Inpatient Facility Coding & Compliance Alert

Whether you're new to hospital coding or have been at it a while, occasionally brushing up on basics is always a good idea. Read through five common questions related to DRGs, decide on your answers, and then check your opinions against our information.


Question 1: What does the acronym MS-DRG stand for, and how long have U.S. hospitals been following the classification system?


Question 2: What is the purpose of DRGs?


Question 3: What determines DRG assignment?


Question 4: How do DRGs change?


Question 5: What are the levels of MS-DRG severity?

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Answer 1: "MS-DRG" stands for Medicare Severity Diagnosis-Related Groups. CMS began implementing the new MS-DRG system of classifications on Oct. 1, 2007. From that date until Sept. 30, 2008, CMS based payments on a 50/50 blend of MS-DRGs and the previous LTC-DRG system. Beginning Oct. 1, 2008 (for fiscal year 2009) and after, CMS based payments only on the MS-DRGs. The system is meant to account for severity of illness and resource consumption for Medicare beneficiaries.


Answer 2: Hospital discharges are assigned to diagnosis-related groups (DRGs). The classification system groups similar clinical conditions (diagnoses) and the procedures furnished by the hospital during the patient's stay.


Answer 3: The patient's (beneficiary's) principal diagnosis and up to 24 secondary diagnoses indicating comorbidities and complications determine the DRG assignment. A patient's DRG assignment can also be affected by the procedures furnished during the hospital stay – up to 25 procedures.


Answer 4: CMS reviews DRG definitions each year to verify that each diagnosis group continues to include cases with clinically similar conditions. The diagnoses within a group must also require comparable amounts of inpatient resources to care for the patient. If review shows that subsets of clinically similar cases within a DRG require significantly different amounts of resources, CMS has two options: assign them to a different DRG with comparable resource use, or create a new DRG.


Answer 5: There are three levels of severity in the MS-DRGs, based on secondary diagnosis codes:

1) MCC – Major Complication/Comorbidity (conditions classified with the highest level of severity, such as 348.39, Encephalopathy, NOS)

2) CC – Complication/Comorbidity (mid-level severity, such as 344.1, Paraplegia, NOS)

3) Non-Complication/Comorbidity (conditions which do not significantly affect the severity of illness and resource use).