Department of Health  and Human Services 
OFFICE  OF 
NSPECTOR  GENERAL 
DRG  154 VALIDATION  UPDATE: 
STOMACH,  ESOPHAGEAL,  AND 
DUODENAL  PROCEDURES 
(XXOBER  1992  OEI-12-89001%  EXECUTIVE  SUMMARY

PURPOSE 
This inspection reabstracted  on a blinded basis, the International  Classification of 
Diseases, 9th Edition, Clinical Modification  codes from a sample of Medicare 
discharges billed as diagnosis-related  group (DRG)  154, stomach, esophageal,  and 
duodenal procedures.  It compared  the reabstracted  DRG to the hospital-billed  DRG 
for reimbursement  changes.  The sample was nationally representative  and covered all 
of 1988, the most recent data available. 
This inspection updated  a previous Office of Inspector  General  (OIG)  study.  For 
1985, the OIG found 20.0 percent  errors  among 75 reabstractions,  improperly  over-
reimbursing hospitals by a projected  $51.0 million.  This inspection used a parallel 
methodolo~  to make these studies statistically comparable.  Statistical tests 
determined  whether  numeric differences  between  1985 results and 1988 results were 
real (statistically significant) or could be attributed  to random  error. 
FINDINGS 
DRG  154 billing erron not reduced 
Of 87 discharges reabstracted  for this inspection,  11 (12.6 percent)  were incorrectly 
assigned to DRG  154. The difference  between  this result and the 20.0 percent  error 
rate  the OIG found for DRG  154 discharges in 1985 was not statistically significant. 
The difference between this inspections  12.6 percent  errors  and the  14.7 percent  for 
all discharges in 1988 also failed to attain  statistical significance. 
ErrozYcontinued  to over-reimbume hospitalr 
This inspection projected  that discharges incorrectly assigned to DRG  154 over-
reimbursed  hospitals $41.4 milliom  This did not statistically differ from the $51.0 
million over-reimbursement  in 1985.  TABLE  OF  CONTENTS

PAGE 
EXWUIWE  suMMARY

INTRODUCIION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

FINDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

 ErrorsNotReduced  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4


All Errors  Over-Reimbursed  Hospitals  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4


Hospitals Still Over-Reimbursed  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...4

ENDNOTES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...6

APPENDICES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

f%  project  participants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...8

B:  ICD-9-CM procedure  codes in DRG  154  . . . . . . . . . . . . . . . . . . . . . . . . . ...10

c  Sample representativeness  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...11

D:  DRG154billing  errors,  1985and  1988.  . . . . . . . . . . . . . . . . . . . . . . . . . . ...12

E  DRG154case-ti  kdexchmge,  1985and  1988 . . . . . . . . . . . . . . . . . . . . . . .  13

F  Reasons for DRG154errors,  1985 and19W  . . . . . . . . . . . . . . . . . . . . . . . ...14
 INTRODUCTION

Background 
Diagnosis-related  group (DRG)  154: stomach, esophageal,  and duodenal procedures; 
encompasses 81 procedures  requiring  use of an operating  room and surgical team. 
These procedures  include various biopsies, excisions, and repairs  of the upper 
gastrointestinal  system.  The International  Classification of Diseases, 9th Edition, 
Clinical Modification  (ICD-9-CM) codes categorized  in DRG  154 define procedures 
only and do not refer  to the underlying or etiological condition such as cancer or 
trauma.  [Appendix B]. 
DRG  154sweight increased from 2.6621 in 1985 to 3.7961 in 1988. Since 1985, the 
U.S. Health  Care Financing Administration  (HCFA)  altered  DRG  154 to eliminate 
age over 69 as a complication code.  This change shifted billings in one quarter  of 
the data collection period for this inspection. 
In a previous study, the OIG found that DRG  154 had an unusually high proportion  of 
billing errors. 1 Correct  ICD-9-CM coding would have grouped  20.0 percent  of its 75 
reabstractions  to different DRGs in 1985.  These billing errors over-reimbursed  the 
hospitals a projected  $51.0 million. 
This inspection updated  the previous study using 1988 data, the most recent  available. 
It used a parallel  methodology to make  these inspections statistically comparable. 
Methodology 
This inspection randomly selected 87 DRG  154 discharges.  The study population 
consisted of the 49,677 Medicare-reimbursed  DRG  1S4 discharges during calendar 
year 1988. The design excluded discharges from specialty institutions such as 
childrens hospitals, tuberculosis units, and psychiatric facilities.  It also excluded 
discharges in Maryland and New Jersey, which the PPS still exempted in 1988. Finally, 
it excluded bills for pediatric, obstetric,  and psychiatric DRGs (principally drug and 
alcohol rehabilitation  performed  by a general hospital).2  Unlike its 1985 predecessor, 
it included hospitals established since the advent of the PPS in 1983. By chance, all 87 
discharges came from different hospitals. 
The OIG requested  that hospitals send complete  copies of the sampled medical 
records to the OIGS  contractor, Baxter-Health  Data  Institute  (HDI)  of Lexington, 
MA.  The OIG followed-up missing records and issued subpoenas  to compel the 
cooperation  of four hospitals. 
The OIG contracted  with the American  Medical Record Association (AMRA) to 
reabstract  the charts.  The AMRA selected  ICD-9-CM codes supported  by the record, 
determined  the principle diagnos@ and grouped  to select the correct DRG.  To assure 
1  that the original ICD-9-CM codes and DRGs did not effect the reabstraction,  the 
AMRA coders conducted their work without knowledge of the original ICD-9-CM 
codes and DRGs.  The coders had instructions not to treat  marginal problems or 
honest differences in judgement  about  appropriate  coding as DRG  errors.  This 
standard  should have produced  a conservative estimate  of the proportion  of discharges 
having DRG errors.  A series of reliability checks verified the reproducibility and 
accuracy of the AMRA coding.  The AMRA also identified the reasons why a 
hospitals bill differed from the correct  codes. 
BOTEC Analysis Corporation  of Cambridge,  Massachusetts  (BOTEC)  edited the 
AMRA database,  checked the samples representativeness,  and conducted statistical 
analyses of the correlates  and financial consequences  of DRG  154 miscoding.  It also 
reweighted the  1985 data to improve comparability with this inspection.  Statistical 
tests determined  whether  numeric differences between  1985 results and 1988 results 
were real (statistically significant) or could be attributed  to random  error. 
Representativeness 
To test the samples representativeness,  the OIG compared  the distribution of sample 
bills to the distribution of the underlying population  of DRG  154.  The sample came 
disproportionately  from rural and nonteaching  hospitals.  [Appendix C]. 
Bed size  Teaching  status 
Sample  PopuMon  Sample  Population 
Location  Control 
Sample  population  I  sample  Population 
higure  1: Sample representativeness  by hospital demography,  1988 
2
 The sample did not statistically differ from the underlying population  with respect to 
 
~atientcharacteristics. 
Age  Sex 
6S74
0s74 
Oa4  0-64 
85+  85+ 
sample  Population  sample  Population 
Race 
Population
samDle  . 
Figure 2: Sample representativeness  by patient  demography,  1988 
3
 FINDINGS

Errors  not reduced 
Pefc&nt 
Of the 87 sample discharges, 11 (12.6

percent)  were incorrectly assigned to 
20  1.  Y6ar

r-
DRG  154.  The difference between  this  + 
r-J1985

result and the 20.0 percent  error  rate  15 
the OIG reported  for 1985 was not 
10 
statistically significant. 
5 
For-profit,  medium-sized, and teaching 
hospitals billed more accurately than  in  0 1 
1985.  Patients  under 75 years old also  AI DRGS 
had higher coding accuracy.  [Appendix
nl  . 
Figure 3: Coding errors,  1985 & 1988 
UJ. 
In contrast  to DRG  154, all DRGs  taken  together  statistically significantly improved 
their coding accuracy from 20.8 percent  errors  in 1985 to 14.7 percent  in 1988? 
However, the difference between this DRGs 12.6 percent  errors and the  14.7 percent 
for all DRGs in 1988 was not statistically significant. 
All errors still over-reimbursed  the hospital 
Of the  11 billing errors in 1988, all over-
imillion 
reimbursed  the hospital.  In 1985, all  50-
errors  also over-reimbursed  the hospital. 
Hospitals still over-reimbursed 
25-
The 87 sample discharges originally 
carried Relative Weights of 3.7%1, 
equivalent to an average payment of 
$11,598.  The AMRA reabstractio~  which 
resulted  in 11 discharges reassigned  to a  0 
1985 
DRG  other than DRG  154, decreased  the 
case-mix index (CMI) to 3.5203, a 
Figure 4: Financial impact,  1985 & 1988 
statistically significant decline of 0.02758. 
This reduction  persisted across most hospital and patient  demographic characteristics. 
a. Because of the smaller sample size that results from DRG-specific analysis, 
estimates  of coding for specific DRGs  are less precise than OIGS national  estimate. 
Statistical tests determined  whether  apparent  differences were real (statistically 
significant) or could be attributed  to random  error. 
4  tmn---u---w--cvtx,  AtIr-:n- s nA tx UeiaIrrV  Uc-Ln-ar ge  a3!3l a  n.-. o~ s.~. . a.t.l.s.m. . xi*3u  y a.,*lPPr rer  r.-rom  m.,  e ne~.  LmnMv 1  cn*& g-G-- --- cLU.L. 
DRG  154 in 1985.  [Appendix E]. 
Extrapolation  of the  1988 CMI change to all 49,677 DRG  154 discharges projected 
that billing errors  over-reimbursed  hospitals $41.4 million.  This over-reimbursement 
did not statistically differ from the $51.0 million over-reimbursement  the OIG 
previously reported  for 1985. 
Reasons for errors 
The causes of rnisassignment to DRG  154 
errors changed between  1985 and 1988. 
Physician rnis-specification and billing 
department  resequencing  increased  over 
time, while miscoding decreased. 
1985  1988
Apparently, medical records departments 
have become more knowledgeable about 
procedure  codes than in 1985.  [Appendix 
Figure 5: Reasons for errors,  1985 & 19tN 
F1. 
5
 ENDNOTES 
1. Meyers M, Kleiman M, Stone D, Lee F, Schutte J, Hsia D, & Krushat M.  DRG 
154: Stomach, esophageal,  and duodenal  procedures.  Washington, DC: HHS Office of 
Inspector General,  July 1989.  Inspection  no. OAI-12-88-01160. 
2. Knight J W & Hsia D C, eds.  National  DRG Validation  Study Update:  Technical 
Report.  Washington, DC. HHS Office of Inspector  General,  1992.  Inspection no. 
OEI-12-90-00191. 
3. Knight J W & Hsia D C, eds.  National  DRG  Validation Study Update:  Summary 
Report.  Washington, DC: HHS Office of Inspector  General,  1992.  Inspection no. 
0EI-12-90-O0190. 
6
 APPENDICES 
7  Appendix A  Project participants 
QIQ 
Cathaleen  A  Ahem,  B.A.

Evan J. Buckingham, B.A.

David C. Hsi~  J.D., M.D., M.P.IiL

Thomas F. Komaniecki, M.P.A.

W. Mark Krushat, M.P.H.

Linda M. Moscoe, B.A

Brian P. Ritchie, B.A.

Barry L, Steeleyb

John M. Traczylq B.A.

HCFA

Timothy F. Greene,  M.A., M.B.A-

Stephen F. Jencks, M.D.

Michael R. McMullan, M.B.A.

Harry L. Savitt, Ph.D.

Jeanette  M. Smith, M.D., M.P.H.=

Malcolm A  Sneen, B.S.

RAND Corporation

Haya P. Rubin, M.D., Ph.Dd

Baxter-Health  Data  Institutee

Patricia J. Baxter, R.N.

Patricia Cassidy-Tsnosas, R.N.

Annette  M. Delaney, R.N., M.A

Ellen B. Inghilleri, R.N.

Janet  Mathews, A.R.T.

Laurie H. Moore, R.R.A.

Claire Shannon, A.R.T.

Michele A. Wiese, B.A.

AMRA

Margret  K  Amatayakul, M.B.A,  RR.A.

Mary Converse, R.R.A.

Nicholas J. Cotsonas, M.D.f

Linda Ertl, R.R.A.

b. Now at Health Audit Services, Ellicott  City, MD. 
c. Now at the Journal of the American  Medical Association, Chicago, IL. 
d. Now at Johns Hopkins Medical Institutions. 
e. Ceased operations  February  IQ  1990. 
f. Outside contractor. 
8  Rita M, Finnegan, R.R.A.

Desla Mantilla,  A.R.T.

Barbara  Manny, R.R.A.

Sonia Martyniulq R.R.A,

Toula Nicholas, AR.T.

Charlotte  Razor, R.R.A.

LouAnn Schraffenberger,  R.R.A.

Lynn Smetko, R.R.A.

Dawn Smith, A.R.T.

Joan Zacharias,  A.R.T.

BOTEC Analvsis Corporation

Geraldine  M. Berenho~  R.R.A.

Andrew H. Chalsm% B.A.

David P. Cavanagh, M.A., Ph.D.

Janet  W. Knight, R.N., Ph.D.

Amy L.  B.A

LOCkWO04 
C3mtract information 
Contractor

BOTEC Analysis Corporation

1698 Massachusetts  Avenue

Cambridge, MA 02138

Proiect  Officer

David Hsi~  J.D., M.D., M.P.H.

Office of Inspector  General

330 Independence  Avenue

Washington, D.C. 20201

Contract

HHS-1OO-9O-OO23

Firm-fixed price contract

$203,257

9  Appendix B: ED-9-CM  procedure codes in DRG 154
39.1  intra-abdominal  venous shunt

42  esophageal  operations

43  incision and excision of the stomach

44  other  operations  on stomach

45.01  duodenum  incision

45.3  local excision or destruction  of lesion or tissue of small intestine

46.7  other  repair  of intestine

53.7  repair  of diaphragmatic  hernia,  abdominal  approach

53.8  repair  of diaphragmatic  hernia,  thoracic approach

10
 Appendix Cl Sample representativeness
Number  [percent]  Population  Sample  Chi-square 
Hospital demogra~hy 
1-99 beds  4,054 [8.2]  9 [10.3]  5.06, 2 df, P= O.916 
100-299beds  17,808 [35.8]  39 [44.8] 
300+ beds  27,814 [56.0]  39 [44.8] 
Metropolitan  41,441 [83.4]  68 [78.2]  2.00, 1 df, P= O.965 
Nonmetropolitan  8,236 [16.6]  19 [21.8] 
Teaching  23,566 [47.4]  32 [36.8]  4.55, 1 df, P= O.965 
Nonteaching  26,111 [52.6]  55 [63.2] 
Profit  5,123 [10.5]  9 [10.3]  0.002, 1 df, P= O.034 
Nonprofit  43,737 [89.5]  78 [89.7] 
Patient  demoma~hy 
<65 years  4,067 [8.2]  7 [8.0]  0.30, 3 df, P= O.041 
65-74 years  20,978 [42.2]  37 [42.5] 
75-84 years  18,034 [36.3]  30 [34.5] 
85+ years  6,598 [13.3]  13 [14.9] 
Male  24,941 [50.2]  45 [51.7]  0.09, 1 df, P= O.233 
Female  24,736 [49.8]  42 [48.3] 
White  43,176 [86.9]  79 [90.8]  1.38,3 df, P= Oo290 
Black  4,177 [8.4]  5 [5.7] 
Other  919 [1.8]  1 [1.1] 
unknown  1,405 [2.8]  2 [2.3] 
Total  49,677 [100.0]  87 [100.0] 
11
 Appendix D: DRG  154 b- errors,  198S and 1988 
Number  [proportion  1988  1985*  t-test 
~ standard  error] 
Hos~ital demoma~hv 
1-99beds  2 [22.2*  14.71  5 [20.0 ~ 8.2]  0.34 
100-299beds  3 [7.7 * 4.3]  89 [32.0 f  9.5]  4.24 
300+  beds  6 [15.4 ~ 5.9]  3 [12.0 k 6.6]  0.61 
Metropolitan  8 [11.8 ~ 3.9]  12 [22.8 ~ 5.9]  1.89 
Nonmetropolitan  3 [15.8 t  8.6J  4 [12.6 ~ 9.7]  0.47 
Teaching  5 [15.6 t  6.5]  9 [29.9 ~ 8.9]  2.28 
Nonteaching  6 [10.9 ~ 4.2]  7 [13.6 k 5.7]  0.47 
Profit  o [0.0*  0.0]  3 [39.3 k 28.0] 5.86 
Nonprofit  11 [14.1 & 4.0]  13 [20.1 t  5.3]  0.96 
patient  demomaRhy 
<65 years  3 [42.9 t  20.2]  2 [21.5 ~ 15.6] 2.73 
65-74 years  3 [8.1 ~ 4.51  6 [21.4 k 9.3]  2.20 
75-84years  3 [10.0 t  5.q  6 [20.6 f  8.4]  1.78 
85+  years  2 [15.4 * 10.4]  2 [27.4 t  13.7] 1.90 
Male  5 [11.1 t  4.71  3 [11.4 f  6.3]  0.05 
Female  6 [14.3 k 5.51  13 [26.7 ~ 7.3]  1.81 
White  9 [11.4 t  3.4] 
Black  2 [0.0 t  0.0] 
Other  o [0.0 t  0.0] 
Unknown  o [33.3 t  333] 
Total  11 [12.6 k 3.6_j  16 [20.8 ~ 5.1]  1.34 
* Reweighed  for comparability to  1988. 
12
 Appendix E  DRG 154 case-mix index change, 1985 and 1988
Relative weight ~  1988  1985  Difference  t-test 
standard  error 
Hosuital  demomauhy 
1-99beds  -0.2658 ~ 0.1772  -0.3679 ~ 0.1517  0.1021  0.91 
100-299beds  0.1603 A 0.0932  -0.5427A 0.1722  0.3824  3.45 
300+ beds  -0.3936 ~ 0.1523  -0.2288 k 0.1268  -0.1648  1.24 
Metropolitan  -0.2827 ~ 0.0982  -0.4316 ~ 0.1121  0,1489  1.17 
Nonmetropcditan  -0.2512 * 0.1386  -0.0883 A 0.0449  -0.1629  2.37 
Teaching  -0.3756 ~ 0.1620  -0.5702 t  0.1678  0.1946  1.41 
Nonteaching  -0.2177 ~ 0.09(M -0.2073 ~ 0.0965  -0.0104  0.10 
Profit  0.0000 ~ O.OCK)-O0.7032 t  0.4908  0.7032  5.99 
Nonprofit  -0.3076 ~ 0.0911  -0.3536 ~ 0.0976  0.0460  0.36 
Patient  demography 
<65 years  -0.8287 ~ ().3907 -(),41()3~ 0.2953  -0.4184  2.79 
65-74 years  -0.1459 ~ 0.0890  -0.3537 ~ 0.1688  0.2078  1.85 
75-84 years  -0.2887 ~ 0.1608  -0,3763 ~ 0.1532  0.0876  0.66 
85+  years  -0.3181 A 0.2311  -0.4953 ~ 0.2481  0.1772  1.38 
Male  -0.2255 ~ O.1O35 -(),2()19~ 0.1134  .0-0236  0.23 
Female  -0.3297 ~ 0.1301  -0.4740 ~ 0.1372  0.1443  1.03 
White  -0.2420 k 0.0808 
Black  -0.9750 &0.6146 
Other  O.0000t  O.oo(x) 
Unknown  O.0000* O.ooa) 
Total  -0.2758 ~ 0.0822  -0.3681 t  0.0943  0.0923  0.74 
13
 Appendix J? Reasons for DRG  154 errors, 1985 and 1988
Number  [percent]  1988  1985 
Mis-specification  5 [45.4]  2 [12.5] 
Miscoding  1 [9.1]  13 [88.0] 
Resequencing  5 [45.4]  o [0.0] 
Other  o [0.0]  1 [6.3] 
Total  11 [100.0]  16 [100.0] 
14   Department of Health  and Human Services 
OFFICE  OF 
NSPECTOR  GENERAL 
DRG  154 VALIDATION  UPDATE: 
STOMACH,  ESOPHAGEAL,  AND 
DUODENAL  PROCEDURES 
DECEMBER  1992  OEI-12-89-001%  m  u  r 
h 
Department of Health  and Human Services 
OFFICE  OF 
INSPECTOR  GENERAL 
DRG  154 VALIDATION  UPDATE: 
STOMACH,  ESOPHAGEAL,  AND 
DUODENAL  PROCEDURES 
OCIOBER  1992  ..
ii
:.;,., 
s:, 
.~, !  OFFICE  OF AUDIT  SERVICES 
~:oAf udit Services (OAS) provides all auditing services for HHS, 
&g audits with its own audit resources  or by overseeing audit work 
~udits  examine the performance  of HHS programs  and/or its 
tractors  in carrying out their respective  responsibilities and are 
kle independent  assessments  of HHS programs  and operations  in 
mste,  abuse, and mismanagement  and to promote  economy and 
the Department. 
? of Investigations (01)  conducts criminal, civil, and administrative 
allegations of wrongdoing in HHS programs  or to HHS beneficiaries 
richment by providers.  The investigative efforts of 01 lead to criminal 
.. Mstrative sanctions, or civil money penalties.  The 01 also oversees 
!!4kaudcontrol units which investigate and prosecute  fraud and patient 
ticaid program.
&, 
f;  OFFICE  OF EVALUATION  AND INSPECIIONS 
e of Evaluation and  Inspections  (OEI)  conducts short-term 
nd program  evaluations  (called inspections)  that focus on issues of 
llepartmen~  the Cmgress,  and the public.  The findings and 
ms contained in these  inspection rermrts generate  rapid, accurate,  and 
m on the efficiency; vulnerab~ity, aid  effective~ess of 
Qgrams. 
tmcl of BOTEC Analysis Corporation  prepared  this report  with 
~ Janet  W. Knight  BOTEC  Project  Director,  and David C. Hsia, OIG 
-r.  Contract  information  and r)roiect ~articiDants are listed in Amendix