
NDRGVS  22.  19.  16.  18.  17.  20. 
Rural  DRG 416  50.  11.  100.  41.  65.  45.
NDRGVS  23.  16.  22.  21.  20.  21. 
Teaching  DRG 416  42.  33.  36.  39.  39.
NDRGVS  20.  20.  15.  17.  17.  19. 
Non- DRG 416  45.  33.  50.  42.  44.  42.
teaching  NDRGVS  17.  17.  20.  19.  20. 
Profit  DRG 416  40. 
28.  20.
NDRGVS  23.  18.  18.  20.  19.  21. 
Nonprofit  DRG 416  47.  37.  43.  42.  42.  43.
NDRGVS  23.  18.4  16.  19.4  18.  20. 
Total  DRG 416  45.  36.  41.  41.  40.  42.
NDRGVS  23.  18.  16.  19.  18.  20.  ((%$))  
Appendix 8-3: DRG 416 assig:::::int errors by patient demography 
Bed size  Wei  hted avera 
",100  1 00-299  300+  Sample  Discharge  Hospijal 
Age  Correct  74.  75.  79.  76.  77.  75.
(years)  Incrrect  80.4  80.  82.  81.0  81.  80. 
Sex  Correct  23.  43.  64.  44.  52.  36.4
(%male)  Incrrect 
63.  44.  60.  56.  55.  56. 
LOS  Correct 
10. 
(days)  Incrrec 
15. 
10. 
Payment  Correct  2915  4267  4779  4025  4366  3650 
Incrrect  3200  4592  446  4029  4315  3849 
Mortalijy  Correc  23.  31.  35.  30.  32.  27. 
Incrrect  45.  22.  20.  30.  24.  33.  Appendix C-1: DRG 416 direction of error
Number of  Bed size 
Weighted percentage 
overpayments  ",100  100-299  300+  Total  Sample  Discarge  Hospnal 
(Percent of errors) 
Urban  2 (100.  7(87.  8(100)  (94.  (96. 
Rural  8(88.  0(0.  2(100)  195.
1'0  183.  167.  (61. 
Teaching 
Nonteaching  3 (100.  4(100)  (100.  (100.)  (100.
10 (90.  4 (66.  61100)  (87.  (88.  (84. 
Prom 
1 (50.  (50.) 
Nonprom  9 (100.  717.  10(100)  (92.  ((5903..   (5902.. 
Total  10 (90.  717.  10(100)  (90.  (91.  (88. 
C-2: DRG 416 direction of error com 
ndix  arison
Percent 
Bed size 
rcenta
overpaymnts  hted 
",100  100-299  300+  Sample  Discharge  Hospnal 
Urban  DRG 416  100.  87.  100.  94.  96.  95.
NDRGVS  53.  60.  57.  58.  57.  56. 
Rural  DRG 416  88.  100. 
83.  67.  61.
NDRGVS  66.  57.  65.  64.  63.  63. 
Teaching  DRG 416  100.  100.  100  100  100
NDRGVS  66.  59.  56.  57.  58.  62. 
tNeaocnh-ing  NDDRGRG 4V16S   6940..   5696..   15090. .  6817..   8598..   8614.. 
prom  DRG 416  50. 
50.  50.  50.
NDRGVS  68.  55.  63.  60.  61.  63. 
Nonprofit  DRG 416  100.  77.  100.  92.  93.  92.
NDRGVS  63.  60.  57.  60.  59.  61. 
Total  DRG 416  90.  778  100. 
90.  91.  88.
NDRGVS  64.  59.  57.  60.  59.  61.  ((%$))  
Appendix C-3: DRG 
demo 
416 direciion of error by patient 
Bed size 
Weighted avera 
",100  1 00-299  300+  Sample  Discharge  Hospijal 
Age  Overpay  80.  - 78.  82.  80.  80.  80.
(years)  Underpay  770  87.  84.  80.  81. 
Sex  Overpay  70.  42.  60.  59.  56.  59.
(%male)  Underpay 
50.  33.  15.  19.4 
LOS  Overpay 
11. 
(days)  Underpay 
31.  21.  10.  13. 
Payment  Overpay  3272  4693  446 
4071  4356  3919 
Underpay  2481  4238  3652  3024  3161 
Mortalny  Overpay  40.  26.  20.  28.  28.  32. 
Underpay  100 
50.  69.  61.3  Appendix 0-1: DRG 416 hospital department making error 
Coding depart-
Bed size
Weighted percentage

ment elTors  ",100  100-299  300+  Total  Sample  Discarge 
Hospijal 
(Percent of errrs) 
Urban  2(100.0),  8(100.)  7(87. 
Rural  8(88.  1(100.)  2(100.  (94.4)  (93.  (98.0)
(91.7)  (98.  (94. 
Teaching  0 (0.  3(100.) 
Nonteaching  10 (90.  6(100.  63(1 (0705.. 
 (85.  (72.4)  (44.
(95.  (98. 
194. 
Prom  1(50.
Nonprofit  9(100.  9(100.  (50.  (50.  150.
9 (90.  (96.4j  (94.  (98. 
Total  10 (90.  9(100.  9190. 
(93. 
193.  (93. 
B!!lance of errors made by hospijal biling department 
endix  0-2: DRG 416 hos  ital de  artment  makin  errr com  arison 
Percent of coing 
Bed size 
rcntage
department errrs  dOO  100-299  300+  'Sample  hDted isharge 
Hospijal 
Urban  NDDRRGG 4V16S   18090..   18080..   9807.. 5  8994..   8993..   8998.. 
Rural  NDDRRGG 4V16S   9848..   19050. .  19000..   9941..   9928..   9944.. 
Teaching  DRG 416 
NDRGVS  91.  19020..   8795..   9805..   9902..   9911.. 
tNeaocnh-ing  NDDRRGG 4V16S   9930..   19000..   19020..   9925..   9918..   9942.. 
Profij  DRG 416  50. 
NDRGVS  86.  92.4  81.  8590..   8550..   8570..  
Nonprofi  DRG 416  100. 
NDRGVS  94.  19000..   9900..   9926.. 4  9914..   9928.. 
Total(cid:1) NDDRRGG 4V16S   9930..   19000..   9900..   9913..   9913..   9923..  ((%$))  
Appendix 0-3: DRG 416 hospital department making error by patient 
graphy 
Bed size  Weighted averages 
",100  1 00-299  300+  Sample  Discharge  Hospijal 
Age  Coing 
. 80.  80.  82.  81.4  81.  81.
(years)  Biling  75.  76.  76.  76. 
Sex  Coing  70.  44.  66.  60.  60.  61.
(%male)  Billng 
LOS  Coing 
15.  10.  10.  10.
(days)  Billng 
Payment  Coing  3272  4592  4503  4092  4362  3897 
Billng  2481  3834  3158  3176  2798 
Mortalijy  Coding  40.  22.  22.  28.  24.  31. 
Billing  100.  50.  48.  76.  . Appendix E-1: DRG 416 reasons for errors 
Bed size 
",100  100-299  300+  Total  (Percent)
Mis-specification
Miscoding  146.
(13.
Resequencing 
(33.
Other 
(6.
Total
(100.)
2: 
Appendix E- DRG 416 reasons for errors b  hos  ital demo 
Mis-spcifiction  Miscing  Resequencng  Other  Total
Number of discharges (Percent distribution) 
",100 bes
4 (36.4)  1 (9.  5(45.  119. 
100-299 beds  5(55.  2122.  2122.  OIO.  11 (100.)

300+ bes(cid:1) 5(50.  1 (10.  3 (30.)  9 (100.
1 (10.  10 (100. 
Urban 8(44.  4122.  5(22. 
1 (5.  18 (100.
Rural  6(50. 
0 (0.  5 (41.  118.  12 (100. 
Teaching 
Nonteaching  4157.  2(28.  010.  1 (1.  00.
10 (43.  2 (8.  10 (43.  1 (4.  23 (100. 
Protn
0 (0.  0(0. 
1 (50. 
Nonprofit  1 (50.  2 (100.
14 (50. 
4 (14.  9 (32.  1 (3.  28 (100.j-
Total 
14 (46.  4(13. 
10 (33.  216.  30 (100.  Appendix E-3: DRG 416 reasons for errors comparison 
Percent distribuion 
Bed size 
Wei  rcenta 
hted 
",100  100-299  300+  Sample  Discharge  Hospijal 
Mis-speffication  DRG 416  36.  55.  50.  46.  49.  44.
NDRGVS  49.  44.  49.  48.  48.  48. 
MiSCing 
DRG 416  11.  20.  13.4  12.  11.
NDRGVS  10.4  14.  11.4  11.  12.  11.8 
Resequencing  DRG 416  45.  22.  30.  33.  29.  35.
NDRGVS  31.  24.  24.  27.  25.  28. 
Other  DRG 416 
11.  10.  10.  10.4 
NDRGVS  15.  14.  12.  14.  11. 
ndix E-4: DRG 416 reasons for errors b 
atient demo 
Mis-speffcation  Miscing  Resequencng 
Other 
Age (years) 
Sex (% male)  81.
 78.  82.  76. 
LOS (days)
 50.
 75.  70. 
12. 
Payment ($) 
Morta,my (%)  42080.
9
 42756. 5  33903. 9  35105. 8  Appendix F-1: DRG 416 corrected relative wei 
hts

Bed size 
Average
",100  100-299 
Avera  Total 
Paid 
5343  534 
1 . 5343  534
Correct 
Diference  2482  3963'  2614  3033
(Rate)  2861  1380  2729  2310
(18. 
19.  (17.  (13.2)" 
Total

Paid

Correct
 36.8232  38.3575  36.8232  112.0039
Diferel)e
 29.9568  34.9075  30.2736  95.1409
6864  4500  5496  16.8630 
. Discharge weighted. 
Appendix F-2: DRG 416 corrected reimbursment

Bed size 
Average
Avera  ",100  100-299  300+  Total 
Paid 
Correc  3853  4221  442  4186
3135  381 
Diference  3685  356
719 
(Rate)  380  797  630
(18. 
(9.  (17. 
3.4)" 
Total 
Paid 
DCiofrerreecn ce  70,488111   105 512804   107 554  231095  859506
(Rate)  671  336  36,222
(23.  (26.  (33. 
127. 
. Discharge weighted.  ., 
Appendix F-
, i)RG 416 projected annual 
cost of errors 
Fiscal Year  Reimbursement 
Overpayment
($ millon) 
 ($ milion) 

1984 
144.
19.
1985 
289.
38.
1986 
601.
79.
1987 
411.
1988 est.  44. 54.
1989 est. 59.
523.
1990 est. 69.
597. 69.
Overpayment is calculated as 13.
2 percent of reimbursement.
Estimates based on linear regression.  , .
":: 
Correct MDCs for DRG 416 errors 
AppendiX' 
Bed size
"JOO  1 00-299  300+ 
Total  (percent)
01:  Nervous System 
04:  Respiratory 
(6.
05:  Circlatory 
(13.
06:  Digestive 
(6.
08:  Musculoskeletal
13.
09:(cid:1) Skin and Breast 
(3.
10:  Endrine and 
Metabolic  (6.
11:  Kidney and Urinary Tract 
(6.
18:  Infectious Diseases 
(23.
21:  Injury, Poisoning & DlUgs 
(26. 
(3.
Total
(300.)
ndix  G-2: Corrct DRGs for DRG 416 errors 
Number of discharges 
Bed size 
,,100  100,299 
300+ 
Total  (Percent) 
Respiratory infecion 
Simple pneumonia 
296 Nutrnional  16. 
(6. 
320 Urinary 
tract infection 
16.
331 Other 
kidney diSOrders 
418 
Postoperative 
(6.
419 Fever' of unknwn oriin  7) 
16.
Other
(16.
Total  133.
1100.) , .
Appendix H-1: DRG 416 clinical review
Number 
Bed size 
(Rate)  Weighted percentage 
",100  100-299  300+  Total  Sample  Discarge 
Hospijal 
Unnecessary 
admissions 
0 (0.0) - 0 (0.  0(0. 
Poor quality  (0.  (0. 
10.
of care  6(25.  4(16.  3(12. 
(17. 
19.  (11.
Premature 
discharge 
0 (0.  1 (4.  0(0. 
11.4)  (15.  (20. 
Appendix H-2: DRG 416 clinical review comparison 
Rate'
Bed size 
Weighted percentage
",100  100-299  300+  Sample  Discharge
" Hospijal 
Unnecessary 
DRG 79 
admissions 
NDRGVS 
12.  10. 
' 8.  10.  10.  11.
Poor quality 
DRG 79  25.  16.  12.
of care  NDRGVS  17.  15.  20. 
11.4 
Premature 
DRG 79
discharge 
NDRGVS