NATIONAL DRG VALIDATION 
STUDY:

SHORT HOSPITALIZATIONS

RICHARD P. KUSSEROW 
INSPECTOR GENERAL 
OAI-05-88-00730 
MAY 1989  EXECUTIVE SUMMARY 
PURPOSE 
This study examined short hospital stays of 1 , 2, or 3 days to ascertin the extent of short 
stays, whether short-stay patients were being admitted and discharged appropriately, and 
whether the quality of care they received was adequate. This report is one in a series of 
National Diagnosis Related Group (DRG) Validation Study 
reports developed from the 

underten by the Office of Inspector General (OIG). 
BACKGROUND 
In October 1983, a new prospective payment system for Medicare hospital stays was intro
duced to encourage hospitals, though appropriate financial incentives, to implement 
: efficiencies to help curb escalating health care costs. Conversely, these same 
economies  ar 
financial incentives might induce some physicians and hospitals to admit patients who do not 
need acute hospital care, in order to obtain payment for treatment that could have been given 
on an outpatient basis. At the other extreme, needed hospita services might be withheld and 
the patient discharged prematurely, thereby increasing profits while placing beneficiares at 
risk. 
METHODOLOGY 
Short hospitalizations were identified by analyzing a random OIG sample of 7,
045 Medicare 
discharges from 239 hospitals between October 1984 and March 1985. 
Comparsons were 
made of the characteristics of short hospitaizations to those of longer stays, and to the entire 
OIG sample. 
FINDINGS 
Of the 7,045 discharges reviewed, 18 percent were short hospitalizations. 
The short hospitalization subsample had a 20 percent unnecessar admssion rate. 
Short stay unnecessar admissions cost the program approximately $217 milion in 
Fiscal Year (FY) 1985. 
The DRGs identified most often as unnecessar admssions were: 
Cataact Surgery 
(39), Digestive Disorders (182), Hear Failure and Shock (127), Chemotherapy (410), 
Bronchitis and Asthma (96), and Medical Back Problems (243). 
Most patients admtted unnecessarly needed qutpatient car. 
The rates of premature discharges and poor quality of car for short hospitalizations 
were reflective of the entire sample.  RECOMMENDA TIONS 
Our frndings on short stays reinforce the recommendations contained in the previous OIG 
National DRG Validation Study: Unnecessary 
report,  Admissions to Hospitals, 
(OAI-09-88-00880), which addressed the unnecessar admssions 
found in the entie sample. 
Our previous report recommended that the Health Car Financing Admistration (HCFA) im
prove the peer review organizations' (PROs ) identifcation of unnecessar admssions. In 
their comments to that report, HCFA agred that to achieve the best return on investment, they
shouid focus review efforts on those cases which 
ar the most problematic. They propose
pilot studies in several States that wil focus on short hospitalizations and DRGs that are fre
quently unnecessar. This report on short stays provides an approach to improve identifica
tion of unnecessar admssions. Should HCFA implement the following recommendations, 
denials of unnecessar hospitalzations for the DRGs listed below should result in net program 
recoupments of approximately $183 millon
, based on FY 1987 data. 
Based on our analysis of problematic. DRGs appearg in the unnecessar admssion study and 
the short hospitalization study, we recommend that HCFA include in their proposed PRO pilot 
studies: 
admission reviews of the following DRGs: Respiratory Neoplasms (82), Bone Cancer 
(239), Medical Back Problems (243), Bone Infection (244), and Enlarged Prostate 
(348); and 
admssion reviews of 1-, 2- or 3-day hospitalizations with the following DRGs: Eye 
Disorders (47), Ear, Nose and Thoat Diagnoses (73), Anal Surgery (158), Urinar Tract 
Infections (320), and Acute Adjustment Reaction (425). 
Unnecessar admssion rates, per DRG, resulting frm these pilot studies and others con
ducted by the PROs, should be calculated and the results 
compard to the OIG study findings.
If the results of these pilot studies verify that unnecessar admssion rates 
ar higher in short 
hospital stays, and that scrutiny leads to a higher 
retur per medcal review resources invested 
HCFA should: 
instrct all PROs to taget certain DRGs determned to give the 
highest retur on 
investment of review resources, and  consider  relaxing the PRO responsibility for 
applying admssion screns or criteria to all reviewed 
cases; and 
requir PROs to perform random, periodc reviews of short hospitalizations 
(1 to 5
days) to uncover any hospital circumvention of established PRO sampling criteria. 
drt 
The HCFA responded to our  report by indicating they would seriously consider the 
DRGs suggested for inclusion in pilot projects to be developed. Their comments can be found 
in appendix F of the report.  ........................................... .................. ............ ....
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TABLE OF CONTENTS 
EXECUTIVE SUMMARY 
INTRODUCTION...................................................... 

, Background.......................................................

Methodology. . . . . . 
FINDINGS. 
Hospital Characteristics 
. . . . . . . . . .4 
Unnecessar Admissions. . . . . 
. . . . .4 
Premature Discharges, Qualty of Care Concerns and Nosocomial Infections. . . . 
Codng Errors 
RECOMMENDATIONS 
Rational. . . . 
APPENDIX A - SAMPLING AND METHODOLOGY 
...................... A-

Record Collection. . . . 
. . . . . . .. A-
Medcal Review  . . . . . . . . . . . . . A-
Statistical Analysis 
Fiscal Projections  . . . . . . . . . . . . A
APPENDIX B - HOSPITAL AND DISCHARGE CHARACTRISTICS. . . 
APPENDIX C - DISCHARGE FREQUENCY BY MDC 
APPENDIX D - INAPPROPRITE PROGRAM PAYMENTS, RETURN ON 
INVESTMNT AND INCREASE IN MEDICAL REVIEW 
WORKOADS 
. . . . . D
-INAPPROPRIATE PROGRAM PAYMENTS PER DRG 
FOR FY 1987 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . D
APPENDIXE - DISCHARGE DESTINATIONS........ . 
APPENDIX F - TH HCFA's COMMNTS TO DRA REPORT. . . . . 
. . . . . . . . . F INTRODUCTION 
BACKGROUND 
On October 1, 1983, the Health Care Financing Admiistration (HCFA), the agency respon
progr, 
sible for admiistering the Medicare  replaced most of its hospital cost-based reim
bursement system with the prospective payment system (PPS). Congrss mandated this 
change because of the rapid increase in Medicar payments for inpatient expenses. Under the 
new system, hospitas currently receive a pre-established payment for each discharge based 
upon an assigned diagnosis related group (DRG). Each of the 475 DRGs results in an as
sociated payment that represents an average cost for patients having simiar diagnoses. Some 
patient hospital stays consume more services (i.e., cost more than the payment) while others 
use less. The hospita retains any surlus from stays costing less than their DRG payment and 
must absorb any losses on stays consuming more services than the payment. In addition to the 
DRG payment, a hospital may receive additional payment from HCFA for atypical cases 
referred to as day or cost outliers. These cases are atypical with respect to a beneficiar 
lengthy inpatient hospita stay or extrordinar costs incurr by the hospital while carng for 
a beneficiar. 
Congress assumed that a fIXed payment per discharge would encourage hospitals to reuce 
waste and unnecessar services. At the same  payments to the hospitals would 
tie, the tota 
provide the same essential resources for patients as the cost-based system. While the intent of 
Congress was to reduce health car costs, it was also concerned that the qualty of care not 
dimiish under this new system. To protect the integrty of PPS and maintain quality of care, 
Congress established peer review organizations (PROs) to monitor PPS activities. 
PREVIOUS OIG STUDIES 
With the advent of prospective payment, the Offce of Inspector Genera (OIG) evaluated PPS 
and its potential effects on utilization and provider behavior in order to detect and prevent 
program frud, abuse and waste. In analyzing vulnerabilties that could result in "gamng" or 
manipulating PPS , the OIG identifed several major concerns. Among these were "upcoding 
the DRGs to obtan higher reimbursement, admtting patients not in need of 
acute hospital 
care to maximize DRG payments, and inappropriately or prematuely discharging patients 
before hospita expenditures exceeded the DRG payment. Deliberate underutilization of hospi
tal resources and inappropriate transfers between acute care hospitals and exempt units were 
also aras of concern.

Based on these concerns, OIG completed thee validation studies ofDRG 14, Specific 
Cerebrovascular Disorder Except Transient Ischemic Attack; DRG 82, Respiratory 
Neoplasms; and DRG 88, Chronic Obstrctive Pulmonar Disease. A review of PRO activity 
in identifying and handling cases of inappropriate discharges and transfers was also completed 
early in 1986, along with a study regarding beneficiar rights under the new payment system. 
An ongoing study of hospital Medicare profits is being conducted by the OIG.  In addition National DRG Validation  was underten to survey 
, a major initiative, the  Stu, 
the accuracy of DRG codng and quality of car performed by hospitals under PPS. Based on 
data from this national study and additional data from other sources, severa reports have been 
or wil be issued by the Inspector General regarding quality of care, as well as identied areas 
of manipulation and PRO performance in monitoring PPS activities. 
National DRG Validation Stuy: Unnecessary Admission to Hospitals 
We have released 

(OAI..09-88-00880). Our findings regarding unnecessar admssions in the 
short-stay sub-
sample reinforce the findigs in this report. The HCFA, in their response to the unnecessar 
admssions report, proposed pilot studies in several States to focus on DRGs associated with 
frequent unnecessar admssions and on short  National DRG Validation 
hospitalizations. 
discusses short hospital stays of I , 2 or 3 days. Our recommen
Study: Short Hospitalizations 

dations recognize HCFA's proposed pilot studies and offer an approach to improve identifica
tion of unnecessar admssions. 
OBJECTIVES 
A short hospitalzation does not necessarly mean the patient received inappropriate tratment, . 
was discharged too soon, or should never have been hospitaized. However, hospitals can 
manipulate PPS by admtting patients who do not need acute care or prematurely discharging 
patients stil in need of therapy or treatment. Either way, the hospita stads to gain financial
ly by underutilzing services while receiving the same payment. 
This study was conducted to ascertn the extent of short stays, whether short-stay patients 
were being admtted and discharged appropriately, and whether the quality of 
car they 
received was adequate. We also analyzed the characteristics of hospitals associated with short-
sample. 
stay hospitaizations in the  National DRG Validation Study 

METHODOLOGY 
Using a two-stage cluster design, the OIG sampled 7,045 complete medcal records from 239 
hospitals stratifed by size. These cases were drawn frm hospita discharges occurrng durng 
October 1984 though March 1985. The OIG contrcted with the Health Data Institute of 
Lexington, Massachusetts for medical records specialists to reabstract the diagnoses, and for 
physicians and nurses to assess the appropriateness of the 
car. A comprehensive system of 
reviews and referrals veried the accuracy of this process. Furer information regarding sam
pling and review methodology can be found in appendix A. 
In assessing appropriateness of car, the patient s condition was evaluated durng thee points 
in time. The first reference was upon admssion. Unnecessar adssions were identified at 
this time. The second evaluation of car concerned the tratment of the patient durng his or 
her hospital stay. Determnations of poor quality of care, unneeded procedures, etc., were then 
made. Finally, a decision regarding the appropriateness of discharge was reached. Registered 
nurses initialy screened the  ncidents relating to the appropriateness of ad
medical records for  mission, quality of car, and appropriateness of discharge. If potential inadequacies were 
found, the medical record was referred to a physician for review. If confirmed, the physician 
prepared a nartive summar describing the nature of the deficiencies noted. 
The reviewers were instrcted to ignore marginal problems or cases involving honest differen
ces in medical judgment about appropriate case management and subsequent discharges. 
OIG medical offcer evaluated all narative summares and quality of comments and found 
them to be adequate and consistent. 
For the purposes of this inspection, hospitalizations shorter than 24 hours were counted as 
day stays. For example, patients who died within 24 hours after admssion were considered 
to have been hospitalized for 1 day.  FINDINGS 
HOSPITAL CHARACTERISTICS 
a/The 7 045 Discharges Reviewed  Percent Were Short Hospitalizations. 
FINDING:  18
From the original sample of 7 045 discharges, we identified a subsample of 1 254 (18 percent) 
short hospitalizations of 1, 2 or 3 days. 
The 1-3 day subsample represented discharges from 237 of the 239 sampled hospitals. We 
reviewed approximately 30 cases from each sampled hospital. The number 
of short stays iden
tified per hospital ranged from 1 to 14. The average number of short stays in small hospitals 
was 6. 1; in medium-sized hospitals, 4.7; and in large hospitals, 5. 
The geographic location of the hospital did not appear to be a signifcant factor. Geographic 
representation of short-stay hospitas was similar to the overall sample. 
Small, rural hospitals had a slightly higher percentage of short stays than larger, urban hospi- . 
tals. Teaching status did not appear to have an effect on the numbers of short stays. More 
detailed information regarng hospita charcteristics can be found in appendix B. 
UNNECESSARY ADMISSIONS 
Short Hospitalizations Had A Much Higher Unnecessary Admission Rate Than 
FINDING: 
Did Hospital Stays 0/4 Days Or More. 
In the 1-3 day subsample of 1 254 hospitalizations, 252 (20 percent) were unnecessar admis
sions. Of the remaining 5,791 discharges, where patients were hospitalize for 4 or more 
days, 488 (8 percent) were unnecessar admssions. In the enti sample of 7 045 discharges, 
10 percent of the admssions were deemed by the physician reviewers to be unnecessar. 
UNNECESSARY ADMISSIONS 
3 Day  4+ Day  Entire  PRO 
Subsampfe  Subsample  Sample  Sample 
Sample  254  791  045  8 milion 
Discharges 
Unnecessary  252  488  740  206,821 
Admissions 
Percent of 
Sample  (20.1%)  (8.4%)  (10.5%)  (2.6%)  These figurs contrast with those from a non-random sample of 8 milion cases the PROs 
reviewed durng a time period (July 1984 through September 1986) which included the 
timefrae of the OIG sample (October 1984 through March 1985). Using different methods 
and standards for identifying unnecessar admssions, the PROs denied 3 percent, or ap
00 
proximately 207, cases, as unnecessar admissions. 
Short Stay Unnecessary Admissions Cost The Programs Approximately $217 
FINDING: 
Milion In Fiscal Year (FY) 1985. 
Although the overall unnecessar admission rate in the entire sample is higher than the rate 
reported by the PROs, comparson of the two subsamples shows that the 
rate for short stays
(20 percent) is substantialy higher than the rate we found for hospitaizations of 4 days or 
more. This indicates that a review of short hospital stays of 1 , 2 or 3 days may result in more 
unnecessar admssion determnations and subsequent progr recoupments. 
We projected that hospitals received approximately $411 milion in FY 1985 for unnecessar 
admssions that were 1-, 2- or 3-day hospitalizations. However, the net loss to the Medicare 
program is about one-hal of this amount. Takg into consideration the cost of providing 
necessar outpatient care needed by the inappropriately admtted hospital patients, we es
timate the net program loss to be approximately $217 millon. 
(See appendix A for more 
detail regarding these projections. 
FINDING: 	 The Longer The Patients' Stay In The Hospital, The Lower The Rate OfUnneces
sary Admissions. 
enti 
For the  sample, the average length of stay (LOS) was 7 days. The average LOS for un
necessar admssions in the entie sample was 5 days. To better understand the significance of 
these statistics in terms of short hospitaizations
, we have 
grphically depicted the percent
the sample discharges falling into actual LOS categories raging from 1 day to 83 days, and
the percent of those cases that were 
unnecessar admssions. 
As the following graph indicates, a larger percent of sampled discharges fell into the 3-
, 4-, 5- or 
day category. To a lesser extent, hospitalizations of 7, 8, 9, and 10 days were also well repre
sented.  ENTIRE SAMPLE DISCHARGES 
BY LENGTH OF STAY

PERCENT 
N= 7,045 
5 .  10 20 40 60 
DAYS 
However, when the rates of unnecessar admssions are graphically depicted by actual LOS 
categories, as shown in the graph below, we see a shar drop in unnecessar admssion rates fol
lowing hospitalizations of 3 days. This downward trend generaly continues the longer the patient 
stays in the hospital. For example, in the entir sample, 3-day hospitalizations had an unneces
sar admssion rate of 21 percent, while 5-day hospitalizations had a rate of 13 percent. The un
necessar admssion rate fell to 7 
percent for hospitalizations of 10 days. 
UNNECESSARY ADMISSIONS 
BY LENGTH OF STAY 
PERCENT 
DAYS  FINDING:  The DRGs Identifed Most Often As Being Unnecessary Admissions Were: 
Cataract Surgery  (39),  Digestive Disorders  (182),  Heart Failure and Shock (127), 
and Medical Back Problems 
Chemotherapy (410), Bronchitis and Asthma 
 (96), 
(243 ). 
The following table compares the 19 DRGs that represented the most frequently 
identied un
necessar admssions found in the short-stay subsample. 
Catarct surgery was the procedure 
identified most often as being an unnecessar hospital admssion. However
, HCFA statistics in
dicat  that since the timefraes of our review, DRG 39 is no longer in the top 25 DRGs paid 
in the countr. This procedur has shifted priary to outpatient settings. 
FREQUENCY OF UNNECESSARY ADMISSIONS

IN 1-3 DAY SUBSAMPLE BY DRG

DESCRIPTION  DRG  # of Unnecessary  % of Total 
Admissions in  Unnecessary 
3 Day Subsample  Admissions 
Cataract Surgery 
21.
Digestive Disorders  182 
Heart Failure & Shock  127  2.4
Chemotherapy  410  2.4 
Bronchitis & Asthma 
Medical Back Problems  243

Dizziness

Metabolic Disorders  296

Seizure & Headache

Eye Disorders

Ear, Nose, Throat Diagnoses

Anal Surgery  157

Anal Surgery  158

Bone Infection  244

Urinary Tract Infections  320

Urinary Tract Disorders  325

Enlarged Prostate  348

Red Blood Cell Disorders  395

Acute Adjustment Reaction  425

Other  120  47.

TOTAL  252  100. 
We also analyze the rate of unnecessar admssions within each of the 19 DRGs appearng in 
the above table.  RATE OF UNNECESSARY ADMISSIONS WITHIN DRG CATEGORY IN 1-3 DAY 
SUBSAMPLE 
DESCRIPTION  DRG  Total # of  # of Unnecessary  Rate of 
DRGs in 1- Admissions Within  Unnecessary
Day Subsample  3 Day Subsample  Admissions 
Within DRG 
Eye Disorders 
100.
Cataract Surgery 
82.
Anal Surgery  158 
75.
Acute Adjustment Reaction  425 
75.
Ear, Nose, Throat Diagnoses 
60.
Dizziness 
57.
Bone Infection  244 
42.
Enlarged Prostate  348 
42.
Urinary Tract Infections  320 
37.
Urinary Tract Disorders  325 
37.
Medical Back Problems  243 
35.
Digestive Disorders 
30.
Anal Surgery  157 
27.
Bronchitis & Asthma 
23.
Red Blood Cell Disorders  395 
20. 
Chemotherapy  410  00
19.
Seizure & Headache 
17.
Heart Failure & Shock  127 
15.

Metabolic Disorders  296

14.
Other  910  120  13. 
Total  1254  252 
As the table on page 7 indicates, the six DRGs with the highest 
occurnce of unnecessary ad
missions in the short-stay subsample were Cataract Surgery (39); Digestive Disorders (182), 
Heart Faiure- and Shock (127); Chemotherapy (410); Bronchitis and Asthma (96); and 
Medical Back Problems (243). 
While these DRGs had the highest frequencies of 
unnecessar admssion, other DRGs had a 
greater chance of being an unnecessar admission. For instance, as demonstrated in the above
char, DRG 47, Eye Disorders, was found to be an unnecessar admission 100 
percent of the
time. 
Admissions for cataract surgery, the most frequently noted unnecessar admssion
, were found
to be unnecessar 83 percent of the time. Anal surgery and acute adjustment reaction were un
necessar 75 percent of the time; followed by ear, nose, throat diagnoses (60 percent) and 
dizzin  ss (57 percent).  Most Patients Admitted Unnecessarily Needed Outpatient Care. 
FINDING: 
Most of the identifed patients admtted unnecessary in both 
the entir sample and the short-
stay subsample needed medical attention, but not in an acute care setting. As the following 
graph indicates, reasons for unnecessar admssions fell into five 
categories. In the short-stay
subsample, 80 percent of the unnecessar admssions should have been more appropriately
treated in an outpatient setting. Approximately 12 percent of 
the unnecessarly admitted did
not need acute care. Social admssions accounted for 
about 2 percent of the unnecessar ad
missions ider"ified in the short-stay subsample. The percentages for the 
entie sample were 
very similar: outpatient, 78 percent; acute car not needed, 12 percent; and social admssions, 
4 percent.

REASONS FOR UNNECESSARY ADMISSIONS 
N=749 
SNFIICF aprop.

Acue cae unneeded - 11. 
No care provided - 3. 1 % 
Socal admission - 4. 
Outpaient aprop. 77.8"1 
PREMATURE DISCHARGES, QUALITY OF CARE CONCERNS AND 
NOSOCOMIAL INFECTIONS 
FINDING:  The Rates Of PrematUre Discharges And Poor Quality Of Care Were Reflective 
Of The Entire Sample. 
As previously mentioned, hospitas may increase profits by 
prematuely dischargig patients. 
If hospitas were routinely discharging patients inappropriately, we might expet to see a num
ber of occurnces in our short-stay sample. We did not. The following 
char displays the
number of prematu discharges appearg in 
the entir sample, the short-stay subsample and
the 4+ day subsample.  PREMATURE DISCHARGES

3 Day  4+ Day  Entire 
Subsample  Subsample  Sample 
Sample  229  716  945* 
Size 
Premature 
Discharges 
Percent 
In 100 cases, reviewers did not commnt on whether the discharge was appropriate 
or premature. 
The following char shows that quality of car issues were identified as often in cases of short 
hospitalizations as in cases where the patient was hospitalized for a longer period of time. 
QUALITY OF CARE 
3 Day  4+ Day  Entire 
Subsample  Subsample  Sample 
Sample  254  791  045 
Size 
Quality of 
Care 
372  464 
Discharges 
Percent  FINDING:  Nosocomial Infections Occurred Less Frequently In.Short Hospitalizations 
Nosocomial infections--infections acquired by the patient while in the hospital--occured less 
frequently durg short hospitalzations. This is expected since the patients were exposed to a 
potentially infectious environment for a shorter period of time. 
NOSOCOMIAL INFECTIONS 
3 Day  4+ Day  Entire 
Subsample  Subsample  Sample 
Sample  201  560  761*

Size

Nosocomial  375  397

Infections

Percent 
Presence or absence of 
 nosocomial infection was not commented on by reviewers in 
284 of the 7 045 cases. 
CODING ERRORS 
FINDING: 	 DRG Coding Errors Were Found In The Short-stay Subsamle As Often As In The 
Entire Sample. 
Under PPS, the accurcy of DRG codng is critical in determning 
fai and accurate payment. 
Using the  International Classifcation of Diseases, 9th Revision, Clinical Modifcation  codes,
hospitals must list in correct sequence the appropriate diagnoses and 
procedurs of a patient
case. This is necessar for the fiscal intermediar to assign the corrct DRG and make ap
propriate payment. 
The short-stay subsample closely miors the enti sample in percent of codng errors found. 
The effect of codng errors in both samples tends to favor the hospitals. In the 
entie sample 
045 discharges, 20 percent of the DRGs were changed by the reviewers. When recoded 
of 7,
correctly, 61 percent of the miscoded cases resulted in a lower-weighted DRG, and in 39 per
cent of the cases the correct DRG had a higher weight. In our shott-stay subsample, 18 per
cent (229) of the 1 254 cases were miscoded. When correctly coded, 60 percent of the 229 
miscoded cases resulted in a lower-weighted DRG, and 40 percent resulted in a higher-
weighted DRG.  Of the 237 hospitals in the short-stay subsample, 129 (54 percent) had a least 
1 miscoded case. 
The average number of miscoded cases was 1.  , the statistical mean and mode was 1. The fol
lowing char indicates the number of codng  rrors resulting in a DRG change per hospital: 
FREQUENCY OF CODING ERRORS IN 1-3 DAY SUBSAMPLE 
N umber of  Number of Hospitas by Bed Size  Total 
Codng 
Hospitals
Errors	 100-299  300+ 
TOTALS	
129 
As in the enti sample, codg errors of short hospital stays were found most often in small 
hospitals. . Two-day hospital stays were miscoded 25 percent of the tie, compard to a
codng error rate of 15 percent for hospitalzations of 1 and 3 days. 
See appendix B for addi
tional information. The most often miscoded DRGs identified in short 
hospitalizations were
as follows: 
MISCODED DRGs IN 1-3 DAY SUBSAMPLE 
DRG	 Relative  Description  Frequency  Percent 
Weights 
140  7470  Angina Pectoris

132  9087  Atherosclerosis

182  6121  Digestive Disorders

5368  Pulmonary Edema & Resp. Failure

0914  Simple Pneumonia & Pleurisy

127  0300  Heart Failure & Shock

3386 
1 . Strokes Except Transient

Ischemic Attacks

180  8112  I. Obstruction

294  8003  Diabetes

296  8886  Metabolic Disorders

Other	
167  72. 
Totals	
229  100.  RECOMMENDATIONS 
National DRG Validation 
Our previous study entitled  Stuy: Unnecessary Admissions to 
Hospitals  specifcaly addrssed unnecessar 
admssions found in the entie sample. Our in
spection of short hospitalizations contains information regarding 
unnecessar admissions 
found in the 1 254 discharges of the short-stay subsample. Our frndings reinforce the recom
mendations contained in the above-cited report on unnecessar admissions, but go further in 
providing an approach to improve identification of unnecessar admssions. 
We recommended in our previous report that HCFA improve the PROs 
' identification of un
necessar admssions. In their comments on that report, HCFA agreed that to achieve the best 
return on investment, they should focus review efforts on those cases which are the most 
problematic. They proposed pilot studies in several 
States that would focus on short 
hospitalizations and DRGs that are frequently unnecessar. Based on our analysis of 
problematic DRGs appearg in the unnecessar admssion study and the short-hospitalization
study, we recommend that HCFA include in their proposed PRO pilot studies: 
admssion reviews of the following DRGs: Respiratory 
Neoplasms (82), Bone Cancer
(239), Medical Back Prblems (243), Bone Infection (244), and Enlarged Prostate 
(348); and 
admssion reviews of 1-, 2- or 3-day hospitalizations with the following DRGs: Eye 
Disorders (47), Ear Nose and Throat Diagnoses (73), Anal Surgery (158), 
Urinar Tract 
Infections (320), and Acute Adjustment Reaction (425). 
We believe scrutiny of these DRGs wil yield the highest retu in identifying inappropriate
progr 
payments, while effciently using medical review 
resources. Our rationale for select
ing these DRGs appear on pages 14-16 of the report. Alternative options regarding which 
DRGs to review are also presented. 
Unnecessar admssion rates, per DRG, resulting frm these pilot studies and others con
ducted by the PROs, should be calculated and the results 
compard to the OIG study findings.
If the results of these pilot studies verify that unnecessar admssion rates ar higher in short 
hospital stays and that scrtiny of certn DRGs yield a higher return per medcal review 
resources invested, HCFA should: 
instrct all PROs to target certain DRGs determed to 
give the highest return on 
investment of review resources, and  consider  relaxing the PROs ' responsibilty for
applying admssion screens or criteria to all reviewed cases; and 
requir PROs to perform random, periodc reviews of short hospitalizations (1 to 5 
days) to uncover any hospital circumvention of PRO sampling criteria.  Once the hospitals become aware of which DRGs ar being scrutinize, some may seek to cir
cumvent the screens by manipulating other DRGs and increasing the length of unnecessar 
hospitalization; e.  , discharging patients on the fourth or filth day of hospitaization for non-
targeted DRGs. Periodc sampling of 1- to 5-day hospitalizations wil guard against such 
manipulation, paricularly since unnecessar admssions appear to drop off draticaly after 
the fourth day of hospitalization. 
RatiQnale For Targeting DRGs For Review 
In recommending specifc DRGs to be reviewed, we focused on identifying 
unnecessar ad
missions in a way to maximize recoupment of program funds. We included DRG or case 
characteristics, such as length of hospita stay, number of 
unnecessar admssions found 
durg review, and the rate or likelihoo of a DRG to be an unnecessar admssion. We also 
considered the relative impact on the existing PRO workloads, in terms of minimum case 
sample size for review and incrementa cost to the PRO for reviewing these cases. 
The table in appendix D displays the 27 DRGs identified in our studies as being the most 
problematic. Using HCFA's FY 1987 payment statistics, and DRG unnecessar admssion 
rates identifed in both the unnecessar admssion and the short-stay hospitalzation studies, 
we have projected the number of discharges per DRG the PROs would be requir 
to review 
and the estimated program dollars that could be recouped by tageting a specific DRG. We 
also calculated the retur on investment (ROI), in terms of overpayment identified per claim 
reviewed. (The inappropriate payments were not adjusted to reflect the difference in cost be
tween the hospita stay and more appropriate outpatient car, nor to reflect any waiver 
provisions that might apply.) Calculations include projections based on review of all clais 
submitted in FY 1987 per DRG, and projections per DRG for hospitaizations 
, 2, or 3 
of 1
days. 
The DRGs with the highest ROIs (dollar recoupment per claim reviewed) identified in our un
necessar admssion study are not the same DRGs identified in our short hospitaization study. 
Short-stay DRGs have relatively higher ROIs because they have a 
grater likelihoo of being
an unnecessar admssion, while at the same tie having a smaler universe of clais to 
review. Review of other DRGs may result in a larger dollar recoupment, but because the 
universe of claims to review is larger, 100 percent review of these DRGs is more resource in
tensive, hence a lower ROI. 
There ar a number of options HCFA may choose in selecting DRGs for tageted review. Iden
tification of inappropriate payments wil be dictly tied to the type of DRGs selected and the 
number of clais reviewed. Based on our study of discharges occurng frm October 1984 
through March 1985, we recommend that HCFA target for review five problematic DRGs that 
appeared in the entie sample and had the highest computed ROI values, and five problematic 
DRGs that appear in the shott-stay subsample with the highest computed ROI values.  Should HGFA implement this recommendation by requirng mandatory review of the DRGs 
listed in the table below, we project, based on FY 1987 data, that the program could realize net 
recoupments estimated at $183 millon, takng into consideration a corrsponding increase of 
approximately 15 percent in the PROs ' medical review workloads. 
INAPPROPRIATE PROGRAM PAYMENTS RESULTING FROM TARGETED DRG 
REVIEW 
DESCRIPTION  DRG  # OF CLAIMS  INAPPROPR lATE  ROI  % OF PRO 
REVIEWED  PROGRAM  (AVERAGE  WORKLOAD 
PAYMENTS  RETURN) 
Respiratory Neoplasms  83,254  $ 54 930,989  $ 660
Medical Back Problems  243  130,545  115,926  453 
Bone Cancer  239  56,330  48,180,445  855 
Bone Infection  244  131,567  688
Enlarged Prostate  348  439  178,360  761  .43 
SUBTOTAL  297 212  $181 537 287  $ 611  13. 
Urinary Tract Infections  320*  669  901 708  849  53 
Ear, Nose, Throat Diagnoses  73*  333  064,809  950
Acute Adjustment Reaction  425*  797  118, 105  085 
Anal Surgery  158*  629  301 665  910 
Eye Disorders  47*  377  250,782  $ 947 
SUBTOTAL  26,804  $ 24 637 069  $ 919 
TOTAL  324 016  $206, 174 356  $ 636  14. 
short-stay DRGs 
ESTIMATED PROGRAM RECOUPMENTS BASED ON FY 1987 DATA 
FY 1987 PRO Expenditus 
$154.0 millon 
Increase in Medical Review Workload  x 15 
percent 
Estiated Progr  $ 23. 1 million
Recoupments Based 
on Review of Above Cited DRGs 
$206.0 million 
Less Increase in Medical Review Workload 
- 23.1 million 
Estimated Net Recoupments 
$182.9 millon 
Another option HCFA might select would be mandatory review of those DRGs 
appearng
most often in our short-stay study as an unnecessar admssion. Review of 1-3 day
hospitaizations for bronchitis and asthma (96) hear failure and shock 
(127), digestive disor ders (182), medical back problems (243) and chemotherapy (410) would yield approximately 
$82 millon in inappropriate payments, and increase the PROs ' workload by approximately 
$13.9 millon. This would result in net recoupments of approximately $68. 1 milion. 
Assuming a goo retur on investment resulting from the proposed pilot studies, HCFA may 
want to consider increasing PRO budgets, allowing for more of this type of activity. However 
if increasing the PROs 
relaxing PRO require
' budgets is not feasible, HCFA might  consider 
ments to review all cases for appropriateness of admission, thus freeing up, to some extent, 
dical review resources that could be redicted toward targeted review of specifc DRGs. 
Alternatively, HCFA may want to consider eliminating other less productive PRO activities in 
order to allow PRO staf to focus more medical resources on these targeted reviews, thus keep
ing PRO workloads constant. 
COMMENTS 
HCFA Comments And DIG Response 
drt 
The HCFA responded to our  report by indicating they would seriously consider the 
DRGs suggested for inclusion in pilot projects to be developed. However
, they were con
cerned that we had not adequately considered the increase costs associated with medical 
review of the targeted DRGs. Therefore, in the fInal report, we have included the dollar 
amount of the 15 percent increase in medical review costs and reduced our program recoup
ment estimates accordigly.

The full text of HCFA's comments can be found in appendix F.  APPENDIX A 
SAMPLING AND METHODOLOGY 
National DRG Validation  used a stratified two-stage sampling design based on

The  Stuy 
hospitals. The sample divided the population of hospitas meeting the study 
s eligibility

criteria (outlined below) into thre groups based on bed size: less than 100 beds, 100 to 299

beds; or 300 or more beds.

The ftrst stage used simple random sampling without replacement to select 80 hospitals within 
each group for a total sample size of 240 hospitas. First, it included only acute care, short-
stay facilities. This test also excluded specialty institutions such as childrn s hospitals.
Second, as of October 1 , 1983, a waiver provision exempte New York, New Jersey, Mas
sachusetts and Marland from PPS. Therefore, the sample excluded facilities in these states. 
Third, the facilty had to have contrbuted data to the 
constrction of the initial relative 
weights assigned to DRG categories at the 
sta of PPS. These initial relative weights derived
from a 20 percent sample of Medicare discharges from facilities 
paricipating in the progrm
in 1981. To be included in the sampling fre, a facility had to both contrbute discharges to 
the constrction of the initial relative weights and to paricipate as a provider at the beginning 
ofPPS, October 1  1983. 
The effective universe of hospitals available for study numbered 4 
913. Of the initial sample
of 240 hospitas, 1 facilty termnated its Medcare eligibilty 
between the sampling time
frame and the actual collection of medical records. The ftrst-stage sample therefore included 
239 (4.9 percent) randomly selected, short-term, acute car facilties eligible under the
Medicare program since at least 1981 and not located in a waiver State. 
The second stage of the design employed systematic random sampling to select 30 
Medicar 
discharges from each of the 239 hospitals. The HCFA's Bureau of Data Management and 
Strtegy supplied a list of all fmal bils they received from the fiscal intermediares though 
Apri 30, 1985. Each bil represented one Par A Medcar discharge for the tie period 
October 1, 1984 to Marh 31, 1985. If a facility had less than 30 discharges during the 
applicable period, the design selected all its available Medicare discharges. 
RECORD COLLECTION 
In mid-1986, OIG sent registere letters to the selected hospitals requesting copies of the com
plete medical record for each of the sampled discharges. 
Admistrative subpoenas compelled
the paricipation of a few institutions. Of the 222 
396 records available from the 239 hospi
tals, the sample design reuested 7,076 (3.2 percent). The study ultimately reeived and 
reviewed 7,045 (99.6 percent) medical records. The hospitals could not locate the remaining 
31 records.  MEDICAL REVIEW 
Registered nurses initialy screned the medcal records for incidents relating to the ap
propriateness of admssion, quality of care and prematur discharge. If the inadequacies were
found, the medical record was referred to a physician experienced in 
firg  char review. Upon con
a case of unnecessar admssion, poor quality of care, or prematur 
discharge, the 
physician dictated a narative summar describing the nature of the deficiencies and citing sup
portng evidence from the patient char. This methodology parleled the process used in local
peer review and by the PROs. The reviewers had 
instrctions to ignore marginal problems or
cases involving honest differences in medical judgment about appropriate case management. 
Medical experts reviewed records presenting specialty car 
issues. Physician panels convened 
to decide dificult cases. The bulk of reviewing physicians had appropriate board certfica
tion, commttee experience and recent patient care responsibilty. An OIG physician reviewed
the clarty and consistency of each medcal reviewer 
s conclusions. 
STATISTICAL ANALYSIS 
Because of the two-stage sample design, this report evaluated its data by hospitals rather than 
by discharges. It calculated proportions of events as the number of events over the total num
ber of discharges reviewed within each bed size group. 
Post-stratifcation analysis followed HCFA practices for classifying hospitas by their
demogrphic charcteristics--urban 
versus rual location and teaching status. Urban versus 
rural status depended on whether the hospital' 
s location fell within the boundaes of a stand
ard metropolita ara as defined by the Census Burau. The HCFA considere a 
hospital to
have teaching status if it has an accredited resi 
ency program. Profit versus not-for-profit
status was provided by the American Hospital Association s (AH) dictory which in tur
was furished to the AH 
by the hospitas. 
FISCAL PROJECTIONS 
Firt, projections were made using the actual dollar paid for the 1 254 Medicare 
patients in the 1- to 3-day subsample (derived from HCFA PATBILL fies).
multiplied the number patient discharges in each bed size category by the average cost 
per discharge in bed size categories for a total in rounded figures. Calculations show the 
total dollar paid to the 1- to 3-day subsampled hospitals in the thee bed size categories.
Small hospitals, for example, were paid $.7 millon for 483 discharges at an average
cost of $1 445.  Admissions in 1-3 Day Subsample  Small  Medium  Large
(n = 1,254): 
# Patient Discharges 
483  373  398 
Average Cost/ischarge  445  170  818 
Total Dollars (in milions)  $0.  $0.  $1.12 
Next, using the same mathematical approach
, projections were made for the costs of 1- to 
day unnecessar admssions by the the bed size categories. For example, smal hospitas
were paid $120,00 for 84 unnecessar admssions at an 
average cost of $1 442 per patient. 
Unnecessary Admissions  (n = 252):  Small  Medium  Large 
# Patient Discharges 
Average Cost/ischarge  442  110  $2,787 
Total Dollars 
$120,  $180,  $230, 
Dividing the dollars paid to hospitas for 1- to 3-
day unnecessar admssions by the
dollars paid for all 1- to 3-day admssions in the subsample by bed 
size category yields
the 1- to 3-day percentage of dollar spent on unnecessar admssions. 
Small  Medium  Large 
Percent of Dollars for 1-3 Day  1.8  1.7  1.2
Unnecessar Admssions 
We adjusted for the higher volume of discharges that occur in large hospitals, using FY 
1985 data. Summng the projections for each bed size category yields a total projected
amount of nearly $411 millon paid by the Medcar 
program for 1- to 3-day 
unnecessar admssions.
 PPS 1-3 Day Admissions (FY 1985)  Small  Medium  Large 
# Discharges (in Millons)  1.52 
Multiplied by Average Cost! 
$3.222  $3.999 
3 Day Discharge 
ields Dollars Paid 
$3,323  $10,020  $14 596 
(in Millions) 
Times Percentage of Sample 
1.8  1.7  1.2 
Dollars for 1-3 Day 
Unnecessar Admssions 
Yields Dollars for 1-3 Day  60.  168.  182.3 
Unnecessar Admssions 
(in Millons) 
Total Dollars (in Millons) 
. Spent on Unnecessar Admssions: 
$411.1 
Finally, we estimated Medicar dollars which would have been spent for the care of 1
to 3-day unnecessar admssions in other medical settings. Analyzing a subsample of 
the740 unnecessar admssions identified in the 
enti OIG sample, we compared
actual acute car costs with an estimate of costs for specific medical treatment in an 
alternative setting. Projections were made to the universe for 
patients with short
hospitaizations requirng medcal 
attention. 
Small  Medium  Large  Total 
Hospita Costs For 
1- 3  $60.  $168.  $182.3  $411.1 
Day Unnecessar 
Admssions (in Millons) 
Costs for 1-3 Day  27.  79.3  87.  193. 
Patient Cae in Other 
Medcal Settings (in Milions) 
Difference Between Acute  $33.  $89.  $94.  $217.3 
and Non-Acute Medcal 
Settings for 1-3 Day 
Hospitaizations (in Millions)  R
RO S 
R GE
G EEAR
NLH 6  9 
DIMPC 11 22
COSADIS
Y 
R S 
SAN  GE
ES  NECESMISSIOMPLE CHAR 252 
RG UNADSADIS
A
H S 
C E
G
TICS  DIS 3 DAY SAMPLE DISCHAR 232  317  187  139  396  400 114  541  1254 
S
I S 
R E
G
RACTE OIG SAMPLE DISCHAR 449  1345  1853  393  1226  898  2517  1821  712  142  2675  7045 
A
B
 H OR 
  C R
X E  ER LS 
I G G E A
PEND HAR CODINSAMPLHOSPIT 129 
C
P
A S Y 
I R
AL AND D TALS  UNNECESSAADMISSION SAMPLE HOSPITALS  150 
T I
PI SP LS 
HOS HO 3 DAY AMPLE OSPITA 237 
SH
S 
L
TIRE MPLE SPITA 239 
NAO
ESH
CS  BED SIZE  100299  300+  100-299  300+  100-299  300+ 
I
T
CTERIS URBANI RURAL STATUS  URBAN  URBAN  RURAL 
CHARA TEACHING STATUS  TEACH-ING  SUBTOTAL  NONI TEACHING  SUBTOTAL  NONI TEACHING  SUBTOTAL  TOTAL  (#)  (%)  (#)  (%)  (#)  (%) 
APPENDIX C 
DISCHARGE FREQUENCY BY MDC 
MAJOR DIAGNOSTIC CATEGORY (MDC)  ENTIRE  3 DAY  UNNECESSARY
Code and Definition  SAMPLE  SUBSAMPLE  ADMISSIONS 
in 1- 3 DAY 
SUBSAMPLE 
01: Diseses & Disorders of the Nervous System  601 (8.53)  112 ( 8.93)  12 ( 4.76)
02: Diseses & Disorders of the Eye	 106  (1.50)  75 ( 5.98)  59 (23.41)
03: Diseses & Disorders of the Ea, Nose & That  129 (1.83)  40 ( 3.19)  12 ( 4.76)
. 04: Dises & Disorders of the Respiratory System  1091 (15.49)  106 ( 8.45)  14 ( 5.56)
05: Diseses & Disorders of the Circulatory System  166 (23.56)  337 (26.87)  19 ( 7.54)
06: Diseses & Disorders of the Digestive System  870 (12.35)  164 (13.08)  35 (13.89)
07: Disese & Disorders of the Hepatobilia  197 (2.80)  22 ( 1.75)  3 ( 1.9)
System & Pancreas 
08: Diseses & Disrders of the Musculoskeleta  628 (8.91)  86 (6.86)  22 ( 8.73)
System & Connective Tissue 
09: Diseses & Disorders of the Ski	 180 (2.56)  29 (2.31)  10 ( 3.97)
Subcutaeous Tissue & Breast 
10: Endocrie, Nutrtional & Metabolic Disees  342 (4.85)  46 (3.67)  8 ( 3. 17)
& Disorders 
11: Diseass & Disorders of the Kidney and Uriar  346 (4.91)  62 (4.94)  17 ( 6.75)
Tract 
12: Diseses & Disorders of the Mae Reprouctive  185 (2.63)  30 (2.39)  10 ( 3.97)
System 
13: Diseses & Disorders of the Female Reproductive  77 (1.09)  14 ( 1.2)  6 ( 2.38)

System 
14: Pregnancy, Child Bir & the Puerprium 
15: Newborns & Other Neonates with Conditions	 1 (0.01)

Orginating in the Perinata Period

16: Bloo, Bloo Forming Organs - 75 (1.06  18 ( 1.44)  3 ( 1.9)

Immunologica Diss & Disorders

17: Myeloproliferative Diss & Poorly  122 (1.73)  (3.27)  6 ( 2.38)

Differentited Neoplams

Diss 
18: Infectious & Paritic  112 (1.59)  13 ( 1.04)  3 ( 1.9)
(Systemic or Unspeified Sites) 
19: Menta Disese & Disrders	 104 (1.48)  19 ( 1.52)  5 ( 1.98)
20: Substae Use & Substace  30 (0.43)  3 (0.24)
Induce Organic Menta Disrders 
21: Injur, Poisoning & Toxic  (1.21)  4 ( 1.9)
( 1.67) 
Effects of Drgs 
22: Bums	 5 (0.07) 
23: Factors influencing Heath Status	 33 (0.47)  (0.88)  3 ( 1.9)
& Other Contacts with Heath Services 
NOT SPECIFD (DRG 468)  66 (0.94)  5 (0.40)  1 ( 0.40) 
TOTAL  7045  1254  252  APPENDIX D 
INAPPROPRIATE PROGRAM PAYMENTS, RETURN ON INVESTMENT AND

INCREASE IN MEDICAL REVIEW WORKLOADS

The following table displays the DRGs identifed in our unnecessar admssion and 
short
hosp,italization studies as being the most problematic in terms of 
unnecessar admssions. 
Using HCFA's FY 1987 payment data and DRG 
unnecessar admssion rates identified in our 
studies, we have calculated, for each DRG and for short hospitalizations coded with that 
DRG, the estiated inappropriate progr payments that could be identified from tageted
reviews. In addition, we have calculated the ROI in terms of inappropriate payments per 
claim reviewed. 
The HCFA has indicated that on the average, PROs review approximately 25 percent of all 
claims submitted for payment under PPS. Therefore, in FY 1987
, they reviewed approximate
2 millon claims for 
ly 2. appropriateness of hospita admssion (8,934 149 clais submitted 
times 25 percent). Using this figur, we computed the increase in workload that would result 
from target review of these DRGs. 
For instance, as displayed in the following table, should HCFA 
madate review of all DRG 
425s paid under PPS in FY 1987, PROs would have to review 14 
240 claims. Assuming an
unnecessar admssion rate of 46.667 percent, we would expect them to identiy 6,645 un
necessar admssions. At an 
average cost of $1 446 per hospitalization, these inappropriate ad
progr 
missions cost the  approximately $9,60,221. For each DRG 425 reviewed, the
program could realize recoupments of $675. Targeted review of DRG 425 would increase 
the
PROs ' PPS workload by approximately .65 pe cent. 
Should targeted review of only DRG 425s with 
corrsponding hospitaizations of 1 
, 2 or 3
days be conducted, 3,797 claims would be reviewed. Assuming an inappropriate admission 
rate of 75 percent, 2,848 of these would be identied as 
inappropriate admissions for a tota
cost of $4 118, 105 to the program. We could expect to receive a retu 
in misspent dollars of
085 per short-stay DRG 425 
clai reviewed. The PROs' PPS workload would be negli
gibly increased. (3,797 DRG 425 clais / 2 200,00 PRO workload = .0017 or . 
17 percent.)  ..........---.....-..-- I Of Pl UDLOA  0'51  0011 000 007 004  O.  O.  0110 0'010216  0016  0260  003 0074  OOJO 003 0145 003 001  OOJO  0079  0275 0017  z,n 
1  501  950  11M  509 426 499  910  436 '50  64Z 517  849  621  652  316  264 101 
0
1
.......................... --........ --................ ---........ SIII -STA' ORG
II8 I A IE , UA
EII CLAI.. 'AYMNTS  II IE 5 . 1) 11 . '2  Z97' 1977  O. '7650 22578 877 4415)1 51143  506	787'66 879 2871 2512 153 281227 9))4 1 197'081 2)1'0 5591 ZO678 n25 15)8 J93 748 70 Z62n znz 7500 3)01665 609876 25)8 11764 Z490 1751 J0769 z03 Z'0551) O. 1428 JZ",41 '252 1636 3U14 5176 4Z8 Z78 4549656 44,9))9	'0529 4741 O. '4815 99'7' 375 075 375 J1'081 U4Z 4Z8 4)onD3 )4n 65Z2O'Z '9) 159968 11716 O. 4118105  2140)4319 115077 
............. -.................. DRG FOR FY 1987 DRGs  , IIIT ITA"  SMOT  2. '0 STA'  )4591 23970 2'79' O. 7500 2)77  8753 29'66 098 '46 5n3 6200 '00 8)25 13650 O. 'ZJ07 07407 Z4269 "n, 23505 O. '00' 47610 O. 4400 150'0 400 Z15n 1504 57'58 Z12Z4 '404 4Z4Z4 507 ''In '2)8 O. )6Z 6500 91,. 09" '56 3199 O. "66 07476 5979 O. 667 ,7J 2500 5)4 6049 Z66 3797	O.  478'29 
, . ------ ..--.......... --- ..-- RAM PAYMENTS PER STAY VERSUS SHORT- IOIG I Of  WOKlOA WEIGHT  6241 0656 025 764Z  4187 0014 450 0'36 0070 605 00)9 1. '25 0378 0768 0504 '48 1657 O.  091 I  Z'53 nD2 0'55 . 0. 00' 55" 06n 9On 60JZ O. 'Z24 5104 0150 9268 0256 680 0593 6742  04JZ 7454  8271 0932 866 070 6503 0075 627 003 0316 7151 428 05'5 005  1. 286 ........z..:a8%..... 
E PROG DRGs  111  1)2 '68  710  317  594  JOI '24  239	 128  531  404  Z11  Z66  318  855  453  419 '54  45'  761  250  165  675 
.......-..-----..-- NAPPROPRIATALL NAPPOP I A PtM	'AYMNTS  4 . 5  '90579 9U8255 Z25078 99)6 48n914 50680 549J0 nJ66JO 405'602 478Z 60Jl27 18'2944 )69250 J0253207 7'599' 10528143 4818045  59115926 1201567	3977J8  Jl62 M30828 742'574 7178 ,n9198 '865 962Z'  705555 ....a......... 
I I
 
VERAGE  COT  R CLAI" '48. 20. M7.  030. '5M. 329. )0. Jl05. 21)9. 2767. '89. '21). 238. 1416. '05'. 2566. '505. 16n. 1877. 2224. 2263. 1655. '52' .  1878. '365. 1446. 
A '
........................ ALL DIG
 'OfUA  CLAIMS  I2 . 3  '28' 46'5  Z377  11 254 )65 3200 '665' "09' 0070 22)87  21974  9552 J025 '2690  50565 '00'7  18776  39280 7429 2"91 1422' '604 4484  4720  9261  '367Z 665  J6 70 :8S==2:=S:8==:Z 
nlOl  RAIE  08'82 7500  37500 Z)I'O 37500  100 0398 ,,,n o. 0439 2l1 3')40 0850 18776  JOJ03 3,n3 300 42'05  22314 069)6 O. '0280 2nn 500 n3n O. '2069 4667 
,,,--------..-.:))	 1987  UIIVEIlSE  400  169  15, 391  53Z  , 254  110  327 645 , J6 200 Ion.  114  '10 J06 269 , 057  J'O  545  6410  967  OJ8 205 072 156  457  113,286  240  28261 06 s=========== 
DIG  210	 127  157  158 '74  182 18J 2J9 210 2'"  320  325 )48 395 100  425  l01AL  ay  ys  81.9  0.4  1.8  0.4  0.3  100 
D a
3-  St
4  6 
4 8
6 7
Day  ays  70.2  2.3  1.5  15.  100 
t
S
PLE  276  393 
M
A
SUBS ay  ys  34.  1.3  1.3  52.  100 
  Y  D Sta
S A
N D
O
I
T
E
 A
  N
X TI 4  2  3  7  6  0  7  0 
I S 5. 0. 4. 1. 1. 1. 1. 0
D E 7 1 1
N D
E  
E
P
G
AP R le 
SCHA Short  Stay bsamp 946  147  254 
u
DI S
 
E
L
P 9  7  4  3  0 
M 1. 1. 0. 6. 10
A
S
ENTIRE  Complete  Sample  071  158  131  670  119  390  442  045 
e 
NS  e  ng
 Car ce 
DISCHARGE  DESTINATIO Home  Another AcutHospital  Skiled Nursi F acil ty
 4- Intennediate Facilty
0ther Inst. 
 Home Health Agency Left Against Medical Advi Expired  Stil a Patient
 TOTAL  APPENDIX F
 3 FEB
 Heelth Car. 
DEPARTMENT OF HEALTH" HUMAN SUVICES FinanCing Administration 
Memorandum
l9T 
Date 
William l. Roper

Fro \) Administrator

OIG Draft Report:  National DRG Validation Review - Short Hospitalizations

OAI-05-88-00730 
The Inspector General

Offi ce of the Secretary 
We have reviewed the OIG draft report which examines the extent of short 
hospital stays, whether short stays are appropri ate and whether short-stay 
patients receive an adequate .quality .of. care. 
studies. 
We generally agree with the OIG recomend4tions regarding pilot 
As we stated in our previous response on this subject, we believe that 
pilot projects in this area should be undertaken. However, these pilot 
projects have unfortunately been_delayed due to other priorities. We will 
seriously consider the DRGs .sug.ges.ted.. by. the OIG for inclusion in our 
pi lot proj  ,ts  en tW I.re. Oeyel1&e.. 
The report states that the program could real ize recoupments estimated at 
$206 million, with a corresponding increase of approximately 15 percent in 
the PROs ' medical review workloads. . The OIG's analysis does not 
adequately consider the costs that would be incurred in accomplishing the 
necessary increased review of the short-stay admissions. Therefore, we 
believe the savings estimate in the report is inflated. 
In closing, we want to mention  as we have in our responses to several 
previous reports, that the OIG has once again identified .coding" problems 
that were actually physician documentation problems. A number of the DRGs 
identified in this report with coding problems resulted in actuality from 
inaccurate or vague physician documentation. We have held training 
sessions across the country for all PROs and instructed them to educate 
hospitals in correct coding principles. Additionally, outside groups such 
as the Amrican Medical Record Association and the American Hospital 
Association have put considerable emphasis on correct coding and conducted 
training and published numerous articles to educate coders. 
report. 
Thank you for giving us the opportunity to comment on this draft