Analysis of MS-DRGs in Medical Billing and Coding: Application Paper

This application paper provides an overview of the Medicare Severity Diagnosis Related Group (MS-DRG) system, which is used to classify Medicare hospital stays for payment purposes. The paper explains how MS-DRGs group patients based on similar treatments, resources, and diagnoses, facilitating a prospective payment system where hospitals are reimbursed based on the DRG category. It details the hierarchical structure of the DRG system, including major diagnostic categories, and describes the components of a DRG such as arithmetic mean duration of stay and weight. The paper also touches on the role of 'groupers' in calculating MS-DRG payments and highlights the factors used for DRG calculation, such as resource intensity and mortality risk, to provide a comprehensive understanding of the system's function in healthcare reimbursement.

medical billing and coding
APPLICATION PAPER

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Application paper on MS-DRGs
The MS – DRG (Medicare severity diagnosis affiliated group) is a system in order to classify a
Medicare hospital stay of patients to groups to grease up the service payments that further
enables for payment to align closely with the maximum utilization of resources. The diagnosis
affiliated to groups is defined as the inpatient division that further classifies the patients which
are similar in terms of treatment, resources, duration of stay, age and diagnosis. Under the
system of prospective payment, the hospitals are being paid in order to treat the patients in a
category of DRG. Further, it is a system which is used as a tool to utilize the procedure of
review, measurement of the risk and the reimbursement (Centers for Medicare & Medicaid
Services. 2013). MS – DRG is used to demonstrate the various kind of patients care like
paediatric, management of data, comparability, newborn, benchmarking and reimbursement.
Moreover, the DRG is entrusted along with the episode’s numeric value of care with the weight
that is betrothed to demonstrate the intensity of resources of the clinical group. The payment
level of the group is being determined, and further the guidelines are given which are utilized for
the formulation of the system of DRG. Firstly, the attributes of the patients which are used in the
definition of DRG and should be restricted to the information which is collected on the billing
form of the hospital. Secondly, the number of DRGs should be manageable which encompasses
the patients on the basis of inpatient. Thirdly, every DRG must include the patients with the
analogous pattern on the basis of the intensity of resources. Lastly, every DRG must include
patients who will be comparable from the clinical perception (Rosenbaum et al., 2014).
Furthermore, the architecture of the system of DRG is hierarchical, and the greatest level is
known as the major diagnostic category. It demonstrates the system body which is being treated
by the medicine and includes 23 MDCs along with the DRG group that is related with all the

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MDCs. The MDCs were being added to show the infection of human immuno-deficiency virus
and the categories of multiple trauma. Further, the level is divided into surgical and medical
sections. The DRGs components are the arithmetic mean duration of stay, geometric mean
duration of stay, title, weight, the procedure of operating room, etc. the administrative
contractors of Medicare uses groupers in order to calculate the MS-DRG payment for the
encounter od each hospital. Moreover, grouper is defined as a program which utilizes an
algorithm to assign each patient to the group, classes or category (Morley et al., 2014).
The system of DRG is used for the system of payment and reimbursement as a payment method
which will be prospective for the inpatient services of the hospital that are being provided to the
beneficiaries of the Medicare. Therefore, it is accustomed to a based model of prospective in
which the hospitals will get the payment depending on the diagnosis of the patients. The factors
which are being used for the calculation of DRG are the intensity of the resources, intervention
need, mortality risk, etc.

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REFERENCES
Centres for Medicare & Medicaid Services. (2013). Acute Inpatient PPS: list of final MS-DRGs,
relative weighting factors and geometric and arithmetic mean length of stay.
Morley, M., Bogasky, S., Gage, B., Flood, S., & Ingber, M. J. (2014). Medicare post-acute care
episodes and payment bundling. Medicare & Medicaid research review, 4(1).
Rosenbaum, B. P., Lorenz, R. R., Luther, R. B., Knowles-Ward, L., Kelly, D. L., & Weil, R. J.
(2014). Improving and measuring inpatient documentation of medical care within the MS-DRG
system: Education, monitoring, and normalized case mix index. Perspectives in Health
Information Management, 11(Summer).