On August 12, 2024, OIG announced the results of an audit of payments made to hospitals for inpatient claims with the Medicare Severity Diagnosis-Related Groups (MS-DRGs) that require ninety-six hours of consecutive mechanical ventilation. The audit focused on claims that reported a mechanical ventilation start date that was five to ten days before the Medicare enrollee was discharged. The audit results showed that seventeen out of 250 sampled claims did not use the correct procedure or diagnosis codes. The 250 sampled claims were randomly selected from a sample of 83,259 inpatient claims that had dates for services from October 2015 through September 2021. Based on the sample results, OIG estimated that Medicare improperly paid hospitals more than $79 million for inpatient claims with certain MS-DRGs for the audit period.

This audit focused on MS-DRGs 207 and 870. MS-DRG 207 is described as “respiratory system diagnosis with ventilator support >96 hours.” MS-DRG 870 is described as “Septicemia or severe sepsis with mechanical ventilation >96 hours.” A hospital uses procedure code 5A1955Z on an inpatient claim to denote that an enrollee has received more than 96 hours of consecutive mechanical ventilation. If an enrollee did not receive ninety-six hours of consecutive mechanical ventilation, the hospital is supposed to assign an MS-DRG associated with a lower severity, and therefore, the hospital receives lower payment.

For eight of the sampled claims, hospitals used the procedure code for more than ninety-six hours of mechanical ventilation when enrollees had not received more than 96 hours of medical ventilation. OIG provided an example for which the documentation (i.e., physician’s notes and ventilation time logs) showed that the enrollee had received ninety-four consecutive hours of mechanical ventilation. The hospital used procedure code 5A1955Z on the claim, indicating that the enrollee had received more than 96 consecutive hours of mechanical ventilation; instead, the hospital should have used procedure code 5A1945Z, indicating that the enrollee received twenty-four to ninety-six hours of mechanical ventilation. Because the hospital used the incorrect procedure code, the claim was assigned incorrectly to MS-DRG 870 rather than MS-DRG 871, resulting in an overpayment of $10,192.

For nine of the sampled claims, hospitals used the incorrect diagnosis code or a procedure code that was not related to mechanical ventilation. OIG gave an example of a hospital that submitted a claim with principal diagnosis code J96.00 (defined as “acute respiratory failure, unspecified whether with hypoxia or hypercapnia”). A review of the medical records showed that the hospital should have used principal diagnosis code I12.0. (defined as “hypertensive chronic kidney disease with stage 5 chronic kidney disease or end stage renal disease”). Because the incorrect diagnosis code was used, the claim was incorrectly assigned to MS-DRG 207 rather than MS-DRG 682 (defined as “Renal failure with MCC”), resulting in an overpayment of $33,060.

OIG performed the audit because prior audits have shown that hospitals do not fully comply with Medicare requirements when using MS-DRGs that require mechanical ventilation for over ninety-six hours. An inpatient claim contains the start and end date of an enrollee’s hospitalization, but only the start date for when mechanical ventilation started. Prior audits resulted in CMS revising its system edit to identify any claim that reported a procedure code for more than ninety-six hours of consecutive ventilation with a mechanical ventilation start date that was four days or fewer before the enrollee was discharged, and then to return the claim to the hospital for validation and resubmission. This audit was conducted as follow-up and covers claims with a mechanical ventilation start date that was five to ten days before the enrollee discharge.

CMS issued guidance related to mechanical ventilation coding following prior audits, but OIG noted that the latest guidance was issued in 2017. Further, the guidance did not include the different ICD-10 procedure code options for reporting consecutive hours of mechanical ventilation or clarify how the procedure code options affect assignment to an MS-DRG.

The seventeen non-compliant claims from this audit were incorrectly assigned to either MS-DRGs 207 or 870 and totaled to $382,032 in overpayments. OIG estimates that Medicare improperly paid hospitals $79.4 million based on the results of the audit. OIG recommended that CMS: (1) direct the Medicare Administrative Contractors to recover the portion of the $382,032 overpayment identified in the audit that is within the four-year reopening period in accordance with CMS’s policies and procedures; and (2) educate hospitals on correctly counting the hours that an enrollee received mechanical ventilation and submitting claims with correct procedure and diagnosis codes.

CMS agreed with the recommendations and will take actions to implement the recommendations.

OIG’s announcement of the audit results can be found here. The complete audit report can be found here.