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 overreimbursing 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 inspection’s 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 overreimbursed hospitals $41.4 milliom This did not statistically differ from the $51.0 

million over-reimbursement in 1985. 
�

�

TABLE OF CONTENTS


PAGE 

EXWUIWE suMMARY


INTRODUCI’ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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, 1985 and 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 154’sweight 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 

children’s 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 

hospital’s bill differed from the correct codes. 

BOTEC Analysis Corporation of Cambridge, Massachusetts (BOTEC) edited the 

AMRA database, checked the sample’s 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 sample’s 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 — 

~atient characteristics. 

Age Sex 

6S74 0s74 

Oa4 0-64 

85+ 85+ 

sample Population sample Population 

Race 

samDle Population . 

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 r- Y6ar


DRG + 

result and the 20.0 percent error rate 15 

the OIG reported for 1985 was not 

statistically significant.’ 10 

For-profit, medium-sized, and teaching 5 

hospitals billed more accurately than in 

1985. Patients under 75 years old also 

0 1 

AI DRGS 

154. The difference between this 1. r-J1985


had higher coding accuracy. [Appendix nl . UJ. Figure 3: Coding errors, 1985 & 1988 

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 DRG’s 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 overreimbursed the hospital. In 1985, all 

errors also over-reimbursed the hospital. 

Hospitals still over-reimbursed 

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 

DRG other than DRG 154, decreased the 

case-mix index (CMI) to 3.5203, a 

statistically significant decline of 0.02758. 

imillion 

50-

25-

0’ 1985 

Figure 4: Financial impact, 1985 & 1988 

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 OIG’S national estimate. 

Statistical tests determined whether apparent differences were real (statistically 

significant) or could be attributed to random error. 

4 
tn-------- AI-:- —–A eiarr -L-——– 3!3 .-–. . . . . . . . . . *3 .,*PP .- ., ------ . mnv muwcvtx, * c.. trns ntx UIVUcnarge ala no~ s~atlsmxiuy alrrer rrom me ne~ LM1 cn&gG LUL 

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. LOCkWO04 B.A


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


C3mtract information 

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 

Hospital demogra~hy 

1-99 beds 4,054 [8.2] 

100-299beds 17,808 [35.8] 

300+ beds 27,814 [56.0] 

Metropolitan 41,441 [83.4] 

Nonmetropolitan 8,236 [16.6] 

Teaching 23,566 [47.4] 

Nonteaching 26,111 [52.6] 

Profit 5,123 [10.5] 

Nonprofit 43,737 [89.5] 

Patient demoma~hy 

<65 years 4,067 [8.2] 

65-74 years 20,978 [42.2] 

75-84 years 18,034 [36.3] 

85+ years 6,598 [13.3] 

Male 24,941 [50.2] 

Female 24,736 [49.8] 

White 43,176 [86.9] 

Black 4,177 [8.4] 

Other 919 [1.8] 

unknown 1,405 [2.8] 

Total 49,677 [100.0] 

9 [10.3] 

39 [44.8] 

39 [44.8] 

68 [78.2] 

19 [21.8] 

32 [36.8] 

55 [63.2] 

9 [10.3] 

78 [89.7] 

7 [8.0] 

37 [42.5] 

30 [34.5] 

13 [14.9] 

45 [51.7] 

42 [48.3] 

79 [90.8] 

5 [5.7] 

1 [1.1] 

2 [2.3] 

87 [100.0] 

Chi-square 

5.06, 2 df, P= O.916 

2.00, 1 df, P= O.965 

4.55, 1 df, P= O.965 

0.002, 1 df, P= O.034 

0.30, 3 df, P= O.041 

0.09, 1 df, P= O.233 

1.38,3 df, P= Oo290 

11

Appendix D: DRG 154 b- errors, 198S and 1988 

Number [proportion 1988 1985* t-test 

~ standard error] 

Hos~ital demoma~hv 

1-99 beds 

100-299 beds 

300+ beds 

Metropolitan 

Nonmetropolitan 

Teaching 

Nonteaching 

Profit 

2 [22.2* 14.71 

3 [7.7 * 4.3] 

6 [15.4 ~ 5.9] 

8 [11.8 ~ 3.9] 

3 [15.8 t 8.6’J 

5 [15.6 t 6.5] 

6 [10.9 ~ 4.2] 

o [0.0* 0.0] 

Nonprofit 11 [14.1 & 4.0] 

patient demomaRhy 

<65 years 

65-74 years 

75-84 years 

85+ years 

Male 

Female 

White 

Black 

Other 

Unknown 

3 [42.9 t 20.2] 

3 [8.1 ~ 4.51 

3 [10.0 t 5.q 

2 [15.4 * 10.4] 

5 [11.1 t 4.71 

6 [14.3 k 5.51 

9 [11.4 t 3.4] 

2 [0.0 t 0.0] 

o [0.0 t 0.0] 

o [33.3 t 333] 

Total 11 [12.6 k 3.6_j 

5 [20.0 ~ 8.2] 0.34 

89 [32.0 f 9.5] 4.24 

3 [12.0 k 6.6] 0.61 

12 [22.8 ~ 5.9] 1.89 

4 [12.6 ~ 9.7] 0.47 

9 [29.9 ~ 8.9] 2.28 

7 [13.6 k 5.7] 0.47 

3 [39.3 k 28.0] 5.86 

13 [20.1 t 5.3] 0.96 

2 [21.5 ~ 15.6] 2.73 

6 [21.4 k 9.3] 2.20 

6 [20.6 f 8.4] 1.78 

2 [27.4 t 13.7] 1.90 

3 [11.4 f 6.3] 0.05 

13 [26.7 ~ 7.3] 1.81 

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 

1-99 beds 

100-299 beds 

300+ beds 

Metropolitan 

Nonmetropcditan 

Teaching 

Nonteaching 

Profit 

Nonprofit 

-0.2658 ~ 0.1772 -0.3679 ~ 0.1517 0.1021 

‘0.1603 A 0.0932 -0.5427A 0.1722 0.3824 

-0.3936 ~ 0.1523 -0.2288 k 0.1268 -0.1648 

-0.2827 ~ 0.0982 -0.4316 ~ 0.1121 0,1489 

-0.2512 * 0.1386 -0.0883 A 0.0449 -0.1629 

0.91 

3.45 

1.24 

1.17 

2.37 

1.41 

0.10 

5.99 

0.36 

2.79 

1.85 

0.66 

1.38 

0.23 

1.03 

0.74 

-0.3756 ~ 0.1620 -0.5702 t 

-0.2177 ~ 0.09(M -0.2073 ~ 

0.0000 ~ O.OCK)O-0.7032 t 

-0.3076 ~ 0.0911 -0.3536 ~ 

0.1678 0.1946 

0.0965 -0.0104 

0.4908 0.7032 

0.0976 0.0460 

0.2953 -0.4184 

0.1688 0.2078 

0.1532 0.0876 

0.2481 0.1772 

0.1134 .0-0236 

0.1372 0.1443 

0.0943 0.0923 

Patient demography 

<65 years 

65-74 years 

75-84 years 

85+ years 

Male 

Female 

White 

Black 

Other 

Unknown 

Total 

-0.8287 ~ ().3907 -(),41()3~ 

-0.1459 ~ 0.0890 -0.3537 ~ 

-0.2887 ~ 0.1608 -0,3763 ~ 

-0.3181 A 0.2311 -0.4953 ~ 

-0.2255 ~ O.1O35 -(),2()19~ 

-0.3297 ~ 0.1301 -0.4740 ~ 

-0.2420 k 0.0808 

-0.9750 &0.6146 

O.0000t O.oo(x) 

O.0000* O.ooa) 

-0.2758 ~ 0.0822 -0.3681 t 

13

Appendix J? Reasons for DRG 154 errors, 1985 and 1988�

Number [percent] 1988 

Mis-specification 

Miscoding 

Resequencing 

Other 

Total 

5 [45.4] 

1 [9.1] 

5 [45.4] 

o [0.0] 

11 [100.0] 

1985 

2 [12.5] 

13 [88.0] 

o [0.0] 

1 [6.3] 

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 h u r 

Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

DRG 154 VALIDATION UPDATE: 

STOMACH, ESOPHAGEAL, AND 

DUODENAL PROCEDURES 

OCI’OBER 1992 
.. ii

:.,;., 

s:, 

~,! OFFICE OF AUDIT SERVICES . 

~:”ofAudit 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 INSPECI’IONS 

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