Federal Register: May 9, 2002 (Volume 67, Number 90)

[Federal Register: May 9, 2002 (Volume 67, Number 90)]
[Proposed Rules]
[Page 31403-31452]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09my02-27]

To assist readers in referencing sections contained in this
document, we are providing the following table of contents.

Outline of Contents

Summary

I. Background
A. Summary
B. Major Contents of This Proposed Rule
II. Proposed Changes to DRG Classifications and Relative Weights
A. Background

B. DRG Reclassification
C. Recalibration of DRG Weights
D. Proposed Add-On Payments for New Services and Technologies
III. Proposed Changes to the Hospital Wage Index
A. Background

B. Proposed FY 2003 Wage Index Update
C. FY 2003 Wage Index Proposal
D. Verification of Wage Data From the Medicare Cost Report
E. Computation of the Proposed FY 2003 Wage Index

F. Revisions to the Wage Index Based on Hospital Redesignation
G. Requests for Wage Data Corrections
IV. Proposed Rebasing and Revision of the Hospital Market Baskets
A. Operating Costs
B. Capital Input Price Index

V. Other Decisions and Proposed Changes to the Prospective Payment
System for Inpatient Operating Costs and Graduate Medical Education
Costs
A. Transfer Payment Policy
B. Sole Community Hospitals (SCHs) (Secs. 412.77 and 412.92)
C. Outlier Payments: Technical Change (Sec. 412.80)
D. Rural Referral Centers (Sec. 412.96)
E. Indirect Medical Education (IME) Adjustment (Sec. 412.105)
F. Medicare-Dependent, Small Rural Hospitals: Ongoing Review of
Eligibility Criteria (Sec. 412.108(b))
G. Eligibility Criteria for Reasonable Cost Payments to Rural Hospitals
for Nonphysician Anesthetists (Sec. 412.113(c))
H. Medicare Geographic Classification Review Board (MGCRB)
Reclassification Process (Secs. 412.230, 412.232, and 412.273)
I. Payment for Direct Costs of Graduate Medical Education (Sec. 413.86)
J. Responsibilities of Medicare-Participating Hospitals in Emergency
Cases (EMTALA)

K. Provider-Based Entities
L. CMS Authority Over Reopening of Intermediary Determinations and
Intermediary Hearing Decisions on Provider Reimbursement
VI. Proposed Changes to the Prospective Payment System for Capital-
Related Costs
A. Background
B. New Hospitals

C. Extraordinary Circumstances
D. Restoration of the 2.1 Percent Reduction to the Standard Federal
Capital Prospective Payment System Payment Rate
E. Clarification of Special Exceptions Policy
VII. Proposed Changes for Hospitals and Hospital Units Excluded
From the Acute Care Hospital Inpatient Prospective Payment System
A. Payments to Excluded Hospitals and Hospital Units (Secs. 413.40(c),
(d), and (f))
B. Criteria for Exclusion of Satellite Facilities from the Hospital
Inpatient Prospective Payment System
C. Critical Access Hospitals (CAHs)

VIII. MedPAC Recommendations
IX. Other Required Information
A. Requests for Data From the Public
B. Information Collection Requirements
C. Public Comments

Addendum--Proposed Schedule of Standardized Amounts Effective with
Discharges Occurring On or After October 1, 2002 and Update Factors and
Rate-of-Increase Percentages Effective With Cost Reporting Periods
Beginning On or After October 1, 2002
I. Summary and Background
II. Proposed Changes to Prospective Payment Rates for Hospital
Inpatient Operating Costs for FY 2003
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2003
IV. Proposed Changes to Payment Rates for Excluded Hospitals and
Hospital Units: Rate-of-Increase Percentages

V. Tables
This section contains the tables referred to throughout the
preamble to this proposed rule and in this Addendum.

Appendix A--Regulatory Impact Analysis
I. Introduction
II. Objectives
III. Limitations of Our Analysis
IV. Hospitals Included In and Excluded From the Acute Care Hospital
Inpatient Prospective Payment System
V. Impact on Excluded Hospitals and Hospital Units

VI. Quantitative Impact Analysis of the Proposed Policy Changes
Under the Hospital Inpatient Prospective Payment System for
Operating Costs
Table I.--Impact Analysis of Changes for FY 2003 Operating Prospective Payment System
Table II.--Impact Analysis of Changes for FY 2003 Operating Prospective Payment System
Table III.--Comparison of Total Payments Per Case
A. Basis and Methodology of Estimates
B. Impact of the Proposed Changes to the Labor Share (Column 1)
C. Impact of the Proposed Changes to the DRG Reclassifications and
Recalibration of Relative Weights (Column 3)
D. Impact of Wage Index Changes (Columns 3, 4, and 5)
E. Combined Impact of DRG and Wage Index Changes--Including Budget
Neutrality Adjustment (Column 6)
F. Impact of MGCRB Reclassifications (Column 7)
G. All Changes (Column 8)
VII. Impact of Specific Proposed Policy Changes

A. Impact of Proposed Policy Changes Relating to Hospital Bed Counts
B. Impact of Proposed Changes Relating to EMTALA Provisions
C. Impact of Proposed Policy Changes Relating to Provider-Based Entity
VIII. Impact of Proposed Policies Affecting Rural Hospitals
A. Raising the Threshold To Qualify for the CRNA Pass-Through Payments
B. Removal of Requirement for CAHs To Use State Resident Assessment
Instrument
IX. Impact of Proposed Changes in the Capital Prospective Payment
System

Appendix B--Report to Congress (available only at Federal Register Website)

Appendix C--Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services

[[Page 31403]]

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Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 412 et al.

Medicare Program; Changes to the Hospital Inpatient Prospective Payment
Systems and Fiscal Year 2003 Rates; Proposed Rule

[[Page 31404]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 412, 413, 482, 485, and 489

[CMS-1203-P]
RIN 0938-AL23

Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2003 Rates

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: We are proposing to revise the Medicare acute care hospital
inpatient prospective payment systems for operating and capital costs
to implement changes arising from our continuing experience with these
systems. In addition, in the Addendum to this proposed rule, we
describe the proposed changes to the amounts and factors used to
determine the rates for Medicare hospital inpatient services for
operating costs and capital-related costs. These changes would be
applicable to discharges occurring on or after October 1, 2002. We also
are setting forth proposed rate-of-increase limits as well as proposed
policy changes for hospitals and hospital units excluded from the acute
care hospital inpatient prospective payment systems.
In addition, we are proposing changes to other hospital payment
policies, which include policies governing: payments to hospitals for
the direct and indirect costs of graduate medical education; pass-
through payments for the services of nonphysician anesthetists in some
rural hospitals; clinical requirements for swing-bed services in
critical access hospitals (CAHs); payments to provider-based entities;
and implementation of the Emergency Medical Treatment and Active Labor
Act (EMTALA).

DATES: Comments will be considered if received at the appropriate
address, as provided below, no later than 5 p.m. on July 8, 2002.

ADDRESSES: Mail written comments (an original and three copies) to the
following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1203-P, P.O. Box 8010, Baltimore, MD
21244-1850.
If you prefer, you may deliver, by hand or courier, your written
comments (an original and three copies) to one of the following
addresses:

Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW,
Washington, DC 20201, or
Room C5-14-03, Central Building, 7500 Security Boulevard, Baltimore, MD
21244-1850.

(Because access to the interior of the Humphrey Building is not
readily available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for commenters who wish to retain proof of filing by stamping
in and keeping an extra copy of the comments being filed.)
Comments mailed to those addresses specified as appropriate for
courier delivery may be delayed and could be considered late.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code CMS-1203-P.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
For comments that relate to information collection requirements,
mail a copy of comments to the following addresses:

Centers for Medicare & Medicaid Services, Office of Information
Services, Security and Standards Group, Division of CMS Enterprise
Standards, Room N2-14-26, 7500 Security Boulevard, Baltimore, Maryland
21244-1850. Attn: John Burke, CMS-1203-P; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 3001, New Executive Office Building, Washington, DC 20503,
Attn: Allison Herron Eydt, CMS Desk Officer.

FOR FURTHER INFORMATION CONTACT: Stephen Phillips, (410) 786-4548,
Operating Prospective Payments, Diagnosis-Related Groups (DRGs), Wage
Index, New Medical Services and Technology, Hospital Geographic
Reclassifications, and Postacute Transfer Issues. Tzvi Hefter, (410)
786-4487, Capital Prospective Payment, Excluded Hospitals, Graduate
Medical Education, Provider-Based Entities, Critical Access Hospital
(CAH), EMTALA Issues. Stephen Heffler, (410) 786-1211, Hospital Market
Basket Rebasing. Jeannie Miller, (410) 786-3164, Clinical Standards for
CAHs. Tom Hutchinson, (410) 786-8953, Hospital Communication with
Medicare+Choice Organizations.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments

Comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of a document, in Room C5-12-08 of the Centers for Medicare

& Medicaid Services, 7500 Security Blvd., Baltimore, MD, on Monday
through Friday of each week from 8:30 a.m. to 5 p.m. Please call (410)
786-7197 to schedule an appointment to view public comments.

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I. Background

A. Summary

1. Acute Care Hospital Inpatient Prospective Payment System
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance)

[[Page 31405]]

based on prospectively set rates. Section 1886(g) of the Act requires
the Secretary to pay for the capital-related costs of hospital
inpatient stays under a prospective payment system. Under these
prospective payment systems, Medicare payment for hospital inpatient
operating and capital-related costs is made at predetermined, specific
rates for each hospital discharge. Discharges are classified according
to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located; and if the hospital is located in
Alaska or Hawaii, the nonlabor share is adjusted by a cost-of-living
adjustment factor. This base payment rate is multiplied by the DRG
relative weight.
If the hospital is recognized as serving a disproportionate share
of low-income patients, it receives a percentage add-on payment for
each case paid through the acute care hospital inpatient prospective
payment system. This percentage varies, depending on several factors
which include the percentage of low-income patients served. It is
applied to the DRG-adjusted base payment rate, plus any outlier
payments received.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid through the acute care
hospital inpatient prospective payment system. This percentage varies,
depending on the ratio of residents to beds.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any outlier payment due is added to the DRG-adjusted base payment rate.
Although payments to most hospitals under the acute care hospital
inpatient prospective payment system are made on the basis of the
standardized amounts, some categories of hospitals are paid the higher
of a hospital-specific rate based on their costs in a base year (the
higher of Federal fiscal year (FY) 1982, FY 1987, or FY 1996) or the
prospective payment system rate based on the standardized amount. For
example, sole community hospitals (SCHs) are the sole source of care in
their areas, and Medicare-dependent, small rural hospitals (MDHs) are a
major source of care for Medicare beneficiaries in their areas. Both of
these categories of hospitals are afforded this special payment
protection in order to maintain access to services for beneficiaries
(although MDHs receive only 50 percent of the difference between the
prospective payment system rate and their hospital-specific rates, if
the hospital-specific rate is higher than the prospective payment
system rate).
The existing regulations governing payments to hospitals under the
acute care hospital inpatient prospective payment system are located in
42 CFR part 412, Subparts A through M.

2. Hospitals and Hospital Units Excluded From the Acute Care Hospital
Inpatient Prospective Payment System

Under section 1886(d)(1)(B) of the Act, as amended, certain
specialty hospitals and hospital units are excluded from the acute care
hospital inpatient prospective payment system. These hospitals and
units are: psychiatric hospitals and units; rehabilitation hospitals
and units; long-term care hospitals; children's hospitals; and cancer
hospitals. Various sections of the Balanced Budget Act of 1997 (Public
Law 105-33), the Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999 (Public Law
106-113), and the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (Public Law 106-554) provide for the
implementation of prospective payment systems for rehabilitation
hospitals and units, psychiatric hospitals and units, and long-term
care hospitals, as discussed below. Children's hospitals and cancer
hospitals will continue to be paid on a cost-based reimbursement basis.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
Under section 1886(j) of the Act, as amended, rehabilitation
hospitals and units are being transitioned from a blend of reasonable
cost-based reimbursement subject to a hospital-specific annual limit
under section 1886(b) of the Act and Federal prospective payments for
cost reporting periods beginning January 1, 2002 through September 30,
2002, to payment on a fully Federal prospective rate effective for cost
reporting periods beginning on or after October 1, 2002 (66 FR 41316,
August 7, 2001). The statute also provides that IRFs may elect to
receive the full prospective payment instead of a blended payment. The
existing regulations governing payment under the inpatient
rehabilitation facility prospective payment system (for rehabilitation
hospitals and units) are located in 42 CFR part 412, subpart P.
Under the broad authority conferred to the Secretary by section 123
of Public Law 106-113 and section 307(b) of Public Law 106-554, we are
proposing to transition long-term care hospitals from payments based on
reasonable cost-based reimbursement under section 1886(b) of the Act to
fully Federal prospective rates during a 5-year period. For cost
reporting periods beginning on or after October 1, 2006, we are
proposing to pay long-term care hospitals under the fully Federal
prospective payment rate. (See the proposed rule issued in the Federal
Register on March 22, 2002 (67 FR 13416).) Under the proposed rule,
long-term care hospitals would also be permitted to elect to be paid
based on full Federal prospective rates. The proposed regulations
governing payments under the long-term care hospital prospective
payment system would be located in 42 CFR part 412, subpart O.
Sections 124(a) and (c) of Public Law 106-113 provide for the
development of a per diem prospective payment system for payment for
inpatient hospital services furnished by psychiatric hospitals and
units under the Medicare program, effective for cost reporting periods
beginning on or after October 1, 2002. This system must include an
adequate patient classification system that reflects the differences in
patient resource use and costs among these hospitals and must maintain
budget neutrality. We are in the process of developing a proposed rule,
to be followed by a final rule, to implement the prospective payment
system for psychiatric hospitals and units.
3. Critical Access Hospitals
Under sections 1814, 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services on a reasonable cost basis. Reasonable cost is
determined under the provisions of section 1861(v)(1)(A) of the Act and
existing regulations under 42 CFR parts 413 and 415.
4. Payments for Graduate Medical Education
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the

[[Page 31406]]

amount of payment for direct GME costs for a cost reporting period is
based on the hospital's number of residents in that period and the
hospital's costs per resident in a base year.
The existing regulations governing GME payments are located in 42
CFR part 413.

B. Major Contents of This Proposed Rule

In this proposed rule, we are setting forth proposed changes to the
Medicare hospital inpatient prospective payment systems for operating
costs and for capital-related costs in FY 2003. We also are proposing
changes relating to payments for GME costs; payments to excluded
hospitals and units; policies implementing EMTALA; clinical
requirements for swing beds in CAHs; and other hospital payment policy
changes. The proposed changes would be effective for discharges
occurring on or after October 1, 2002.
The following is a summary of the major changes that we are
proposing to make:
1. Proposed Changes to the DRG Reclassifications and Recalibrations of
Relative Weights
As required by section 1886(d)(4)(C) of the Act, we adjust the DRG
classifications and relative weights annually. Based on analyses of
Medicare claims data, we are proposing to establish a number of new
DRGs and to make changes to the designation of diagnosis and procedure
codes under other existing DRGs. Our proposed changes for FY 2003 are
set forth in section II. of this preamble.
Among the proposed changes discussed are:
Revisions of DRG 1 (Craniotomy Age >17 Except for Trauma)
and DRG 2 (Craniotomy for Trauma Age >17) to reflect the current
assignment of cases involving head trauma patients with other
significant injuries to MDC 24;
Reconfiguration of DRG 14 (Specific Cerebrovascular
Disorders Except Transient Ischemic Attack) and DRG 15 (Transient
Ischemic Attack and Precerebral Occlusions) and creation of a new DRG
524 (Transient Ischemia);
Creation of a new DRG for heart assist devices;
Reassignment of the diagnosis code for rheumatic heart
failure with cardiac catheterization;
Assignment of new, and reassignment of existing, cystic
fibrosis principal diagnosis codes;
Designation of a code for insertion of totally implantable
vascular access device (VAD);
Changes in the DRG assignment for the bladder
reconstruction procedure code.
Changes in DRG and MDC assignments for numerous newborn
and neonate diagnosis codes; and
Changes in DRG assignment for cases of tracheostomy and
continuous mechanical ventilation greater than 96 hours.
We also are presenting our analysis of applicants for add-on
payments for high-cost new medical technologies.
2. Proposed Changes to the Hospital Wage Index
In section III. of this preamble, we discuss proposed revisions to
the wage index and the annual update of the wage data. Specific issues
addressed in this section include the following:
The FY 2003 wage index update, using FY 1999 wage data.
Exclusion from the wage index of Part A physician wage
costs that are teaching-related, as well as resident and Part A
certified registered nurse anesthetist (CRNA) costs.
Collection of data for contracted administrative and
general, housekeeping, and dietary services.
Revisions to the wage index based on hospital
redesignations and reclassifications by the Medicare Geographic
Classification Review Board (MGCRB).
Requests for wage data corrections, including
clarification of our policies on mid-year corrections.
3. Revision and Rebasing of the Hospital Market Basket
In section IV. of this preamble, we discuss issues relating to our
proposed rebasing and revision of the hospital market basket in
developing the recommended FY 2003 update factor for the operating
prospective payment rates and the excluded hospital rate-of-increase
limits. We also set forth the data sources used to determine the
proposed revised market basket relative weights and choice of price
proxies.
4. Other Decisions and Proposed Changes to the Prospective Payment
System for Inpatient Operating and Graduate Medical Education Costs
In section V. of this preamble, we discuss several provisions of
the regulations in 42 CFR Parts 412 and 413 and set forth certain
proposed changes concerning the following:
Options for expanding the postacute care transfer policy.
Refinement of the application of a hospital bed-count
policy that would more accurately reflect the size of a hospital's
operations.
Clarification of the application of the statutory
provisions on the calculation of hospital-specific rates for SCHs.
Technical change regarding additional payments for outlier
cases.
Rural referral centers proposed case-mix index values for
FY 2003.
Changes relating to the IME adjustment, including
resident-to-bed ratio caps and counting beds for IME and DSH
adjustments.
Clarification and codification of classification
requirements for MDHs and intermediary evaluations of cost reports for
these hospitals.
Changes to policies on pass-through payments for the costs
of nonphysician anesthetists in some rural hospitals.
Clarification of policies relating to implementing 3-year
reclassifications of hospitals and other policies related to hospital
reclassifications decisions made by the MGCRB.
Changes relating to payment for the direct costs of GME.
Changes related to emergency medical conditions in
hospital emergency department under the EMTALA provisions.
Criteria for and payments to provider-based entities.
CMS-directed reopening of intermediary determinations and
hearing decisions on provider reimbursements.
5. Prospective Payment System for Capital-Related Costs
In section VI. of this preamble, we specify the proposed payment
requirements for capital-related costs which include:
Capital-related costs for new hospitals.
Additional payments for extraordinary circumstances.
Restoration of the 2.1 percent reduction to the standard
Federal capital prospective payment system rate.
Clarification of the special exceptions payment policy.
6. Proposed Changes for Hospitals and Hospital Units Excluded From the
Prospective Payment Systems
In section VII. of this preamble, we discuss the following
proposals concerning excluded hospitals and hospital units and CAHs:
Payments for existing excluded hospitals and hospital
units for FY 2003.
Updated caps for new excluded hospitals and hospital
units.
Revision of criteria for exclusion of satellite facilities
from the acute care hospital inpatient prospective payment system.

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The prospective payment systems for inpatient
rehabilitation hospitals and units and long-term care hospitals.
Changes in the advance notification period for CAHs
electing the optional payment methodology.
Removal of the requirement on CAHs to use a State resident
assessment instrument (RAI) for patient assessments for swing-bed
patients.
7. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the FY 2003
prospective payment rates for operating costs and capital-related
costs. We also establish the proposed threshold amounts for outlier
cases. In addition, we address update factors for determining the rate-
of-increase limits for cost reporting periods beginning in FY 2003 for
hospitals and hospital units excluded from the acute care hospital
inpatient prospective payment system.
8. Impact Analysis
In Appendix A, we set forth an analysis of the impact that the
proposed changes described in this proposed rule would have on affected
entities.
9. Report to Congress on the Update Factor for Hospitals Under the
Prospective Payment System and Hospitals and Units Excluded From the
Prospective Payment System
Section 1886(e)(3) of the Act requires the Secretary to report to
Congress on our initial estimate of a recommended update factor for FY
2003 for payments to hospitals included in the acute care hospital
inpatient prospective payment system, and hospitals excluded from this
prospective payment system. This report is included as Appendix B to
this proposed rule.
10. Proposed Recommendation of Update Factor for Hospital Inpatient
Operating Costs
As required by sections 1886(e)(4) and (e)(5) of the Act, appendix
C provides our recommendation of the appropriate percentage change for
FY 2003 for the following:
Large urban area and other area average standardized
amounts (and hospital-specific rates applicable to SCHs and MDHs) for
hospital inpatient services paid under the prospective payment system
for operating costs.
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by hospitals and
hospital units excluded from the acute care hospital inpatient
prospective payment system.
11. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, the Medicare Payment Advisory
Commission (MedPAC) is required to submit a report to Congress, not
later than March 1 of each year, that reviews and makes recommendations
on Medicare payment policies. This annual report makes recommendations
concerning hospital inpatient payment policies. In section VIII. of
this preamble, we discuss the MedPAC recommendations and any actions we
are proposing to take with regard to them (when an action is
recommended). For further information relating specifically to the
MedPAC March 1 report or to obtain a copy of the report, contact MedPAC
at (202) 653-7220 or visit MedPAC's website at: http://www.medpac.gov.

II. Proposed Changes to DRG Classifications and Relative Weights

A. Background

Under the acute care hospital inpatient prospective payment system,
we pay for inpatient hospital services on a rate per discharge basis
that varies according to the DRG to which a beneficiary's stay is
assigned. The formula used to calculate payment for a specific case
multiplies an individual hospital's payment rate per case by the weight
of the DRG to which the case is assigned. Each DRG weight represents
the average resources required to care for cases in that particular DRG
relative to the average resources used to treat cases in all DRGS.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources. The proposed changes to the DRG
classification system and the proposed recalibration of the DRG weights
for discharges occurring on or after October 1, 2002 are discussed
below.

B. DRG Reclassification

1. General
Cases are classified into DRGs for payment under the acute care
hospital inpatient prospective payment system based on the principal
diagnosis, up to eight additional diagnoses, and up to six procedures
performed during the stay, as well as age, sex, and discharge status of
the patient. The diagnosis and procedure information is reported by the
hospital using codes from the International Classification of Diseases,
Ninth Revision, Clinical Modification (ICD-9-CM).
For FY 2002, cases are assigned to one of 506 DRGs in 25 major
diagnostic categories (MDCs). Most MDCs are based on a particular organ
system of the body. For example, MDC 6 is Diseases and Disorders of the
Digestive System. However, some MDCs are not constructed on this basis
because they involve multiple organ systems (for example, MDC 22
(Burns)).
In general, cases are assigned to an MDC based on the patients'
principal diagnosis before assignment to a DRG. However, for FY 2002,
there are eight DRGs to which cases are directly assigned on the basis
of ICD-9-CM procedure codes. These are the DRGs for heart, liver, bone
marrow, lung transplants, simultaneous pancreas/kidney, and pancreas
transplants (DRGs 103, 480, 481, 495, 512, and 513, respectively) and
the two DRGs for tracheostomies (DRGs 482 and 483). Cases are assigned
to these DRGs before classification to an MDC.
Within most MDCs, cases are then divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures, by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age. Some surgical and medical DRGs are further
differentiated based on the presence or absence of complications or
comorbidities (CC).
Generally, nonsurgical procedures and minor surgical procedures not
usually performed in an operating room are not treated as O.R.
procedures. However, there are a few non-O.R. procedures that do affect
DRG assignment for certain principal diagnoses, such as extracorporeal
shock wave lithotripsy for patients with a principal diagnosis of
urinary stones.
Patients' diagnosis, procedure, discharge status, and demographic
information is fed into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). These screens are designed to identify cases that require
further review before classification into a DRG.
After screening through the MCE and any further development of the
claims, cases are classified into the appropriate

[[Page 31408]]

DRG by the Medicare GROUPER software program. The GROUPER program was
developed as a means of classifying each case into a DRG on the basis
of the diagnosis and procedure codes and, for a limited number of DRGs,
demographic information (that is, sex, age, and discharge status). The
GROUPER is used both to classify current cases for purposes of
determining payment and to classify past cases in order to measure
relative hospital resource consumption to establish the DRG weights.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights. However, in the July 30,
1999 final rule (64 FR 41500), we discussed a process for considering
non-MedPAR data in the recalibration process. In order for the use of
particular data to be feasible, we must have sufficient time to
evaluate and test the data. The time necessary to do so depends upon
the nature and quality of the data submitted. Generally, however, a
significant sample of the data should be submitted by mid-October, so
that we can test the data and make a preliminary assessment as to the
feasibility of using the data. Subsequently, a complete database should
be submitted no later than December 1 for consideration in conjunction
with next year's proposed rule.
The major changes we are proposing to the DRG classification system
for FY 2003 GROUPER version 20.0 and to the methodology to recalibrate
the DRG weights are set forth below. Unless otherwise noted, our DRG
analysis is based on data from 100 percent of the FY 2001 MedPAR file,
which contains hospital bills received through May 31, 2001, for
discharges in FY 2001.
2. MDC 1 (Diseases and Disorders of the Nervous System)
a. Proposed Revisions of DRGs 1 and 2
Currently, adult craniotomy patients are assigned to either DRG 1
(Craniotomy Age >17 Except for Trauma) or DRG 2 (Craniotomy for Trauma
Age >17). The trauma distinction recognizes that head trauma patients
requiring a craniotomy often have multiple injuries affecting other
body parts. However, we note that the structure of these DRGs predates
the creation in FY 1991 of MDC 24 (Multiple Significant Trauma). The
creation of MDC 24 resulted in head trauma patients with other
significant injuries being assigned to MDC 24 and removed from DRG 2.
In FY 1990, there was a 16-percent difference in the DRG weights for
DRG l and DRG 2. In FY 1992, after the creation of MDC 24, the
percentage difference in the DRG weights for DRG 1 and DRG 2 had
declined to 1.2 percent. The FY 2002 payment weight for DRG 1 is 3.2713
and for DRG 2 is 3.3874, a 3.5 percent difference.
For FY 2003, we reevaluated the GROUPER logic for DRGs 1 and 2 by
combining the patients assigned to these DRGs and examining the impact
of other patient attributes on patient charges. The presence or absence
of a CC was found to have a substantial impact on patient charges.

------------------------------------------------------------------------
Number
Cases in DRGs 1 and 2 of Average
patients charges
------------------------------------------------------------------------
With CC............................................. 19,012 $49,659
Without CC.......................................... 9,618 26,824
------------------------------------------------------------------------

Thus, there is an 85.1 percent difference in average charges for
the groups with and without CC for the combined DRGs 1 and 2. On this
basis, we are proposing to redefine and retitle DRGs 1 and 2 as
follows: DRG 1 (Craniotomy Age >17 with CC); and DRG 2 (Craniotomy Age

>17 without CC).
b. Proposed Revisions of DRGs 14 and 15
To assess the appropriate classification of patients with stroke
symptoms, we evaluated the assignment of cases to DRGs 14 (Specific
Cerebrovascular Disorders Except Transient Ischemic Attack (TIA) and
DRG 15 (Transient Ischemic Attack and Precerebral Occlusions). Our data
review indicated that the cases in DRGs 14 and 15 fell into three
discrete groups. The first group included cases in which the patients
were very sick, with severe intracranial lesions or subarachnoid
hemorrhage and severe consequences. The second group included cases in
which patients had not suffered a debilitating stroke but instead may
have experienced a transient ischemic attack. The patients in the
second group had one half of the average length of stay in the hospital
as the first group. The third group of cases included patients who
appeared to suffer strokes with minor consequences, as well as those
having occluded vessels without having a full-blown stroke.
We found that patients who have intracranial hemorrhage and
patients who have infarction are similar in severity. These cases are
more frequent in occurrence than cases with patients who have
subarachnoid hemorrhage. Therefore, we are proposing to continue to
group patients with intracranial hemorrhage and infarction together.
These types of cases are different from patients with, for example, an
occlusive carotid artery without infarction. In this common group of
cases, patients are not as severely ill because they typically have
lesser degrees of functional status deficits.
Our analysis indicates that we can improve the clinical and
resource cohesiveness of DRGs 14 and 15 by reassigning several specific
ICD-9-CM codes. For example, code 436 (Acute, but ill-defined,
cerebrovascular disease) is not a specific code and contains patients
with a wide range of deficits and anatomic problems. Our data show that
these cases consume fewer resources and have shorter lengths of stay
than other cases in DRG 14. Therefore, we are proposing to remove code
436 from DRG 14 and reassign it to DRG 15. We also are proposing to
create a third new DRG to further identify these cases. The proposed
revised or new DRG titles are as follows: DRG 14 (Intracranial
Hemorrhage and Stroke with Infarction); DRG 15 (Nonspecific
Cerebrovascular and Precerebral Occlusion without Infarction); and DRG
524 (Transient Ischemia).
The following table represents a proposed reconfiguration of DRGs
14 and 15 and the creation of a new DRG 524 reflecting these three
categorizations:

----------------------------------------------------------------------------------------------------------------
Number of Average length
Proposed DRG and title cases of stay (days) Average charge
----------------------------------------------------------------------------------------------------------------
Revised DRG 14 (Intracranial Hemorrhage and Stroke with 164,786 6.1 $15,643
Infarction)....................................................
Revised DRG 15 (Nonspecific Cerebrovascular and Precerebral 70,866 4.9 11,595
Occlusion without Infarction)..................................
New DRG 524 (Transient Ischemia)................................ 92,835 3.3 8,633
----------------------------------------------------------------------------------------------------------------

[[Page 31409]]

The proposed reconfiguration of DRGs 14 and 15 would result in the
following codes being designated as principal diagnosis codes in
proposed revised DRG 14:

430, Subarachnoid hemorrhage
431, Intracerebral hemorrhage
432.0, Nontraumatic extradural hemorrhage
432.1, Subdural hemorrhage
432.9, Unspecified intracranial hemorrhage
433.01, Occlusion and stenosis of basilar artery, with
cerebral infarction
433.11, Occlusion and stenosis of carotid artery, with
cerebral infarction
433.21, Occlusion and stenosis of vertebral artery, with
cerebral infarction

433.31, Occlusion and stenosis of multiple and bilateral
arteries, with cerebral infarction
433.81, Occlusion and stenosis of other specified precerebral
artery, with cerebral infarction
433.91, Occlusion and stenosis of unspecified precerebral
artery, with cerebral infarction
434.01, Cerebral thrombosis with cerebral infarction
434.11, Cerebral embolism with cerebral infarction
434.91, Cerebral artery occlusion, unspecified, with cerebral
infarction

In addition, we are proposing that the following two codes be moved
from DRG 14 to DRG 34 (Other Disorders of Nervous System with CC) and
DRG 35 (Other Disorders of Nervous System without CC): Code 437.3
(Cerebral aneurysm, nonruptured) and Code 784.3 (Aphasia). These codes
do not represent acute conditions. Aphasia, for example, could result
from a cerebral infarction, but if it does, the infarction should be
correctly coded as the principal diagnosis.
The proposed redefined DRG 15 would contain the following principal
diagnosis codes:

433.00, Occlusion and stenosis of basilar artery, without
mention of cerebral infarction
433.10, Occlusion and stenosis of carotid artery, without
mention of cerebral infarction
433.20, Occlusion and stenosis of vertebral artery, without
mention of cerebral infarction

433.30, Occlusion and stenosis of multiple and bilateral
arteries, without mention of cerebral infarction
433.80, Occlusion and stenosis of other specified precerebral
artery, without mention of cerebral infarction
433.90, Occlusion and stenosis of unspecified precerebral
artery, without mention of cerebral infarction
434.00, Cerebral thrombosis without mention of cerebral
infarction
434.10, Cerebral embolism without mention of cerebral
infarction
434.90, Cerebral artery occlusion, unspecified, without
mention of cerebral infarction
436, Acute, but ill-defined, cerebrovascular disease

In addition, we are proposing to remove the following codes from
the existing DRG 15 and place them in the proposed newly created DRG
524:

435.0, Basilar artery syndrome
435.1, Vertebral artery syndrome

435.2, Subclavian steal syndrome
435.3, Vertebrobasilar artery syndrome
435.8, Other specified transient cerebral ischemias
435.9, Unspecified transient cerebral ischemia

We are proposing to move code 437.1 (Other generalized ischemic
cerebrovascular disease) from DRG 16 (Nonspecific Cerebrovascular
Disorders with CC) and DRG 17 (Nonspecific Cerebrovascular Disorders
without CC) and add it to the proposed new DRG 524. This proposed
change represents a modification to improve clinical coherence and
seems to be a logical change for the construction of the proposed new
DRG 524.
3. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Heart Assist Systems
Heart failure is typically caused by persistent high blood pressure
(hypertension), heart attack, valve disease, other forms of heart
disease, or birth defects. It is a chronic condition in which the lower
chambers of the heart (ventricles) cannot pump sufficient amounts of
blood to the body. This causes the organs of the body to progressively
fail, resulting in numerous medical complications and frequently death.
DRG 127 (Heart Failure and Shock), to which heart failure cases are
assigned, is the single most common DRG in the Medicare population, and
represents the medical, not surgical, treatment options for this group
of patients.
In many cases, heart transplantation would be the treatment of
choice. However, the low number of donor hearts limits this treatment
option. Circulatory support devices, also known as heart assist systems
or left ventricular assist devices (LVADs), offer a surgical
alternative for end-stage heart failure patients. This type of device
is often implanted near a patient's native heart and assumes the
pumping function of the weakened heart's left ventricle. Studies are
currently underway to evaluate LVADs as permanent support for end-stage
heart failure patients.
We have reviewed the payment and DRG assignment of this type of
device in the past. Originally, these cases were assigned to DRG 110
(Major Cardiovascular Procedures with CC) and DRG 111 (Major
Cardiovascular Procedures without CC) in the September 1, 1994 final
rule (59 FR 45345). A more specific procedure code, 37.66 (Implant of
an implantable, pulsatile heart assist system) was made effective for
use with hospital discharges occurring on or after October 1, 1995. In
the August 29, 1997 final rule (62 FR 45973), we reassigned these cases
to DRG 108 (Other Cardiothoracic Procedures), because it was the most
clinically similar DRG with the best match in resource consumption
according to our data. In the July 31, 1998 final rule (63 FR 40956),
we again reviewed our data and discovered that the charges for
implantation of an LVAD were increasing at a greater rate than the
average charges for DRG 108. The length of stay for cases with code
37.66 was approximately 32 days, or three times as long as all other
DRG 108 cases. Therefore, we decided to move LVAD cases from DRG 108 to
DRG 104 (Cardiac Valve and Other Major Cardiothoracic Procedures with
Cardiac Catheterization) and DRG 105 (Cardiac Valve and Other Major
Cardiothoracic Procedures without Cardiac Catheterization). We
continued to review our data and discuss this topic in the FY 1999 and
FY 2000 annual final rules: July 30, 1999 (64 FR 41498) and August 1,
2000 (65 FR 47058).
In the August 1, 2001 final rule (66 FR 39838), we remodeled MDC 5
to add five new DRGs. We also added procedure codes 37.62 (Implant of
other heart assist system), 37.63 (Replacement and repair of heart
assist system), and 37.65 (Implant of an external, pulsatile heart
assist system) to DRGs 104 and 105. We removed defibrillator cases from
DRGs 104 and 105 and assigned them to DRG 514 (Cardiac Defibrillator
Implant with Cardiac Catheterization) and DRG 515 (Cardiac
Defibrillator Implant without Cardiac Catheterization) to make these
DRGs more clinically coherent. This also increased the relative weights
for DRGs 104 and 105, as the defibrillator cases had lower average
charges than other cases in those two DRGs.
In the FY 2001 MedPAR data file, we found 185 LVAD cases in DRG 104
and 90 cases in DRG 105, for a total of 275 cases. These cases
represent 1.3 percent of the total cases in DRG 104, and approximately
0.5 percent of the total

[[Page 31410]]

cases in DRG 105. However, the average charges for these cases are
approximately $36,000 and $85,000 higher than the average charges for
cases in DRGs 104 and 105, respectively.
This situation presents a dilemma, in that the technology has been
available since 1995 and is gradually increasing in utilization, while
LVAD cases involving the technology remain a small part of the total
cases in these two DRGs. In fact, removing LVAD cases from the
calculation of the average charge changes the average by only -0.4
percent and -0.5 percent for DRGs 104 and 105, respectively. Therefore,
despite the dramatically higher average charges for LVADs compared to
the DRG averages, the relative volume is insufficient to affect the
average to any great degree.
Therefore, we are proposing to create a new DRG 525 (Heart Assist
System Implant), which would contain these cases. The proposed FY 2003
relative weight for proposed new DRG 525 is 11.3787.
The new DRG would consist of any principal diagnosis in MDC 5, plus
one of the following surgical procedures:

37.62, Implant of other heart assist system
37.63, Replacement and repair of heart assist system
37.65, Implant of an external, pulsatile heart assist system

37.66, Implant of an implantable, pulsatile heart assist
system

Cases in which a subsequent heart transplant occurs during the
hospitalization episode would continue to be assigned to DRG 103 (Heart
Transplant) because cases involving procedure codes 336 (Combined
heart/lung transplant) and 375 (Heart transplant) are assigned to DRG
103, regardless of other codes included on the bill.
We reiterate a discussion we included in the August 1, 2000 final
rule (65 FR 47058) regarding placement of code 37.66 in the MCE
screening software as a noncovered procedure. The default designation
for that code will continue to be ``noncovered'' because of the
stringent conditions that must be met by hospitals in order to receive
payment for implantation of the device.
Section 65-15 of the Medicare Coverage Issues Manual (Artificial
Hearts and Relative Devices) provides the national coverage
determination regarding Medicare coverage of these devices. This
section may be accessed online at http://www.hcfa.gov/pubforms/06_cim/ci00.htm.
b. Moving Diagnosis Code 398.91 (Rheumatic Heart Failure) From DRG 125
to DRG 124
DRG 124 (Circulatory Disorders Except Acute Myocardial Infarction
(AMI), with Cardiac Catheterization and Complex Diagnosis) and DRG 125
(Circulatory Disorders Except Acute Myocardial Infarction (AMI) with
Cardiac Catheterization without Complex Diagnosis) have a somewhat
complex DRG logic. In order to be assigned to DRG 124 or 125, the
patient must first have a circulatory disorder, which would be one of
the diagnoses included in MDC 5. However, these DRGs exclude acute
myocardial infarctions. Therefore, these DRGs are comprised of cases
with a diagnosis from MDC 5, excluding acute myocardial infarction, but
also with a cardiac catheterization during the stay.
DRGs 124 and 125 are then further defined by whether or not the
patient had a complex diagnosis. If the patient had a complex
diagnosis, the case is assigned to DRG 124. If the patient does not
have a complex diagnosis, the case is assigned to DRG 125. A list of
diagnoses that comprise complex diagnoses is identified within DRG 124.
These diagnoses can be listed as either a principal or secondary
diagnosis.
We have received correspondence regarding the current assignment of
diagnosis code 398.91 (Rheumatic heart failure). The correspondent
pointed out that, while other forms of heart failure are listed as
complex diagnoses under DRG 124, rheumatic heart failure is not
included as a complex diagnosis within that DRG. Currently, if a
patient with rheumatic heart failure receives a cardiac
catheterization, the case is assigned to DRG 125.
The correspondent had conducted a study and found that patients
with rheumatic heart failure who receive a cardiac catheterization have
lengths of stay that are significantly longer than patients with other
forms of heart failure who receive a cardiac catheterization and who
are assigned to DRG 125. The correspondent found that these patients
have lengths of stay more similar to those cases assigned to DRG 124
(which have other forms of heart failure), and recommended that
diagnosis code 398.91 be added to the list of complex diagnoses within
DRG 124.
Within our claims data, we found 439 cases of patients in DRG 125
with rheumatic heart failure who received a cardiac catheterization.
The average charges for these rheumatic heart failure cases were almost
twice as much as for other cardiac patients in DRG 125 who received a
cardiac catheterization and who did not have a diagnosis of rheumatic
heart failure. We also conferred with our medical consultants and they
agree that rheumatic heart failure with cardiac catheterization is a
complex diagnosis and should be assigned to DRG 124 along with the
other complex forms of heart failure cases involving cardiac
catheterization.
We are proposing to add code 398.91 to DRG 124 as a complex
diagnosis. As a result, catheterization cases with rheumatic heart
disease would no longer be assigned to DRG 125.
c. Radioactive Element Implant
In the August 1, 2001 final rule, we created DRG 517 (Percutaneous
Cardiovascular Procedure without Acute Myocardial Infarction (AMI) with
Coronary Artery Stent Implant) as a result of the overall DRG splits
based on the presence of AMI (66 FR 39839). We assigned code 92.27
(Implantation or insertion of radioactive elements) to DRG 517 because
we believed that code 92.27 would always accompany cases involving a
percutaneous cardiovascular procedure and intravascular radiation
treatment. We have since determined that code 92.27 can also be present
as a stand-alone code in other types of cases. When cases with code
92.27 do not meet the criteria for DRG 517, they are currently directed
into DRG 468 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis). Because DRG 468 is for cases in which the O.R. procedure is
unrelated to the principal diagnosis, rather than assign cases with
code 92.27 that would otherwise be assigned to MDC 5 to DRG 468 because
they do not meet the criteria for assignment to DRG 517, we are
proposing to assign these cases to DRG 120 (Other Circulatory System
O.R. Procedures).
4. MDC 10 (Endocrine, Nutritional, and Metabolic Diseases and
Disorders)
Currently, when ICD-9-CM code 277.00 (Cystic Fibrosis without
mention of meconium ileus) is reported as the principal diagnosis, it
is assigned to the following DRG series in MDC 10: DRG 296 (Nutritional
and Metabolic Disease, Age >17 with CC); DRG 297 (Nutritional and
Metabolic Disease, Age >17 without CC); and DRG 298 (Nutritional and
Metabolic Disease, Age 0-17).
As part of our annual review of DRG assignments and based on
correspondence that we have received, we examined claims relating to
cases involving code 277.00 as a principal diagnosis in DRGs 296, 297,
and 298. Our analysis of the average charges for cases in which code
277.00 was the principal diagnosis in DRGs 296, 297, and 298 indicates
that resource

[[Page 31411]]

utilization for these cases is quite different from resource
utilization for other cases in the three DRGs. We believe that this
difference in resource utilization is due to the fact it is not
uncommon for cystic fibrosis patients to be admitted with pulmonary
complications. Our findings on the number of cases and the average
charges in the three DRGs when code 277.00 is assigned as the principal
diagnosis, and our findings for all cases in the three DRGs, are
indicated in the charts below.

Cases in DRG 296, 297, and 298 With Code 277.00 as the Principal
Diagnosis
------------------------------------------------------------------------
Number of Average
DRG and description cases charges
------------------------------------------------------------------------
DRG 296 (Nutritional & Metabolic Disease 271 $34,111
Age >17 with CC).......................
DRG 297 (Nutritional & Metabolic Disease 133 21,998
Age >17 with CC).......................
DRG 298 (Nutritional & Metabolic Disease 0 ..............
Age 0-17)..............................
------------------------------------------------------------------------

All Cases in DRG 296, 297, 298
------------------------------------------------------------------------
Number of Average
DRG and description cases charges
------------------------------------------------------------------------
DRG 296 (Nutritional & Metabolic Disease 169,768 $10,480
Age >17 with CC).......................
DRG 297 (Nutritional & Metabolic Disease 31,560 6,190
Age >17 without CC)....................
DRG 298 (Nutritional & Metabolic Disease 17 8,603
Age 0-17)..............................
------------------------------------------------------------------------

Based on the results of our analysis, we are proposing that three
new cystic fibrosis principal diagnosis codes be assigned to specific
DRGs and MDCs, and that other changes be made to DRG and MDC
assignments of existing cystic fibrosis codes, as discussed below.
We are proposing to create the following three new principal
diagnosis codes:

277.02 (Cystic fibrosis with pulmonary manifestations)
277.03 (Cystic fibrosis with gastrointestinal manifestations)
277.09 (Cystic fibrosis with other manifestations)

We are proposing that existing code 277.01 (Cystic fibrosis with
mention of meconium ileus) would continue to be assigned to DRG 387
(Prematurity with Major Problems) and DRG 389 (Full Term Neonate with
Major Problems) in MDC 15 (Newborns and Other Neonates with Conditions
Originating in the Perinatal Period), since it is a newborn diagnosis
code.
Because proposed new code 277.02 would identify those patients with
cystic fibrosis who have pulmonary manifestations, we are proposing to
assign cases in which the principal diagnosis is the proposed new code
277.02 to DRG 79 (Respiratory Infection and Inflammations Age >17 with
CC), DRG 80 (Respiratory Infections and Inflammations Age >17 without
CC), or DRG 81 (Respiratory Infections and Inflammations Age 0-17) in
MDC 4 (Diseases and Disorders of the Respiratory System).
We are proposing that proposed new code 277.03 would be assigned to
DRG 188 (Other Digestive System Diagnoses Age >17 with CC), DRG 189
(Other Digestive System Diagnoses Age >17 without CC), and DRG 190
(Other Digestive System Diagnoses Age 0-17) in MDC 6 (Diseases and
Disorders of the Digestive System), because of its specific
relationship to the digestive system.
Since proposed new code 277.09 could involve a number of
manifestations (excluding pulmonary and gastrointestinal), we are
proposing to assign this proposed new code to DRGs 296, 297, and 298 in
MDC 10, where we are retaining the current assignment of existing code
277.00.
The following chart summarizes our proposed DRG and MDC assignments
for new and existing cystic fibrosis principal diagnosis codes:

------------------------------------------------------------------------
Proposed MDC Proposed DRG
Principal diagnosis code and description assignment assignments
------------------------------------------------------------------------
Existing 277.00 (Cystic fibrosis without 10 296, 297, 298
mention of meconium ileus).............
Existing 277.01 (Cystic fibrosis with 15 387, 389
mention of meconium ileus).............
Proposed new 277.02 (Cystic fibrosis 4 79, 80, 81
with pulmonary manifestations).........
Proposed new 277.03 (Cystic fibrosis 6 188, 189, 190
with gastrointestinal manifestations)..
Proposed new 277.09 (Cystic fibrosis 10 296, 297, 298
with other manifestations).............
------------------------------------------------------------------------

5. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)
a. Insertion of Totally Implantable Vascular Access Device (VAD)
In the August 1, 2001 final rule (66 FR 39844), we discussed our
review of the DRG assignment of code 86.07 (Insertion of totally
implantable vascular access device (VAD)). Code 86.07 is considered a
nonoperative procedure when it occurs in MDC 11. Therefore, patients in
renal (kidney) failure requiring implantation of this device for
dialysis are grouped to medical DRG 316 (Renal Failure). We examined
whether implantation of this device should be removed from DRG 316 and
placed into surgical DRG 315 (Other Kidney and Urinary Tract O.R.
Procedures).
Implantation of a VAD into the chest wall and blood vessels of a
patient's upper body allows access to a patient's vessels via an
implanted valve and cannula. Two devices are implanted during one
operative session. One system is implanted arterially (the ``draw''),
while the other is implanted venously (the ``return''). Typically, the
VAD allows access to the patient's blood for hemodialysis purposes when
other sites in the body have been exhausted. The device is usually
inserted in the outpatient setting. Operative time is approximately 1
to 1.5 hours.

[[Page 31412]]

In the FY 2002 final rule (66 FR 39844-39845), we pointed out that
cases where the VAD was inserted as an inpatient procedure also
involved other complications, leading to higher average charges.
Therefore, we indicated that we were not assigning code 86.07 to DRG
315 at that time, but we would consider other alternative adjustments
to DRGs 315 and 316.
For FY 2003, we explored whether DRG 315 should be split based on
existence or nonexistence of CCs. However, during our consideration of
this alternative, we discovered that DRG 315 does not lend itself to a
CC split due to the high occurrence of cases in this DRG that already
have complications identified on the CC list. Therefore, we reexamined
cases in DRGs 315 and 316 in the FY 2001 MedPAR file. The results are
reflected in the chart below:

------------------------------------------------------------------------
Without Code
With Code 86.07 86.07
------------------------------------------------------------------------
DRG 315 (surgical):
Number of Cases................. 354................ 21,089.
Average Length of Stay.......... 12.6 days.......... 6.7 days.
Average Charges................. $47,251............ $25,622.
DRG 316 (Medical):
Number of Cases................. 887................ 76,676.
Average Length of Stay.......... 10.3............... 6.6 days.
Average Charges................. $31,904............ $16,934.
------------------------------------------------------------------------

These results are similar to the findings included in the FY 2002
final rule that were based on data from the FY 2000 MedPAR file (66 FR
39845).
We found that the average length of stay in DRG 315 for patients
not receiving the VAD is 6.7 days, while those patients who received
the VAD had an average length of stay of 12.6 days. We found the
average charges in DRG 315 for patients not receiving the VAD were
approximately $25,622, while the average charges for those patients who
received the VAD were $47,251.
We found that the cases receiving the VAD as an inpatient procedure
are significantly more costly than other cases in DRG 316. Therefore,
we are proposing to designate code 86.07 as an O.R. procedure under MDC
11. Specifically, code 86.07 would be recognized as an O.R. procedure
code in MDC 11 and assigned to DRG 315 when combined with the following
principal diagnosis codes from DRG 316:

403.01, Malignant hypertensive renal disease with renal
failure
403.11, Benign hypertensive renal disease with renal failure
403.91, Unspecified hypertensive renal disease with renal
failure
404.02, Malignant hypertensive heart and renal disease with
renal failure

404.12, Malignant hypertensive heart and renal disease with
renal failure
404.92, Unspecified hypertensive heart and renal disease with
renal failure
584.5, Acute renal failure with lesion of tubular necrosis
584.6, Acute renal failure with lesion of renal cortical
necrosis
584.7, Acute renal failure with lesion of renal medullary
(papillary) necrosis
584.8, Acute renal failure with other specified pathological
lesion in kidney
584.9, Acute renal failure, unspecified
585, Chronic renal failure
586, Renal failure, unspecified

788.5, Oliguria and anuria
958.5, Traumatic anuria
b. Bladder Reconstruction
We received correspondence regarding the current classification of
procedure code 57.87 (Reconstruction of urinary bladder) as a minor
bladder procedure and the assignment of the code under DRG 308 (Minor
Bladder Procedures with CC) and DRG 309 (Minor Bladder Procedures
without CC). The correspondent believed that bladder reconstruction is
not a minor procedure, submitted individual hospital charges to support
this contention, and recommended that the code be classified as a major
procedure and assigned to a higher weighted DRG.
Our clinical advisors indicated that reconstruction of the bladder
is a more extensive procedure than the other minor bladder procedures
in DRGs 308 and 309. They agree that the bladder reconstruction
procedure is as complex as the procedures under code 57.79 (Total
cystectomy) and the other major bladder procedures in DRGs 303 through
305.
As indicated in the chart below, we found that the average charges
for bladder reconstruction are significantly higher than the average
charges for other minor procedures within DRGs 308 and 309:

------------------------------------------------------------------------
With Without
Code Code
57.87 57.87
------------------------------------------------------------------------
DRG 308 (minor bladder procedure with CC):
Number of Cases................................... 64 5,066
Average Charges................................... $36,560 $19,923
DRG 309 (minor bladder procedures without CC):
Number of Cases................................... 25 3,021
Average Charges................................... $23,390 $11,200
------------------------------------------------------------------------

We found that procedure code 57.87 may be more appropriately placed
in DRG 303 (Kidney, Ureter and Major Bladder Procedures for Neoplasm),
304 (Kidney, Ureter and Major Bladder Procedures for Nonneoplasm with
CC), and DRG 305 (Kidney, Ureter and Major Bladder Procedures for
Nonneoplasm without CC), based on average charges for procedures in
these three DRGS as indicated in the following chart:

------------------------------------------------------------------------
Number of Average
DRG cases charges
------------------------------------------------------------------------
303 (Kidney, Ureter and Major Bladder 14,116 $30,691
Procedures for Neoplasm)...............
304 (Kidney, Ureter and Major Bladder 8,060 30,577
Procedures for Nonneoplasm with CC)....
305 (Kidney, Ureter and Major Bladder 2,029 15,492
Procedures for Nonneoplasm without CC).
------------------------------------------------------------------------

Based on the results of our analysis and the advice of our medical
consultants discussed above, we are proposing to classify code 57.87 as
a major bladder procedure and to assign it to DRGs 303, 304, and 305.
6. MDC 15 (Newborns and Other Neonates with Conditions Originating in
the Perinatal Period)
The primary focus of updates to the Medicare DRG classification
system is for changes relating to the Medicare patient population, not
the pediatric or neonatal patient populations. However, the Medicare
DRGs are sometimes used to classify other patient populations. Over the
years, we have received comments about aspects of the Medicare newborn
DRGs that appear problematic, and we have responded to these on an
individual basis. Some correspondents have requested that we take a
closer

[[Page 31413]]

overall look at the DRGs within MDC 15.
To respond to this request relating to review of MDC 15, we
contacted the National Association of Children's Hospitals and Related
Institutions (NACHRI), along with our own medical advisors, to obtain
proposals for possible revisions of the existing DRG categories in MDC
15. The focus of the requested proposals was to refine category
definitions within the framework of the existing seven broadly defined
neonatal DRGs. The proposals also were to take advantage of the new,
more specific neonatal diagnosis codes to be adopted, effective October
1, 2002, to assist with refinements to the existing DRG category
definitions.
In preparing these proposed changes to MDC 15, we have considered
comments and suggestions previously received, including suggestions
from NACHRI on how to make improvements within the existing framework
of seven very broadly defined neonatal DRGs. In the future, we may
consider broader changes to MDC 15.
a. Definition of MDC 15
The existing diagnosis definitions for MDC 15 include certain
diagnoses that may be present at the time of birth but may also
continue beyond the perinatal period.
These diagnoses are basically congenital anomalies, and even though
they may continue beyond the perinatal period, they are assigned to MDC
15 which is specific to newborns and neonates.
The diagnosis codes assigned to the DRGs under MDC 15 have been a
source of confusion because older children and adults can be admitted
with these principal diagnoses and assigned to newborn or neonate DRGs
in MDC 15 as if they were newborns.
Our medical consultants and NACHRI have reviewed the listing of
diagnosis codes and identified those that should not be routinely
classified under MDC 15. As a result of this review, we are proposing
that the following list of diagnosis codes be removed from MDC 15:
758.9, Conditions due to anomaly of unspecified chromosome

759.4, Conjoined twins
759.7, Multiple congenital anomalies, so described
759.81, Prader-Willi Syndrome
759.83, Fragile X Syndrome
759.89, Other specified anomalies
759.9, Congenital anomaly, unspecified
779.7, Periventricular leukomalacia
795.2, Nonspecific abnormal findings on chromosomal analysis

We are proposing to assign the nine diagnosis codes listed above to
the following MDCs and DRGs (if medical):

----------------------------------------------------------------------------------------------------------------
Proposed MDC
Diagnosis code Title assignment Proposed DRG assignment
----------------------------------------------------------------------------------------------------------------
758.9........................... Conditions due to anomaly of 23 467 (Other Factors Influencing
unspecified chromosome. Health Status).
759.4........................... Conjoined twins............... 6 188, 189, 190 (Other Digestive
System Diagnoses, age >17
with CC, Age >17 without CC,
and Age 0-17, respectively).
759.7........................... Multiple congenital anomalies, 8 256 (Other Musculoskeletal
so described. System and Connective Tissue
Diagnoses).
759.81.......................... Prader-Willi Syndrome......... 8 256 (Other Musculoskeletal
System and Connective Tissue
Diagnoses).
759.83.......................... Fragile x Syndrome............ 19 429 (Organic Disturbances and
Mental Retardation)
759.89.......................... Other specified anomalies..... 8 256 (Other Musculoskeletal
System and Connective Tissue
Diagnoses).
759.9........................... Congenital anomaly, 23 467 (Other Factors Influencing
unspecified. Health Status).
779.7........................... Periventricular leukomalacia.. 1 34, 35 (Other Disorders of the
Nervous System with CC and
without CC, respectively).
795.2........................... Nonspecific abnormal findings 23 467 (Other Factors Influencing
on chromosomal analysis. Health Status).
----------------------------------------------------------------------------------------------------------------

The following three specific 4-digit diagnosis codes have been
determined invalid by the ICD-9-CM Coordination and Maintenance
Committee, effective October 1, 2002, and we are proposing to remove
---------------------------------------------------------------------------
them from MDC 15.

770.8, Other newborn respiratory problems
771.8, Other infection specific to the perinatal period
779.8, Other specified conditions originating in the perinatal
period

The above three codes are being replaced by 5-digit codes to
capture more detail. These new 5-digit codes are assigned to DRGs
within MDC 15 and are listed among the codes in Table 6A--New Diagnosis
Codes in the Addendum of this proposed rule.
In addition, the ICD-9-CM Coordination and Maintenance Committee
created a number of new codes, effective October 1, 2002, to capture
newborn and neonatal conditions. Therefore, we are proposing to add the
following new 23 diagnosis codes to MDC 15:

747.83, Persistent fetal circulation
765.20, Unspecified weeks of gestation
765.21, Less than 24 completed weeks of gestation
765.22, 24 completed weeks of gestation
765.23, 25-26 completed weeks of gestation
765.24, 27-28 completed weeks of gestation

765.25, 29-30 completed weeks of gestation
765.26, 31-32 completed weeks of gestation
765.27, 33-34 completed weeks of gestation
765.28, 35-36 completed weeks of gestation
765.29, 37 or more completed weeks of gestation
770.81, Primary apnea of newborn
770.82, Other apnea of newborn
770.83, Cyanotic attacks of newborn
770.84, Respiratory failure of newborn

770.89, Other respiratory problems after birth
771.81, Septicemia [sepsis] of newborn
771.82, Urinary tract infection of newborn
771.83, Bacteremia of newborn
771.89, Other infections specific to the perinatal period
779.81, Neonatal bradycardia
779.82, Neonatal tachycardia
779.89, Other specified conditions originating in perinatal
period

[[Page 31414]]

b. DRG 386 (Extreme Immaturity or Respiratory Distress Syndrome,
Neonate)
The existing DRG 386 is defined by the presence of one of the ICD-
9-CM extreme prematurity codes (765.01 through 765.05) with the fifth
digit indicating birthweight less than 1,500 grams (3.3 pounds). NACHRI
has identified two weaknesses in the use of the fifth digit to define
prematurity.
One weakness relates to determining extreme immaturity, which, in
part, is limited by the existing ICD-9-CM diagnosis codes. The existing
ICD-9-CM definition for the extreme immaturity codes ``usually implies
birthweight less than 1,000 grams (2.2 pounds) or gestational age less
than 28 completed weeks,'' or both. The fifth digit provides range
values for birthweight but gives no information on gestational age. A
specific and distinct set of ICD-9-CM diagnosis codes for gestational
age is to be introduced effective October 1, 2002. These new codes will
provide a clearer basis for differentiating extreme immaturity or
gestational age, or both.
The second weakness is that diagnosis code 769 (Respiratory
distress syndrome in newborn) is currently only associated with DRG
386, which requires extreme prematurity, but respiratory distress
syndrome in newborns can occur with all levels of prematurity.
Therefore, we believe that code 769 should not be used to classify a
diagnosis under DRG 386.
The proposed revision to DRG 386 would reflect the upcoming new
ICD-9-CM diagnosis codes. We are proposing to redefine DRG 386 to
include those newborns whose preterm birthweight is less than 1,000
grams or gestational age is less than 27-28 completed weeks, or both.
Therefore, we would remove diagnosis code 769 from DRG 386, as this
code is associated with all levels of prematurity, not just extreme
immaturity. In addition, we are proposing to revise the title of DRG
386 to read ``Extreme Immaturity''.
Because birthweight for neonates varies at all gestational ages,
some neonates will meet the DRG 386 criteria for preterm extremely low
birthweight (less than 1,000 grams) but not the DRG 386 criteria for
extremely short gestation age (less than 27-28 completed weeks). The
reverse may also occur, where a neonate meets the DRG 386 criteria for
extremely short gestational age (less than 27-28 completed weeks) but
not for preterm extremely low birthweight (less than 1,000 grams). In
either situation, the neonate would be assigned to the proposed
retitled DRG 386 (Extreme Immaturity).
NACHRI provided the following information on the measurement of
gestational age and its use in the definition of Medicare neonatal
DRGs. First, they noted that gestational age can be as powerful a
predictor of a newborn's hospitalization course as birthweight and
corresponds more directly to organ system immaturity. Second, while
gestational age can be identified with a reasonable level of accuracy,
it cannot be measured as precisely as birthweight. These two
considerations led NACHRI to recommend the inclusion of gestational age
in the definition of the Medicare neonatal DRGs, but in a conservative
manner. Specifically, extremely short gestational age, as identified
earlier, usually implies gestational age less than 28 weeks. The
proposed new definition of DRG 386 includes only the gestational age
codes for less than 27 to 28 completed weeks. Thus, there is a 1-week
conservative bias in the use of the new gestational age codes for DRG
386. It is also important to note that the existing DRG 386 definition
includes existing codes 765.01 through 765.05, which include extreme
immaturity without a specific identification of gestational age and
birthweight up to 1,499 grams (3.3 pounds). Thus, the proposed revised
definition of DRG 386 is actually somewhat more stringent as well as
more specific.
To implement these changes, we are proposing to remove the
following diagnosis codes from the list of ``principal or secondary
diagnosis'' under DRG 386:

765.04, Extreme immaturity, 1,000-1,249 grams
765.05, Extreme immaturity, 1,250-1,499 grams
769, Respiratory distress syndrome in newborn

Note, as explained above, while we are proposing to remove
diagnosis codes 765.04, 765.05, and 769 from the list of principal or
secondary diagnosis under DRG 386, a neonate would still be assigned to
DRG 386 if there is a diagnosis of gestational age less than 27 to 28
completed weeks reported (765.21 through 765.23).
We are proposing to add the following diagnosis codes to the list
of ``principal or secondary diagnosis'' under DRG 386:

765.11, Other preterm infants, less than 500 grams
765.12, Other preterm infants, 500-749 grams
765.13, Other preterm infants, 750-999 grams
765.21, Less than 24 completed weeks of gestation
765.22, 24 completed weeks of gestation
765.23, 25-26 completed weeks of gestation

c. DRG 387 (Prematurity With Major Problems)
The existing definition of DRG 387 has the following three
components: (1) Principal or secondary diagnosis of prematurity; (2)
Principal or secondary diagnosis of major problem (these are diagnoses
that define MDC 15); or (3) secondary diagnosis of major problem (these
are diagnoses that do not define MDC 15 so they can only be secondary
diagnosis codes for patients assigned to MDC 15). We are proposing
changes for each component of the definition for DRG 387.
We are proposing to revise the definition for the first component
of DRG 387, ``principal or secondary diagnosis of prematurity'', to
include all preterm low birthweight codes with fifth digit range code
values indicating birthweight between 1,000 grams (2.2 pounds) and
2,499 grams (5.5 pounds), or gestational age between 27 to 28 and 35 to
36 completed weeks, or both. This would include all of the preterm low
birthweight and gestational age codes except those assigned to the
proposed revised DRG 386 and except for the following four preterm and
gestational age codes: 765.10, 765.19, 765.20, and 765.29.
It is possible for a neonate to be premature and greater than 2,500
grams (5.5 pounds). In this instance, one of the new gestational age
codes that specifically identifies the newborn to be less than 37
completed weeks of gestation would need to be present to meet the
criteria for inclusion in DRG 387. This is not a conceptual change for
DRG 387, in that diagnosis codes 765.10 and 765.19 should both refer to
newborns less than 37 completed weeks of gestation. Therefore, we are
proposing to take into consideration the new ICD-9-CM codes that
require a more specific affirmation that the newborn is less than 37
completed weeks of gestation. Because DRG 387 is a broadly defined
category (1,000-2,499 grams or 27-36 completed weeks of gestation),
NACHRI recommends that it is important to require specific information
for inclusion of patients at the high end of the birthweight/
gestational age range.
We are proposing to remove the following diagnosis codes from the
list of diagnoses defined as ``principal or secondary diagnosis of
prematurity'' for DRG 387:

765.10, Other preterm infants, unspecified (weight)

[[Page 31415]]

765.11, Other preterm infants, less than 500 grams
765.12, Other preterm infants, 500-749 grams
765.13, Other preterm infants, 750-999 grams
765.19, Other preterm infants, 2,500+ grams

We are proposing to add the following diagnosis codes to the list
of diagnoses defined as ``principal or secondary diagnosis of
prematurity'' for DRG 387:

765.04, Extreme immaturity, 1000-1249 grams
765.05, Extreme immaturity, 1250-1499 grams
765.24, 27-28 completed weeks of gestation
765.25, 29-30 completed weeks of gestation

765.26, 31-32 completed weeks of gestation
765.27, 33-34 completed weeks of gestation
765.28, 35-36 completed weeks of gestation

We are proposing to revise the definition for the second component
of DRG 387, ``principal or secondary diagnosis of major problem'', to
remove certain diagnosis codes and to add other diagnosis codes. We are
proposing to remove three groups of diagnosis codes. The first group of
diagnosis codes that we are proposing to remove includes the fetal
malnutrition codes for the birthweight ranges less than 2500 grams.
NACHRI indicates that these newborns are not necessarily more
complicated than preterm infants of the same birthweight range. These
newborns have fewer problems related to organ system immaturity and
often demonstrate excellent catch-up growth after delivery. Some of the
fetal malnutrition diagnosis neonates may have serious problems.
Therefore, it is best for the classification system to look for other
more specific, major problem diagnoses than to include all of these
newborns in DRG 387. We are proposing to remove the following diagnosis
codes from DRG 387.

764.11, ``Light-for-dates'' with signs of fetal malnutrition,
less than 500 grams
764.12, ``Light-for-dates'' with signs of fetal malnutrition,
500-749 grams
764.13, ``Light-for-dates'' with signs of fetal malnutrition,
750-999 grams
764.14, ``Light-for-dates'' with signs of fetal malnutrition,
1,000-1,249 grams
764.15, ``Light-for-dates'' with signs of fetal malnutrition,
1,250-1,499 grams
764.16, ``Light-for-dates'' with signs of fetal malnutrition,
1,500-1,749 grams

764.17, ``Light-for-dates'' with signs of fetal malnutrition,
1,750-1,999 grams
764.18, ``Light-for-dates'' with signs of fetal malnutrition,
2,000-2,499 grams
764.21, Fetal malnutrition without mention of ``light-for-
dates'', less than 500 grams
764.22, Fetal malnutrition without mention of ``light-for-
dates'', 500-749 grams
764.23, Fetal malnutrition without mention of ``light-for-
dates'', 750-999 grams
764.24, Fetal malnutrition without mention of ``light-for-
dates'', 1,000-1,249 grams
764.25, Fetal malnutrition without mention of ``light-for-
dates'', 1,250-1,499 grams
764.26, Fetal malnutrition without mention of ``light-for-
dates'', 1,500-1,749 grams
764.27, Fetal malnutrition without mention of ``light-for-
dates'', 1,750-1,999 grams

764.28, Fetal malnutrition without mention of ``light-for-
dates'', 2,000-2,499 grams

The second group of codes we are proposing to remove from the list
of ``principal or secondary diagnosis of major problems'' under DRG 387
consists of the following 13 diagnosis codes. The majority of these
diagnosis codes do not represent a major problem for a newborn at or
shortly after birth. NACHRI believes that costs associated with
newborns with these conditions are similar to costs associated with
neonates without a major problem.

763.4, Cesarean delivery affecting fetus or newborn
770.1, Meconium aspiration syndrome
770.8, Other newborn respiratory problems
771.8, Other infection specific to the perinatal period
772.0, Fetal blood loss
773.2, Hemolytic disease due to other and unspecified
isoimmunization of fetus or newborn
773.5, Late anemia due to isoimmunization of fetus or newborn
775.5, Other transitory neonatal electrolyte disturbances

775.6, Neonatal hypoglycemia
776.0, Hemorrhagic disease of newborn
776.6, Anemia of prematurity
777.1, Meconium obstruction in fetus or newborn
777.2, Intestinal obstruction due to inspissated milk in
newborn

We note that diagnosis code 770.8 (Other newborn respiratory
problems) and diagnosis code 771.8 (Other infection specific to the
perinatal period) are 4-digit codes that are being replaced by a series
of more specific 5-digit codes, effective October 1, 2002. (See Table
6C in the Addendum of this proposed rule.) The listing of the codes on
the second group above includes some of these new 5-digit codes.
The third group of diagnosis codes that we are proposing to remove
from the list of diagnosis defined as ``principal or secondary
diagnosis of major problem'' under DRG 387 includes the following two
diagnosis codes. These codes are no longer assigned to MDC 15 when they
are the principal diagnosis.

759.4, Conjoined twins
779.7, Periventricular leukomalacia

We are proposing to add the following nine new and existing
diagnosis codes to the list of ``principal or secondary diagnosis of
major problem'' that defines DRG 387. These nine diagnosis codes
generally represent major problems at the time of birth and have costs
more similar to those of neonates with major problems than neonates
without major problems. Many of these diagnosis codes are related to
congenital anomaly conditions.

747.83, Persistent fetal circulation (new code)
769, Respiratory distress syndrome in newborn

770.84, Respiratory failure of newborn (new code)
771.3, Tetanus neonatorum
771.81, Septicemia of newborn (new code)
771.82, Neonatal urinary tract infection (new code)
771.83, Bacteremia of newborn (new code)
771.89, Other infections specific to perinatal period (new
code)
776.7, Transient neonatal neutropenia

Of special note is the handling of diagnosis code 769 (Respiratory
distress syndrome in newborn). Earlier in this preamble, we discussed
the proposed removal of this diagnosis code from the definition of
proposed retitled DRG 386 (Extreme Immaturity) because, even though it
is usually associated with prematurity, it may occur with all levels of
prematurity. We are proposing to add respiratory distress syndrome
(which was previously assigned to existing DRG 386) to the list of
diagnoses that define ``principal or secondary diagnosis of major
problem'' for DRG 387. We are not proposing to add it to the list of
diagnoses that define ``principal or secondary diagnosis of
prematurity'' for DRG 387. The rationale for not adding code 769 as a
prematurity diagnosis is that it occurs in only a small subset of
neonates in the birthweight range of 1,000 to 2,499 grams (2.2 to 5.5
pounds), and the vast majority of occurrences is in the upper end of
this birthweight range. Respiratory distress syndrome

[[Page 31416]]

might not be indicative of a major problem for neonates at the low end
of this range (for example, those closer to 1,000 to 1,249 grams),
because these neonates will most likely have multiple significant
problems. Therefore, we are proposing that respiratory distress
syndrome be classified as a major problem and included among the list
of ``principal or secondary diagnosis of major problem'' for DRG 387.
In addition, we are proposing to revise the definition for the
third defining component of DRG 387, ``secondary diagnosis of major
problem''. This list of major problem diagnoses can only be secondary
diagnoses because they are not among the list of principal diagnoses
that defines MDC 15 for the Medicare DRG classification system. Based
on NACHRI's recommendations, we are proposing to add and remove
diagnoses from this list on the same basis as previously described for
the list of ``principal or secondary diagnosis of major problems'' for
DRG 387. That is, diagnoses are removed if, in the majority of
instances, the condition does not represent a major problem for a
newborn at or shortly after birth, and on average exhibits costs
similar to the costs associated with neonates without a major problem.
In addition, we are proposing to remove the asthma with status
asthmaticus diagnosis codes, as these diagnosis codes pertain to
newborns or other conditions arising in the perinatal period.
We are proposing to remove the following diagnosis codes from the
list of ``secondary diagnosis of major problem'' for DRG 387:

276.5, Volume depletion
349.0, Reaction to spinal or lumbar puncture
457.2, Lymphangitis
493.01, Extrinsic asthma with status asthmaticus
493.11, Intrinsic asthma with status asthmaticus
493.91, Asthma, unspecified type, with status asthmaticus
578.1, Blood in stool
683, Acute lymphadenitis
693.0, Dermatitis due to drugs and medicines taken internally

695.0, Toxic erythema
708.0, Allergic urticaria
745.4, Ventricular septal defect
785.0, Tachycardia, unspecified
995.2, Unspecified adverse effect of drug, medicinal and
biological substance, not elsewhere classified
999.5, Other serum reaction, not elsewhere classified
999.6, ABO incompatibility reaction, not elsewhere classified
999.7, Rh incompatibility reaction, not elsewhere classified
999.8, Other transfusion reaction, not elsewhere classified

We are proposing to add the following 65 diagnosis codes to the
list of ``secondary diagnosis of major problem'' for DRG 387:

416.0, Primary pulmonary hypertension
416.8, Other chronic pulmonary heart diseases
425.3, Endocardial fibroelastosis
425.4, Other primary cardiomyopathies
427.0, Paroxysmal supraventricular tachycardia
427.1, Paroxysmal ventricular tachycardia
466.11, Acute bronchiolitis due to respiratory syncytial virus
(RSV)
466.19, Acute bronchiolitis due to other infectious organisms
478.74, Stenosis of larynx

480.0, Pneumonia due to adenovirus
480.1, Pneumonia due to respiratory syncytial virus
480.2, Pneumonia due to parainfluenza virus
480.8, Pneumonia due to other virus not elsewhere classified
480.9, Viral pneumonia, unspecified
745.0, Common truncus
745.10, Complete transposition of great vessels
745.11, Double outlet right ventricle
745.12, Corrected transposition of great vessels

745.19, Other transposition of great vessels
745.2, Tetralogy of Fallot
745.3, Common ventricle
745.60, Endocardial cushion defect, unspecified type
745.61, Ostium primum defect
745.69, Other endocardial cushion defects
746.01, Atresia of pulmonary valve, congenital
746.1, Tricuspid atresia and stenosis, congenital
746.2, Ebstein's anomaly

746.7, Hypoplastic left heart syndrome
746.81, Subaortic stenosis, congenital
746.82, Cor triatriatum
746.84, Obstructive anomalies of heart, congenital, not
elsewhere classified
746.86, Congenital heart block
747.10, Coarctation of aorta (preductal) (postductal)
747.11, Interruption of aortic arch
747.41, Total anomalous pulmonary venous connection
747.81, Anomalies of cerebrovascular system, congenital

748.3, Other congenital anomalies of larynx, trachea, and
bronchus
748.4, Cystic lung, congenital
748.5, Agenesis, hypoplasia, and dysplasia of lung, congenital
750.3, Tracheoesophageal fistula, esophageal atresia and
stenosis, congenital
751.1, Atresia and stenosis of small intestine, congenital
751.2, Atresia and stenosis of large intestine, rectum, and
anal canal, congenital
751.3, Hirschsprung's disease and other congenital functional
disorders of colon
751.4, Anomalies of intestinal fixation, congenital
751.62, Congenital cystic disease of liver

751.69, Other congenital anomalies of gall bladder, bile
ducts, and liver
751.7, Anomalies of pancreas, congenital
753.0, Renal agenesis and dysgenesis
753.5, Exstrophy of urinary bladder
756.51, Osteogenesis imperfecta
756.6, Anomalies of diaphragm, congenital
756.70, Congenital anomaly of abdominal wall, unspecified
756.71, Prune belly syndrome
756.79, Other congenital anomalies of abdominal wall

758.1, Patau's Syndrome
758.2, Edwards' Syndrome
758.3, Autosomal deletion syndromes
759.4, Conjoined twins
759.7, Multiple congenital anomalies, so described
759.81, Prader-Willi Syndrome
759.89, Other specified anomalies
7797, Periventricular leukomalacia
785.51, Cardiogenic shock

785.59, Other shock without mention of trauma
789.5, Ascites

d. DRG 388 (Prematurity Without Major Problems)
We are proposing to revise the definition for prematurity for DRG
388 ((Prematurity without Major Problems) in the same manner that we
proposed to revise the definition of prematurity for DRG 387
(Prematurity with Major Problems).
We are proposing to remove the following five diagnosis codes from
the list of codes pertaining to the ``principal or secondary diagnosis
of prematurity'' for DRG 388:

765.10, Other preterm infants unspecified (weight)
765.11, Other preterm infants, less than 500 grams
765.12, Other preterm infants, 500-749 grams
765.13, Other preterm infants, 750-999 grams

[[Page 31417]]

765.19, Other preterm infants, 2,500+ grams

We are proposing to add the following seven diagnosis codes to the
definition of principal or secondary diagnosis of prematurity for DRG
388:

765.04, Extreme immaturity, 1000-1249 grams
765.05, Extreme immaturity, 1250-1499 grams

765.24, 27-28 completed weeks of gestation
765.25, 29-30 completed weeks of gestation
765.26, 31-32 completed weeks of gestation
765.27, 33-34 completed weeks of gestation
765.28, 35-36 completed weeks of gestation
e. DRG 389 (Full Term Neonate With Major Problem)
We are proposing to revise the definition of ``principal or
secondary diagnosis of major problem'' for DRG 389 (Full Term Neonate
with Major Problem) in the same manner that we proposed to revise the
definition for DRG 387 (Prematurity with Major Problem).
f. DRG 390 (Neonate With Other Significant Problems)
DRG 390 is defined as patients with ``principal or secondary
diagnosis of newborn or neonate, with other significant problems, not
assigned to DRG 385 through 389, 391, or 469 (principal diagnosis
invalid as discharge diagnosis). As a result of our proposed changes to
other neonatal DRGs, we are proposing to make conforming changes
related to diagnosis codes assigned to DRG 390.
g. DRG 391 (Normal Newborn)
DRG 391 (Normal Newborn) is defined by a list of principal
diagnoses (for example, V30, Newborn codes plus certain minor newborn
problems) and no secondary diagnoses or only certain secondary
diagnoses (that is, minor problem diagnoses). NACHRI recommended that
the definition of DRG 391 be modified to expand the number of minor
problem newborn diagnoses included in both the list of principal
diagnoses and the list of only certain secondary diagnoses that define
DRG 391. The diagnoses that we are proposing to add to DRG 391 are
conditions that NACHRI has identified as occurring with some frequency
in the newborn population and having costs more similar to that of DRG
391 than DRG 390 (Neonates with Other Significant Problems).
We are proposing to add the following diagnosis codes to the list
of ``principal diagnosis'' that defines DRG 391:

764.00, ``Light-for-dates'' without mention of fetal
malnutrition, unspecified (weight)
764.90, Fetal growth retardation unspecified (weight)
765.10, Other preterm infants unspecified (weight)
765.19, Other preterm infants, 2,500+ grams

765.20, Unspecified weeks of gestation
765.29, 37 or more completed weeks of gestation

We also are proposing to add the above six diagnosis codes to the
list of ``only certain secondary diagnosis'' that defines DRG 391, as
indicated below. Of these diagnosis codes, NACHRI indicates that the
highest volume diagnosis code is 765.19 (Other preterm infants, 2,500+
grams). NACHRI notes that when this diagnosis code is recorded and no
major problem or significant problem diagnosis is recorded, these
patients have costs that are not much different than those for other
normal newborns.
We are proposing to add the following codes to the list of ``only
certain secondary diagnosis'' that defines DRG 391:

216.0, Benign neoplasm of skin of lip
216.1, Benign neoplasm of eyelid, including canthus
216.2, Benign neoplasm of ear and external auditory canal
216.3, Benign neoplasm of skin of other and unspecified parts
of face
216.4, Benign neoplasm of scalp and skin of neck
216.5, Benign neoplasm of skin of trunk, except scrotum
216.6, Benign neoplasm of skin of upper limb, including
shoulder

216.7, Benign neoplasm of skin of lower limb, including hip
216.8, Benign neoplasm of other specified sites of skin
216.9, Benign neoplasm of skin, site unspecified
228.00, Hemangioma of unspecified site
228.01, Hemangioma of skin and subcutaneous tissue
228.1, Lymphangioma, any site
379.8, Other specified disorders of eye and adnexa
379.90, Disorder of eye, unspecified
379.92, Swelling or mass of eye

379.93, Redness or discharge of eye
379.99, Other ill-defined disorders of eye
427.60, Premature beats, unspecified
427.61, Supraventricular premature beats
427.9, Cardiac dysrhythmia, unspecified
528.4, Cysts of oral soft tissues
553.1, Umbilical hernia without mention of obstruction or
gangrene
603.8, Other specified types of hydrocele
603.9, Hydrocele, unspecified

607.89, Other specified disorders of penis
607.9, Unspecified disorder of penis and perineum
624.9, Unspecified noninflammatory disorder of vulva and
perineum
692.9, Contact dermatitis and other eczema unspecified cause
701.1, Keratoderma, acquired
701.3, Striae atrophicae
701.8, Other specified hypertrophic and atrophic conditions of
skin
701.9, Unspecified hypertrophic and atrophic conditions of
skin
702.8, Other specified dermatoses

705.1, Prickly heat
706.1, Other acne
706.2, Sebaceous cyst
709.8, Other specified disorders of skin
709.9, Unspecified disorder of skin and subcutaneous tissue
719.61, Other symptoms referable to joint of shoulder region
719.65, Other symptoms referable to joint of pelvic region and
thigh
755.00, Polydactyly, unspecified digits
755.01, Polydactyly of fingers

755.02, Polydactyly of toes
755.10, Syndactyly of multiple and unspecified sites
755.11, Syndactyly of fingers without fusion of bone
755.12, Syndactyly of fingers with fusion of bone
755.13, Syndactyly of toes without fusion of bone
755.14, Syndactyly of toes with fusion of bone
755.66, Other congenital anomalies of toes
755.67, Anomalies of foot, congenital, not elsewhere
classified
755.9, Unspecified congenital anomaly of unspecified limb

757.2, Dermatoglyphic anomalies
757.32, Vascular hamartomas
757.39, Other specified congenital anomalies of skin
757.4, Specified congenital anomalies of hair
757.5, Specified congenital anomalies of nails
757.6, Specified congenital anomalies of breast
757.8, Other specified congenital anomalies of the integument
757.9, Unspecified congenital anomaly of the integument
760.0, Maternal hypertensive disorders affecting fetus or
newborn

[[Page 31418]]

760.1, Maternal renal and urinary tract diseases affecting
fetus or newborn
760.2, Maternal infections affecting fetus or newborn
760.3, Other chronic maternal circulatory and respiratory
diseases affecting fetus or newborn
760.4, Maternal nutritional disorders affecting fetus or
newborn
760.5, Maternal injury affecting fetus or newborn
760.6, Surgical operation on mother affecting fetus or newborn
760.70, Unspecified noxious substance affecting fetus or
newborn via placenta or breast milk
760.74, Anti-infectives affecting fetus or newborn via
placenta or breast milk
760.76, Diethylstilbestrol (DES) exposure affecting fetus or
newborn via placenta or breast milk

760.79, Other noxious influences affecting fetus or newborn
via placenta or breast milk
760.8, Other specified maternal conditions affecting fetus or
newborn
760.9, Unspecified maternal condition affecting fetus or
newborn
761.0, Incompetent cervix affecting fetus or newborn
761.1, Premature rupture of membranes affecting fetus or
newborn
761.5, Multiple pregnancy affecting fetus or newborn
761.7, Malpresentation before labor affecting fetus or newborn
761.8, Other specified maternal complications of pregnancy
affecting fetus or newborn
761.9, Unspecified maternal complication of pregnancy
affecting fetus or newborn

762.8, Other specified abnormalities of chorion and amnion
affecting fetus or newborn
762.9, Unspecified abnormality of chorion and amnion affecting
fetus or newborn
763.4, Cesarean delivery affecting fetus or newborn
763.5, Maternal anesthesia and analgesia affecting fetus or
newborn
763.7, Abnormal uterine contractions affecting fetus or
newborn
763.89, Other specified complications of labor and delivery
affecting fetus or newborn
764.00, ``Light-for-dates'' without mention of fetal
malnutrition, unspecified (weight)
764.90, Fetal growth retardation unspecified (weight)
765.10, Other preterm infants unspecified (weight)

765.19, Other preterm infants, 2,500+ grams
765.20, Unspecified weeks of gestation
765.29, 37 or more completed weeks of gestation
767.2, Fracture of clavicle due to birth trauma
767.3, Other injuries to skeleton due to birth trauma
767.8, Other specified birth trauma
767.9, Unspecified birth trauma
768.2, Fetal distress before onset of labor, in liveborn
infant
768.3, Fetal distress first noted during labor, in liveborn
infant

768.4, Fetal distress, unspecified as to time of onset, in
liveborn infant
768.9, Unspecified severity of birth asphyxia in liveborn
infant
70.9, Unspecified respiratory condition of fetus and newborn
772.8, Other specified hemorrhage of fetus or newborn
772.9, Unspecified hemorrhage of newborn
773.1, Hemolytic disease due to ABO isoimmunization of fetus
or newborn
773.2, Hemolytic disease due to other and unspecified
isoimmunization of fetus or newborn
773.5, Late anemia due to isoimmunization of fetus or newborn
775.6, Neonatal hypoglycemia

775.9, Unspecified endocrine and metabolic disturbances
specific to the fetus and newborn
776.4, Polycythemia neonatorum
776.8, Other specified transient hematological disorders of
fetus or newborn
776.9, Unspecified hematological disorder specific to fetus or
newborn
777.1, Meconium obstruction in fetus or newborn
777.3, Hematemesis and melena due to swallowed maternal blood
of newborn
777.8, Other specified perinatal disorders of digestive system
777.9, Unspecified perinatal disorder of digestive system
778.3, Other hypothermia of newborn

778.4, Other disturbances of temperature regulation of newborn
778.6, Congenital hydrocele
778.7, Breast engorgement in newborn
778.9, Unspecified condition involving the integument and
temperature regulation of fetus and newborn
779.9, Unspecified condition originating in the perinatal
period
780.6, Fever
781.0, Abnormal involuntary movements
781.3, Lack of coordination
782.1, Rash and other nonspecific skin eruption

782.2, Localized superficial swelling, mass, or lump
782.4, Jaundice, unspecified, not of newborn
782.61, Pallo
782.62, Flushin
782.7, Spontaneous ecchymose
782.8, Changes in skin texture
782.9, Other symptoms involving skin and integumentary tissues
783.3, Feeding difficulties and mismanagement
784.2, Swelling, mass, or lump in head and neck

784.9, Other symptoms involving head and neck
785.2, Undiagnosed cardiac murmurs
785.3, Other abnormal heart sounds
785.9, Other symptoms involving cardiovascular system
786.00, Respiratory abnormality, unspecified
786.7, Abnormal chest sounds
786.9, Other symptoms involving respiratory system and chest
787.3, Flatulence, eructation, and gas pain
790.6, Other abnormal blood chemistry

790.7, Bacteremia
790.99, Other nonspecific findings on examination of blood
795.6, False positive serological test for syphilis
795.79, Other and unspecified nonspecific immunological
findings
796.1, Abnormal reflex
910.0, Abrasion or frictions burn of face, neck, and scalp
except eye, without mention of infection
910.2, Blister of face, neck, and scalp except eye, without
mention of infection
910.8, Other and unspecified superficial injury of face, neck,
and scalp, without mention of infection
920, Contusion of face, scalp, and neck except eye(s)

999.5, Other serum reaction, not elsewhere classified
999.6, ABO incompatibility reaction, not elsewhere classified
V01.1, Contact with or exposure to tuberculosis
V01.6, Contact with or exposure to venereal diseases
V01.7, Contact with or exposure to other viral diseases
V01.81, Contact with or exposure to communicable diseases,
anthrax
V01.89, Contact with or exposure to communicable diseases,
other communicable diseases
V01.9, Contact with or exposure to unspecified communicable
disease
V02.3, Carrier or suspected carrier of other gastrointestinal
pathogens

V05.3, Need for prophylactic vaccination and inoculation
against viral hepatitis
V05.4, Need for prophylactic vaccination and inoculation
against varicella

[[Page 31419]]

V05.8, Need for prophylactic vaccination and inoculation
against other specified disease
V05.9, Need for prophylactic vaccination and inoculation
against unspecified single disease
V07.8, Need for other specified prophylactic measure
V07.9, Need for unspecified prophylactic measure
V18.0, Family history of diabetes mellitus
V18.1, Family history of other endocrine and metabolic
diseases
V18.2, Family history of anemia

V18.3, Family history of other blood disorders
V18.8, Family history of infectious and parasitic diseases
V19.2, Family history of deafness or hearing loss
V19.8, Family history of other condition
V71.9, Observation for unspecified suspected condition
V72.0, Examination of eyes and vision
V72.6, Laboratory examination
V73.89, Special screening examination for other specified
viral diseases
V73.99, Special screening examination for unspecified viral
disease
7. MDC 23 (Factors Influencing Health Status and Other Contacts With
Health Services)
In the August 1, 2001 final rule, we included in Table 6A--New
Diagnosis Codes (66 FR 40064) code V10.53 (History of malignancy, renal
pelvis), which was approved by the ICD-9-CM Coordination and
Maintenance Committee as a new code effective October 1, 2001. We
assigned the code to DRG 411 (History of Malignancy without Endoscopy)
and DRG 412 (History of Malignancy with Endoscopy).
We received correspondence which suggested that we should have also
assigned code V10.53 to DRG 465 (Aftercare with History of Malignancy
as Secondary Diagnosis). The correspondent pointed out that all other
codes for a history of malignancy are included in DRG 465.
We agree that code V10.53 should be included in the list of the
history of malignancy codes within DRG 465. Therefore, we are proposing
to add V10.53 to the list of secondary diagnosis in DRG 465.
8. Pre-MDC: Tracheostomy
DRG 483 (Tracheostomy Except for Face, Mouth and Neck Diagnoses) is
used to classify patients who require long-term mechanical ventilation.
Mechanical ventilation can be administered through an endotracheal tube
for a limited period of time. When an endotracheal tube is used for an
extended period of time (beyond 7 to 10 days), the patient runs a high
risk of permanent damage to the trachea. In order to maintain a patient
on mechanical ventilation for a longer period of time, the endotracheal
tube is removed and a tracheostomy is performed. The mechanical
ventilation is then administered through the tracheostomy.
A tracheostomy also may be performed on patients for therapeutic
purposes unrelated to the administration of mechanical ventilation.
Patients with certain face, mouth, and neck disease may have a
tracheostomy performed as part of the treatment for the face, mouth, or
neck disease. These patients are assigned to DRG 482 (Tracheostomy for
Face, Mouth and Neck Diagnoses).
Therefore, patients assigned to DRGs 482 and 483 are differentiated
based on the principal diagnosis of the patient. At certain times,
selecting the appropriate principal diagnosis for the patients
receiving tracheostomies for assignment to a DRG can be difficult. The
overall number of tracheostomy patients increased by 13 percent between
1994 and 1999. During the same period, the percent of tracheostomy
patients in DRG 483 (patients without certain face, mouth, or neck
diseases) versus DRG 482 increased from 83.6 percent to 87.6 percent.
The payment weight for DRG 483 is more than four times greater than
the DRG 482 payment weight, and this has led to concerns about coding
compliance. Specifically, the fact that cases are assigned to DRG 483
based on the absence of a code indicating face, mouth, or neck
diagnosis creates an incentive to omit codes indicating these
diagnoses.
To address issues of possible coding noncompliance, we are
proposing to modify DRGs 482 and 483 to differentiate the assignment to
either DRG based on the presence or absence of continuous mechanical
ventilation that lasts more than 96 hours (code 96.72). This
modification would ensure that the patients assigned to DRG 483 are
patients who had the tracheostomy for long-term mechanical ventilation.
Based on an examination of claims data from the FY 2001 MedPAR file, we
found that many patients assigned to DRG 483 do not have the code 96.72
for mechanical ventilation greater than 96 hours recorded. In part,
this is the result of the limited number of procedure codes (six) that
can be submitted on the current uniform hospital claim form, and the
fact that code 96.72 does not currently affect the DRG assignment.
We found that many of the patients who are assigned to DRG 483 have
multiple procedures, making it impossible for all procedures performed
to be submitted on the hospital claim form. Because of the current
underreporting of code 96.72 for continuous mechanical ventilation
greater than 96 hours, we do not believe we can accurately determine
the payment weights for modified DRGs 482 and 483 as described above.
In order to encourage the reporting of the code 96.72 for
continuous mechanical ventilation for greater than 96 hours, we are
proposing to change the definition of DRG 483 so that patients who have
a tracheostomy and continuous mechanical ventilation greater than 96
hours (code 96.72) with a principal diagnosis unrelated to disease of
the face, mouth, or neck would be assigned to DRG 483. DRG 483 would be
retitled ``Tracheostomy/Mechanical Ventilation 96+ Hours Except Face,
Mouth, and Neck Diagnosis.''
We will give future consideration to modifying DRGs 482 and DRG 483
based on the presence of code 96.72, and invite comments on this area.
9. Medicare Code Editor (MCE) Change
As explained under section II.B.1. of this preamble, the MCE is a
software program that detects and reports errors in the coding of

Medicare claims data.
The MCE includes an edit for ``nonspecific principal diagnosis''
that identifies a group of codes that are valid according to the ICD-9-
CM coding scheme, but are not as specific as the coding scheme permits.
The fiscal intermediaries use cases identified in this edit for
educational purposes for hospitals only. That is, when a hospital
reaches a specific threshold of cases (usually 25) in this edit, the
fiscal intermediary will contact the hospital and educate it on how to
code diagnoses using more specific codes in the ICD-9-CM coding scheme.
The claims identified in this nonspecific principal diagnosis edit are
neither denied nor returned to the hospital.
Code 436 (Acute, but ill-defined, cerebrovascular disease) is one
of the codes included in the groups of codes identified in the
nonspecific principal diagnosis edit, and is widely used in smaller
hospitals where testing mechanisms are not available to more
specifically identify the location and condition of cerebral and
precerebral vessels. Because of the frequent use of code 436 among
smaller hospitals, we

[[Page 31420]]

are proposing to remove the code from the nonspecific principal
diagnosis edit in the MCE. We address the use of code 436 in section
II.B.3. of this proposed rule under the discussion of MDC 5 changes
with regard to the remodeling of DRGs 14 and 15.
10. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. Therefore, it is necessary to have a decision rule within the
GROUPER by which these cases are assigned to a single DRG. The surgical
hierarchy, an ordering of surgical classes from most resource-intensive
to least resource-intensive, performs that function. Its application
ensures that cases involving multiple surgical procedures are assigned
to the DRG associated with the most resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibrations, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications and recalibrations, to determine if the ordering of
classes coincides with the intensity of resource utilization.
A surgical class can be composed of one or more DRGs. For example,
in MDC 11, the surgical class ``kidney transplant'' consists of a
single DRG (