The term DRG is used extensively in the medical healthcare system, especially in medical billing and coding. Now one might question what is DRG in healthcare? DRG is an abbreviation for Diagnosis Related Group. It is a classified system used to structure different designated groups of patients according to the medical diagnosis.
DRG is often associated with denial claims made by the patients or the payers which can delay the revenue generation in medical billing.
The medical billing and coding companies might face denials from professionals and patients addressed as DRG denials.
These denials are also referred to as DRG denials. Let’s navigate further to find out what is meant by DRG in healthcare industry and what are DRG denials that can hamper the performance of medical billing and coding companies.
What is DRG in healthcare and how to avoid DRG denials?
As mentioned above, DRG is the abbreviation for Diagnosis Related Group.
The main reason for curating a specified classification group is to bring transparency into the billing procedure. This way it becomes easier for the insurance companies or the payers to recognize the DRG group as well as the procedures adopted by the patient for specific treatment.
It is very common that the payer or the insurance company on behalf of the patient to deny the claims made by the diagnosis related group (DRG).
One of the main reasons provided by the payer is that the DRG mentioned in that particular claim is lacking substantial evidence clinically.
The medical coding and billing teams working at the healthcare practices often include the required codes by themselves if the conditions or special procedures are mentioned by the physician in side notes.
However, the situation might get complex if the payer simply refuses to acknowledge it.
It is equally important for the management of the medical healthcare facility to be well equipped beforehand to handle such situations. One of the best ways to address DRG claims is to equip the facility with the best possible medical billing and coding professionals who have proper guidelines on how to deal with these denials in order to keep the revenue generation as smooth as possible.
Importance of DRG in revenue generation of medical billing
DRG is an integral part of medical billing and coding services. It is very important for revenue generation. Some of the reasons how it simplifies the revenue generation cycle are
- It makes the payment process easier. It channelizes the costs of hospitalization and other medical procedures with the help of its classification system.
- Approximately 30% of all the hospital discharges would have at least one of the DRGs mentioned in their medical bill
- It brings parity to the bill as the insurance panels can recognize these groups easily
- DRG payment classification system actually helps in improving the efficiency of the healthcare system.
- It makes workflow management simplified and easy to handle.
- While making a claim for any medical procedure, DRG plays a vital role. For instance, CPT codes of medical billing mainly focus on the procedures performed on the patients whereas the ICD codes’ prime focus is on the diagnosis. The DRG takes into account both the procedure and the diagnosis and compiles a claim according to both of them.
Scrutiny of DRG
The billing and coding companies scrutinize these diagnoses related groups on a regular basis especially when it comes to the payment time. The company might have to go through a DRG denial if it is not up to date with different methodologies when making the claims depending upon DRGs.
There are various ways by which companies scrutinize different DRGs. Some of them are.
DRG usually works on three different tiers according to the coding and billing structure. The tiers climb up according to the severity of the disease as well as the mortality risk of the patient. DRG is scrutinized according to these tiers.
- In the first tier, the lowest rate of reimbursement is prescribed for the group.
- In the second tier, a bit of top-notch reimbursements i
AMA states that the DRG claims made by the medical billing must include one code of diagnosis, comorbidity, or complication (CC). as the inclusion of comorbidity or complication will increase the reimbursement rate making the claim more worthwhile and unrepeatable.
The DRG claims are scrutinized by the healthcare organization to ensure that there is sufficient clinical evidence attached to the claim so that there is no denial in return.
The DRG is upgraded regularly so that the updated clinical evidence is attached immediately whenever a claim is to be made. For instance, if a person has suffered from any kind of respiratory problem then he is immediately issued a corresponding code which might not be part of the actual medical bill.
This upgraded DRG as mentioned in the above point can only be claimed once clinical evidence is attached otherwise the payer or the insurance company will reject the claim stating that there has been a lack of clinical evidence which will degrade the DRG code.
- s included in the group because there is a certain level of complication or comorbidity (CC) attached to this tier.
- In the third tier, the highest level of reimbursement rates is prescribed. As this group has a significant level of complication or comorbidity and the risk of mortality is very high.
AMA states that the DRG claims made by the medical billing must include one code of diagnosis, comorbidity, or complication (CC). as the inclusion of comorbidity or complication will increase the reimbursement rate making the claim more worthwhile and unrepeatable.
The DRG claims are scrutinized by the healthcare organization to ensure that there is sufficient clinical evidence attached to the claim so that there is no denial in return.
The DRG is upgraded regularly so that the updated clinical evidence is attached immediately whenever a claim is to be made. For instance, if a person has suffered from any kind of respiratory problem then he is immediately issued a corresponding code which might not be part of the actual medical bill.
This upgraded DRG as mentioned in the above point can only be claimed once clinical evidence is attached otherwise the payer or the insurance company will reject the claim stating that there has been a lack of clinical evidence which will degrade the DRG code.
How can DRG denials be avoided?
As mentioned at the beginning of the article, DRG denials can be a substantial issue for the medical billing and coding companies and they try their level best to avoid it as it can cause hindrance in the revenue cycle creating problems for the physicians and patients as well.
Here are some ways by which medical billing and coding companies can avoid them.
- Review and document every step to ensure that the DRG claim is foolproof and clinical evidence is attached to it.
- The professionals working on DRG claims must be thorough experts, and they should have insight into the revenue generation cycle of the medical billing and coding company.
- Train the employees with the latest methodologies so that they provide enough clinical evidence to assist the DRG claims.
- AAPC has identified different DRG denial rates according to its tiers and how crucial it is to analyze and track them while managing different issues simultaneously. Therefore, a guideline is there to assist the medical billing companies to follow the steps while making the DRG claims.
- Get in touch with the experts of the companies while working on the revenue generation cycle. An expert opinion can change how you make the claim and also guide you on how to assist your claim with enough clinical data that it cannot be rejected by the payer.
Final words
DRG is a vital part of the medical billing and coding companies. It is important to identify their worth and handle them with extensive focus and responsibility so that the chances of DRG denials are negligible.
DRG denials can cause hindrance in the revenue cycle therefore they must be avoided at all costs so that it does not cause any kind of delay in the revenue generation for both the medical billing and coding company and the medical healthcare organization.