Dr. Patricia Farrell on Medika Life

Uncovering Hidden, Frustrating Loopholes of the Arcane DRGs in Healthcare

Those three little letters loom large when it comes to treatment and a hospital stay, so it’s time for everyone to be informed.

Hospitalization is not a question of being in the hospital and receiving treatment; discharge is a major factor. As a hospital patient, have you wanted to know when you were going home? It is a fact about which most patients remain unaware. Shouldn’t it be a simple matter of when you’re well, right?

Most of us assume that discharge is up to our treating physician or surgeon to decide when it’s appropriate for us to go home and what sort of in-home treatment or rehab we should have prescribed as part of our aftercare. We are, in that regard, totally in the dark because the day of discharge has been taken out of your physician’s hands and is controlled by a codebook; the DRGs are an all-payer guide with one section, another, the MS-DRGs, for Medicare patients.

What is this mysterious acronym? The acronym stands for Diagnosis Related Groups, a plan for codes for illnesses and procedures related to them. These codes (there are 740) are mandates for discharge, and physicians must abide by them unless there are extenuating medical circumstances.

Ask the older women in your family how long they remained in hospital after the birth of their children. Today, women may remain for one day or 48 hours. Previously, women may have been patients in the hospital for up to 10 days after childbirth. The DRGs changed all of that.

Specialized medical practices such as those for reproductive medicine have begun providing professional articles to assist physicians in coding and reimbursement. Patients who may wish to peruse the reimbursement rates for orthopedic procedures can find this information here. But note that there is no agreement among hospitals that would indicate they all bill at the same rate. Essentially, the patient is on their own when it comes to cost because of a lack of transparency.

The DRGs aren’t something new because the codes were designed and implemented as part of the prospective payment system for Medicare in 1983. How effective has it been at attaining its primary goal, and have there been problems with its design and utilization over the years? Psychiatrists began expressing their displeasure almost as soon as they saw the coding in 1986.

These issues include the problems of premature discharge, code manipulation, cost-shifting, and equitable patient access to psychiatric services. The potential effects of a DRG payment system on clinical practice are reviewed.

The psychiatrist’s view was relevant to the DRG and its application to psychiatric intervention. Based on limited data on the issue of discharge of psychiatric patients, it was believed that this information was not developed, tested, or applied in psychiatric facilities.

In fact, of the 14 psychiatric diagnostic groupings contained in the initial DRG listing, none were validated in any psychiatric facility, whether in a general hospital, a general hospital’s psychiatric unit, or a private psychiatric facility.

How could anyone, with such flawed data, decide when the discharge of a patient with a psychiatric disorder was appropriate? Considering that the listings were to optimize savings in terms of reimbursement, inappropriately released psychiatric patients would become a burden on local communities, and it was reasonable to assume they would be rehospitalized, potentially at a higher rate. Liaison psychiatry, found to be a cost-effective means of providing care, was not factored into the DRGs.

Another problematic aspect of this coding system is that it’s not uniform in its application for Medicare, Medicaid, and other third-party payment for hospitalization. Code manipulation is present in every form of care under the DRGs.

One aspect of code manipulation (at whose benefit?) is billing practices for reimbursement for patients with multiple disorders. The patient is treated and discharged under one DRG mandate and then re-admitted under another of their illnesses and treated again until that DRG mandate kicks in. Ethical, patient-friendly, or beneficial to the facility’s bottom line? Physicians in one study found this was used particularly with geriatric patients.

Another practice with psychiatric patients is DRG-creep, where a patient is diagnosed with a disorder that pays at a higher rate. When a diagnosis is restricted to a psychiatrist’s independent opinion, who can question this?

Consider another aspect of hospital discharge following DRG guidelines. Where does it indicate any provision for family care, appropriate follow-up services, or placement? If there’s no place for the patient to reside, what do you do, admit them to a rehab facility where another set of DRGs will be initiated? Is this cost-saving for whichever agency is paying for care?

The previous paragraph brought to mind two cases of lengthy hospitalizations. One was for a young woman, about 18, who had been an inpatient in a private psychiatric hospital for five years. I asked what her diagnosis was on discharge. The social worker said, “We’re meeting to decide that today.” That day? What were they using as her diagnosis for all those years? Of course, her wealthy family had private insurance, but didn’t the insurance company demand a working diagnosis? Was it DRG-creep here?

Another is a bizarre case that resulted in active media coverage and a book. It was about the life and hospitalization of Huguette Clark. Fabulously wealthy, she was a patient in a major New York City hospital for 20 years. No DRGs there?

Medical care is still ruled by reimbursement, and the DRGs hold an untenable place in that hierarchy.

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Pat Farrell PhD
Pat Farrell PhDhttps://medium.com/@drpatfarrell
I'm a licensed psychologist in NJ/FL and have been in the field for over 30 years serving in most areas of mental health, psychiatry research, consulting, teaching (post-grad), private practice, consultant to WebMD and writing self-help books. Currently, I am concentrating on writing articles and books.


Medika Editor: Mental Health

I'm a licensed psychologist in NJ/FL and have been in the field for over 30 years serving in most areas of mental health, psychiatry research, consulting, teaching (post-grad), private practice, consultant to WebMD and writing self-help books. Currently, I am concentrating on writing articles and books.

Patricia also acts in an editorial capacity for Medika's mental health articles, providing invaluable input on a wide range of mental health issues.

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