ms drg assignment reports select services

Mastering MS-DRG Assignments to Enhance Reimbursements

Executives of hospital management often overlook medical coding as a contributing factor to the revenue cycle – but it’s a crucial link between earning well-deserved reimbursements from the services performed. One such revenue-defining coding system is the Medicare Severity Diagnosis Related Group (MS-DRG), which utilizes ICD-10 diagnosis and procedure codes , and other factors, such as age, sex, and discharge disposition, to facilitate payment for Inpatient services. In this introduction to MS-DRG assignments, we’ll explore examples of DRGs and introduce invaluable resources for selecting the correct DRG, including a DRG list and DRG assignment software.

What is Medicare Severity Diagnosis Related Group (MS-DRG) Coding?

MS-DRG is a sophisticated classification system that holds the power to categorize patients and their medical cases based on clinical characteristics and the resources required for their care (CMS, 2023). Each patient’s case is assigned a specific DRG, encapsulating diagnoses, procedures, age, sex, MCCs, CCs, and other relevant factors. These codes effectively communicate the complexity and intensity of services provided, determining reimbursement levels for hospital stays. Introduced by the Centers for Medicare and Medicaid Services (CMS), this system streamlines the payment process for Inpatient services.

It serves as a universal language, allowing healthcare providers to effectively communicate the complexity and intensity of services rendered. By assigning specific DRGs to patient cases, hospitals can accurately capture the intricacies of each scenario, leading to fair reimbursement and improved financial outcomes.

Accurate DRG assignment plays a pivotal role in directly impacting a hospital’s or facility’s reimbursements and revenue cycle. Accurate and appropriate DRG assignment ensures that the severity and complexity of each patient case are effectively communicated, leading to proper reimbursement for the resources invested in their care. By assigning the correct DRG, hospitals can optimize their revenue potential by capturing the true value of the services provided.

Additionally, accurate DRG assignment helps healthcare organizations navigate complex payment structures and regulatory guidelines, reducing the risk of undercoding or overcoding, which can result in financial penalties or revenue loss. A streamlined and efficient revenue cycle relies heavily on accurate DRG assignment, ensuring that hospitals receive fair and adequate reimbursements for the care they deliver while maintaining financial stability and sustainability.

DRG Examples

To grasp the practical application of DRG assignments, let’s explore some examples.

Patient admitted with the principal diagnosis of acute myocardial infarction is impacted when a percutaneous cardiovascular procedure is performed with drug-eluting or non-drug eluting stents or arteries.

DRG 246 PERCUTANEOUS CARDIOVASCULAR PROCEDURE WITH DRUG-ELUTING STENT WITH MCC OR 4+ ARTERIES OR STENTS DRG 247 PERCUTANEOUS CARDIOVASCULAR PROCEDURE WITH DRUG-ELUTING STENT WITHOUT MCC DRG 248 PERCUTANEOUS CARDIOVASCULAR PROCEDURE WITH NON-DRUG-ELUTING STENT WITH MCC OR 4+ ARTERIES OR STENTS DRG 249 PERCUTANEOUS CARDIOVASCULAR PROCEDURE WITH NON-DRUG-ELUTING STENT WITHOUT MCC

MDC 05 Disease and Disorders of the Circulatory System

Percutaneous Cardiovascular Procedures with Coronary Artery/Stent Decision Tree

Patient admitted with the principal diagnosis of acute myocardial infarction is impacted when the patient has a major complication or comorbidity (MCC) or complication and comorbidity (CC) or not and whether the patient was discharged alive or expired.

DRG 280 ACUTE MYOCARDIAL INFARCTION, DISCHARGED ALIVE WITH MCC DRG 281 ACUTE MYOCARDIAL INFARCTION, DISCHARGED ALIVE WITH CC DRG 282 ACUTE MYOCARDIAL INFARCTION, DISCHARGED ALIVE WITHOUT CC/MCC DRG 283 ACUTE MYOCARDIAL INFARCTION, EXPIRED WITH MCC DRG 284 ACUTE MYOCARDIAL INFARCTION, EXPIRED WITH CC DRG 285 ACUTE MYOCARDIAL INFARCTION, EXPIRED WITHOUT CC/MCC

Acute Myocardial Infarction and Principal Diagnosis Decision Tree

Patient admitted with the principal diagnosis of pneumonia is impacted when the patient has a major complication or comorbidity (MCC) or complication and comorbidity.

DRG 193 SIMPLE PNEUMONIA AND PLEURISY WITH MCC DRG 194 SIMPLE PNEUMONIA AND PLEURISY WITH CC DRG 195 SIMPLE PNEUMONIA AND PLEURISY WITHOUT CC/MCC

MDC 04 Diseases and Disorder of the Respiratory System

Simple Pneumonia as the Principal Diagnosis Decision Tree

DRG Resources

Here are several DRG resources to assist with appropriate assignment:

MS-DRG List:  This comprehensive DRG list from CMS includes  a vast range of codes  representing various medical cases, diagnoses, procedures, and patient profiles. This list enables healthcare providers to accurately assign the most suitable DRG, streamlining the reimbursement process and optimizing financial outcomes.

MS-DRG Grouper Software : An invaluable tool in correctly assigning DRGs is the MS-DRG Grouper software. The software calculates payments to cover the costs of an Inpatient encounter. The coder enters the ICD-10-CM/PCS codes into the software, and it calculates the MS-DRG based on those codes the user has selected. The MS-DRG payment equals the MS-DRG relative weight multiplied by the hospital blended rate.

Utilize Our Coding Support Services to Assign DRGs & Optimize Revenue

YES offers expert coding support services for DRG assignment, designed to streamline providers’ processes, ensure compliance, and maximize revenue potential. Here’s why you should choose our services:

• Expertise and Experience : Our highly skilled team of certified coding professionals possesses extensive knowledge and experience in coding and assigning DRGs. We remain current with the latest industry regulations and guidelines, guaranteeing accurate and comprehensive coding to maximize reimbursements.
• Compliance and Audit Readiness : We recognize the importance of compliance in healthcare. Our services ensure that your coding practices align with regulatory guidelines, safeguarding your organization from penalties and preparing you for any compliance audits.
• Revenue Optimization : By leveraging our DRG assignment and coding support services, you unlock the full revenue potential of your organization. Utilizing our customized trending reports, we identify areas for improvement, minimize coding errors, and provide actionable insights to enhance financial performance.

Mastering DRG assignment is essential for hospitals and healthcare organizations to achieve optimal reimbursements and operational efficiency.  Contact us today  to discuss how our  coding support services  can elevate your coding practices and drive superior outcomes.

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Guest post: determining the ms-drg.

By Cheryl Ericson, MS, RN, CCDS, CDIP

Many clinical documentation improvement (CDI) specialists with clinical backgrounds are encoder dependent, trained to “code” using an encoder and taught to create a working MS-DRG based on grouper software. Many coders also rely on the encoder. However, CDI specialists and coders should understand how to manually assign a MS-DRG, too.

The basics steps for assigning a MS-DRG are:

• Identify all the reportable diagnoses in the health record and assign their applicable ICD code (we currently use ICD-9-CM, but will transition to ICD-10-CM October 1).
• Identify the principal diagnosis (the condition after study determined to be chiefly responsible for occasioning the admission). The remaining diagnoses are secondary diagnoses, some of which may be classified by CMS as a CC or MCC.
• Use the Alphabetic Index of diagnoses in the  DRG Expert  to identify the base/medical MS-DRG, noting its Major Diagnostic Category (MDC)/body system by scanning the MS-DRGs associated with the listed pages to see which applies to the particular scenario. The MDC is necessary to assign the surgical MS-DRG when applicable.
• Identify all reportable procedures and their associated procedure code (ICD-9-CM Volume 3 until we transition to ICD-10-PCS).

The Uniform Hospital Discharge Data Set (UHDDS) defines reportable diagnoses and procedures. Most coders and CDI specialists are familiar with the definitions associated with diagnoses, but less familiar with those associated with procedures. You should only report significant procedures. According to UHDDS, a significant procedure is one that is either:

• Surgical in nature
• Carries a procedural risk
• Carries an anesthetic risk
• Requires specialized training

In addition, UHDDS defines the principal procedure as:

• One that was performed for definitive treatment, rather than one performed for diagnostic or exploratory purposes, or was necessary to take care of a complication
• If two procedures could be principal, then select the one most related to the principal diagnosis

The UHDDS definitions of significant procedures is helpful because not all procedures will affect the MS-DRG. Some procedures won’t have any impact on the MS-DRG, some procedures will change the base medical MS-DRG, and some procedures will move the case to a surgical MS-DRG.

Procedures that are diagnostic in nature are less likely to impact the MS-DRG assignment because they are typically performed in the outpatient setting, which is why they are less likely to be the principal procedure. Also, the principal procedure is usually related to the principal diagnosis, meaning they usually can be found in the same MDC/body system. ICD-10-PCS has specific guidelines regarding the assignment of the principal procedure.

If a procedure was performed, determine if it is significant:

• If there are multiple significant procedures determine the principal procedure
• It is not a “reimbursable” procedure (i.e., one that will not affect the MS-DRG assignment)
• It is a major operating room procedure

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MS-DRG Classifications and Software

Guidance for MS-DRG classifications including a manual, comprehensive analysis information, and software.

Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: August 29, 2013

Section 1886(d) of the Act specifies that the Secretary shall establish a ification system (referred to as DRGs) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG.  Therefore, under the IPPS, we pay for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned.  Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs.

Congress recognized that it would be necessary to recalculate the DRG relative weights periodically to account for changes in resource consumption.  Accordingly, section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG ifications and relative weights at least annually.  These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.

Currently, cases are ified into Medicare Severity Diagnosis Related Groups (MS-DRGs) for payment under the IPPS based on the following information reported by the hospital: the principal diagnosis, up to 24 additional diagnoses, and up to 25 procedures performed during the stay.  In a small number of MS-DRGs, ification is also based on the age, sex, and discharge status of the patient.  Effective October 1, 2015, the diagnosis and procedure information is reported by the hospital using codes from the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) and the International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS).

For additional information on the MS-DRG system, including yearly reviews and changes to the MS-DRGs, please view prior Inpatient Prospective Payment System (IPPS) proposed and final rules located in the left navigational area of this page.

Any MS-DRG related inquiries should be sent to the  [email protected] mailbox. 

PROCESS FOR REQUESTING ANNUAL MS-DRG CLASSIFICATION CHANGES

Effective April 5, 2022, the new electronic intake system, Medicare Electronic Application Request Information System TM (MEARIS TM ), became available as an initial release for users to begin gaining familiarity with a new approach and process to submit MS-DRG ification change requests. MEARIS TM , including the mechanism for submitting MS-DRG ification change requests, can be accessed at: https://mearis.cms.gov .

Accordingly, beginning with the FY 2024 MS-DRG ification change requests, CMS will now only accept such requests submitted via MEARIS TM . Request for annual MS-DRG ification changes submitted through the [email protected] mailbox will no longer be considered.

Latest News

ICD-10 MS-DRGs V41.1 Effective April 1, 2024 (PDF)

ICD-10 MS-DRGs V40.1 Effective April 1, 2023 (ZIP)  - Updated 11/25/2022

ICD-10 MS-DRGs V39.1 Effective April 1, 2022  (ZIP)  - Updated 11/16/2021

ICD-10 MS-DRGs V38.1 Effective January 1, 2021 (ZIP)

ICD-10 MS-DRGs Version 37.2 Effective August 01, 2020 (PDF)

July 2020 Quarterly Update to the Inpatient Prospective Payment System (IPPS) Fiscal Year (FY) 2020 Pricer (PDF)

ICD-10 MS-DRGs Version 37.1 R1 Effective April 1, 2020 - Updated March 23, 2020 (PDF)

ICD-10 MS-DRGs Version 37.1 Effective April 1, 2020 (PDF)  

MS-DRG CC/MCC Comprehensive Analysis Information

CMS hosted a listening session that described the Medicare-Severity Diagnosis-Related Group (MS‑DRG) Complication and Comorbidity (CC)/Major Complication and Comorbidity (MCC) Comprehensive Analysis discussed in the FY 2020 Inpatient Prospective Payment System (IPPS) proposed and final rules. This listening session included a review of the methodology to measure the impact on resource use and provided an opportunity for CMS to receive public input on this analysis and to address any clarifying questions in order to assist the public in formulating written comments on the current severity level designations for consideration in future rulemaking.

This listening session was held on October 8, 2019; 2:00 – 3:00 PM ET.

For the transcript and audio file of the listening session, visit https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip .

Link to the supplementary file that was made available for the listening session:

• ICD-10-CM Diagnosis Codes Impact on Resource Use File - FY 2018 MedPAR (ZIP)    

We are providing updated impact on resource use files so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2019 - FY 2023 MedPAR files:

• ICD-10-CM Diagnosis Codes Impact on Resource Use File - FY2019 and FY2020 MedPAR (ZIP)
• ICD-10-CM Diagnosis Codes Impact on Resource Use File - FY2021 MedPAR (ZIP)
• ICD-10-CM Diagnosis Codes Impact on Resource Use File - FY2022 MedPAR (ZIP)
• ICD-10-CM Diagnosis Codes Impact on Resource Use File - FY2023 MedPAR (ZIP)

MS-DRG Definitions Manual and Software

Fy 2025 – version 42 test grouper – draft file for fy 2025 ipps/ltch pps proposed rule.

This is a supporting file for the FY 2025 IPPS/LTCH PPS Proposed Rule .

We are providing a test version of the ICD-10 MS-DRG GROUPER Software, Version 42, so that the public can better analyze and understand the impact of the proposals included in the FY 2025 IPPS/LTCH PPS proposed rule. This test software reflects the proposed GROUPER logic for FY 2025.  For additional information regarding the Version 42 Test GROUPER please see the file titled CMS-1808-P Table 6P.1a-6P.1b below.

In addition, users are able to view the draft version of the Definition of Medicare Code Edits Version 42 and the ICD-10 MS-DRG Definitions Manual, Version 42.  

• Draft Definition of Medicare Code Edits Version 42 (ZIP) : The draft ICD-10 Definition of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2025. Zip file contains a PDF and text file that is 508 compliant.
• Proposed ICD-10 MS-DRG Definitions Manual Files V42 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the proposed ICD-10 MS-DRG Grouper logic.
• Proposed ICD-10-CM/PCS MS-DRG V42 Definitions Manual Table of Contents - Full Titles - HTML Version
• Medicare Severity Diagnosis Related Group (MS-DRG) Test Grouper Software and Medicare Code Editor (MCE) Version 42, ICD-10 PC Software (ZIP)
• CMS-1808-P Table 6P.1a-6P.1b (ZIP) : An Excel file that contains the mapped Version 42 FY 2025 ICD-10-CM codes and the deleted Version 41 FY 2024 ICD-10-CM codes and the mapped Version 42 FY 2025 ICD-10-PCS codes and the deleted Version V41.1 FY 2024 ICD-10-PCS codes that should be used for testing purposes with users’ available claims data.

FY 2024 – Version 41.1 (Effective April 1, 2024 through September 30, 2024)

• Definition of Medicare Code Edits V41.1 (ZIP)  The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2024. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V41.1 (ZIP)  A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. - Updated 03/12/2024
• V41.1 Definitions Manual Table of Contents - Full Titles - HTML Versions - Updated 03/12/2024
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V41.1  MAINFRAME Software (ZIP) - Updated 03/12/2024
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V41.1, ICD-10 PC Software (ZIP) - Updated 03/12/2024
• Medicare Severity Diagnosis Related Group (MS-DRG) and Medicare Code Editor (MCE) Version 41.1 Java Source Code and Reference Implementation Binaries (ZIP) - Updated 03/14/2024
• Version 41.1 Appendix C Suppression Logic (PDF) - Updated 03/12/2024  

FY 2024 – Version 41.A Alternate Test GROUPER – DRAFT file for FY 2024 IPPS/LTCH PPS Proposed Rule

This is a supporting file for the FY 2024 IPPS/LTCH PPS Proposed Rule .

We are providing an alternate test version of the ICD-10 MS-DRG GROUPER Software, Version 41.A, so that the public can better analyze and understand the impact of the proposals with application of the NonCC Subgroup Criteria included in the FY 2024 IPPS/LTCH PPS proposed rule. This alternate test software reflects the proposed GROUPER logic for FY 2024 with application of the NonCC Subgroup Criteria.  For additional information regarding the Version 41.A Alternate Test GROUPER please see the file titled CMS-1785-P Table 6P.1a below.

• Medicare Severity Diagnosis Related Group (MS-DRG) Alternate Test Grouper Software and Medicare Code Editor (MCE) Version 41.A, ICD-10 PC Software (ZIP)
• CMS-1785-P Table 6P.1a (ZIP) :  An Excel file that contains the mapped Version 41 FY 2024 ICD-10-CM codes and the deleted Version 40.1 FY 2023 ICD-10-CM codes that should be used for testing purposes with users’ available claims data.
• Definition of Medicare Code Edits V41 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2024. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V41 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. - Updated 10/16/2023
• V41 Definitions Manual Table of Contents - Full Titles - HTML Versions   - Updated 10/23/2023
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V41  MAINFRAME Software (ZIP)  
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V41, ICD-10 PC Software (ZIP)  
• Medicare Severity Diagnosis Related Group (MS-DRG) and Medicare Code Editor (MCE) Version 41 Java Source Code and Reference Implementation Binaries (ZIP) - Updated 8/22/2023

Java Source Code vs. Executable Jars

• The Java Source Code (JAR files) are provided for transparency around the grouping and editing methodology internals. These files are not intended for direct use in applications but offer an opportunity for users to have some additional insight into the component’s inner workings.
• In addition to the source files, precompiled jar files and instructions are provided which can be used on any platform running Java.

We are providing a test version of the ICD-10 MS-DRG GROUPER Software, Version 41, so that the public can better analyze and understand the impact of the proposals included in the FY 2024 IPPS/LTCH PPS proposed rule. This test software reflects the proposed GROUPER logic for FY 2024.  For additional information regarding the Version 41 Test GROUPER please see the file titled CMS- 1785-P Table 6P.1a below.

In addition, users are able to view the draft version of the ICD-10 MS-DRG Definitions Manual, Version 41. 

• Proposed ICD-10 MS-DRG Definitions Manual Files V41 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the proposed ICD-10 MS-DRG Grouper logic. 
• Proposed ICD-10-CM/PCS MS-DRG V41 Definitions Manual Table of Contents - Full Titles - HTML Version
• Medicare Severity Diagnosis Related Group (MS-DRG) Test Grouper Software and Medicare Code Editor (MCE) Version 41, ICD-10 PC Software (ZIP)
• CMS-1785-P Table 6P.1a (ZIP) :  An Excel file that contains the mapped Version 41 FY 2024 ICD-10-CM codes and the deleted Version 40.1 FY 2023 ICD-10-CM codes that should be used for testing purposes with users’ available claims data
• Definition of Medicare Code Edits V40.1 (ZIP)  The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2023. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V40.1 (ZIP) A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic.
• V40.1  Definitions Manual Table of Contents - Full Titles - HTML Versions
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V40.1  MAINFRAME Software (ZIP)
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V40.1, ICD-10 PC Software (ZIP)
• Medicare Severity Diagnosis Related Group (MS-DRG) and Medicare Code Editor (MCE) Version 40.1 Java Source Code and Reference Implementation Binaries (ZIP)

09/02/2022 Update: We are providing a re-release of the version 40 software to reflect updates that have been made to enhance the performance of the software. These updates do not affect any testing or grouping results.

For both the MS-DRG and MCE Java Mainframe software packages the following changes were made to the executable software.

• The hierarchy of common files was name spaced to remove any potential conflict when multiple grouping or editing Java applications are run by a single larger program on the Mainframe
• The Logging Error Message referring to “slf4j.impl.StaticLoggerBinder” has been corrected so this warning no longer appears. (This warning had no effect on the component functionality).
• Please refer to the Sample Environment file in the java folder to add “COBJVMINITOPTIONS=-Djzos.merge.sysout=true” to the Environment file on your USS system. For MS-DRG, refer to folder CMSDRG400_MF_Java_jar. For MCE, refer to folder MCEV400_MF_Java_jar folder.
• The COBOL wrapping programs provided have been enhanced to add “redirectStandardStreams” which allows greater flexibility in the location of log files on the Mainframe system

For the MS-DRG Mainframe reference files the following changes and clarifications are provided.

• For the DXPATERN file, The ‘XXX’ entries were removed from the file; these were placeholders for empty attributes (codes with no attributes for the OPERAND column) and were inadvertently left in.
• For the PRPATERN file, the ‘nonor’ attribute was not in the legacy flat files, but now appears. It is a better representation of the operating room severity levels - the ‘nonor’ attribute is meant to indicate the procedures that are non-operating room procedures. The PRATTLST file was annotated to include this attribute. 
• FORMULA_COLLECTION_ID column removed from the file, it is an internal field that is unnecessary for users.
• There is an attribute in the formulas, called ‘ORPROC’ that appears in many of the DRG formulas. This does not appear in the PRATTLST anywhere. This is meant to indicate codes that are operating room procedures, either extensive (attribute d68) or non-extensive (attribute d477). Replaced all mention of ‘ORPROC’ with ‘d468 OR d477’ in the DRGLOGIC file (both attributes already appear in the PRATTLST file). 
• Definition of Medicare Code Edits V40 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2023. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V40 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. 
• V40 Definitions Manual Table of Contents - Full Titles - HTML Versions  
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V40  MAINFRAME Software (ZIP)  - Updated 11/03/2022: This is a replacement of the previously released Medicare Severity Diagnosis Related Groups v40.0 I-10 z/OS (Java) Batch Mainframe Software.  The updated zip file addresses the POA logic flag that was not recognizing the POA Exempt status X in the Mainframe wrapper. 
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V40, ICD-10 PC Software (ZIP)
• Medicare Severity Diagnosis Related Group (MS-DRG) and Medicare Code Editor (MCE) Version 40 Java Source Code and Reference Implementation Binaries (ZIP)

This is a supporting file for the FY 2023 IPPS/LTCH PPS Proposed Rule

We are providing a test version of the ICD-10 MS-DRG GROUPER Software, Version 40, so that the public can better analyze and understand the impact of the proposals included in the FY 2023 IPPS/LTCH PPS proposed rule. This test software reflects the proposed GROUPER logic for FY 2023.  For additional information regarding the Version 40 Test GROUPER please see the file titled CMS-1771-P Table 6P.1a below.

In addition, users are able to view the draft version of the ICD-10 MS-DRG Definitions Manual, Version 40.

• Proposed ICD-10 MS-DRG Definitions Manual Files V40 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the proposed ICD-10 MS-DRG Grouper logic.
• Proposed ICD-10-CM/PCS MS-DRG V40 Definitions Manual Table of Contents - Full Titles - HTML Version
• Medicare Severity Diagnosis Related Group (MS-DRG) Test Grouper Software and Medicare Code Editor (MCE) Version 40, ICD-10 PC Software (ZIP)
• CMS-1771-P Table 6P.1a (ZIP) : An Excel file that contains the mapped Version 40 FY 2023 ICD-10-CM codes and the deleted Version 39.1 FY 2022 ICD-10-CM codes that should be used for testing purposes with users’ available claims data.

Update 07/18/2022 : We are providing a re-release of the version 39.1 software to reflect the standalone Java MCE binaries, sources, and documentation zip file in the PC software.  These updates do not affect any testing or grouping results

• Definition of Medicare Code Edits V39.1 (ZIP)   - Updated 3/14/22: The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2022. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V39.1 (ZIP)   - Updated 3/18/22: A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic.
• V39.1  Definitions Manual Table of Contents - Full Titles - HTML Versions  - Updated 3/18/22
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V39.1  MAINFRAME Software (ZIP)  -   Updated 3/14/22
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V39.1, ICD-10 PC Software (ZIP)  -   Updated 7/18/22

Update 12/22/2021 : The Apache Log4j open-source logging software library is used in the PC and Java based grouping and editing software (MS-DRG Java, MCE Java, MSGMCE). Recently, a vulnerability was discovered in Log4j that could present security issues when running under certain conditions. The Mainframe BAL software is not impacted.

Apache has issued an updated version of Log4j (2.16.0) to fix this issue. The updated software removes any potential association with the vulnerability.

There is no impact or change to any grouping or editing results or data files.

We have provided updated software files in order to remove any potential association with the vulnerability.

MS-DRG and MCE Mainframe Java distribution updates:

• Removed Log4j from the MS-DRG Mainframe and MCE Mainframe Java software packages as this logging is not utilized in this environment
• Updated the documentation for the standalone Java MS-DRG and MCE to reference 2.16.0 of Log4j

MSGMCE Products

•  Updated the Log4j version used to 2.16.0 from the current versions (MSGMCE PC - 2.7)
•   Definition of Medicare Code Edits V39 (ZIP)   :The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2022. Zip file contains a PDF and text file that is 508 compliant.   
• ICD-10 MS-DRG Definitions Manual Files V39 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic.   
• V39  Definitions Manual Table of Contents - Full Titles - HTML Versions  
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 39  MAINFRAME Software (ZIP)   - Updated 12/22/21  
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 39, ICD-10 PC Software (ZIP)  - Updated 12/22/21

This is a supporting file for the FY 2022 IPPS/LTCH PPS Proposed Rule

We are providing a test version of the ICD-10 MS-DRG GROUPER Software, Version 39, so that the public can better analyze and understand the impact of the proposals included in the FY 2022 IPPS/LTCH PPS proposed rule. This test software reflects the proposed GROUPER logic for FY 2022. For additional information regarding the Version 39 Test GROUPER please see the file titled CMS-1752-P Tables 6P.1a and 6P.1b below.

In addition, users are able to view the draft version of the ICD-10 MS-DRG Definitions Manual, Version 39.

• Proposed ICD-10 MS-DRG Definitions Manual Files V39 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the proposed ICD-10 MS-DRG Grouper logic.
• Proposed ICD-10-CM/PCS MS-DRG V39 Definitions Manual Table of Contents - Full Titles - HTML Version
• Medicare Severity Diagnosis Related Group (MS-DRG) Test Grouper Software and Medicare Code Editor (MCE) Version 39, ICD-10 PC Software (ZIP)
• CMS-1752-P Table 6P.1a and 6P.1b (ZIP) : An Excel file that contains the mapped Version 39 FY 2022 ICD-10-CM and ICD-10-PCS codes and the deleted Version 38 FY 2021 ICD-10-CM and ICD-10-PCS codes that should be used for testing purposes with users’ available claims data.
• Definition of Medicare Code Edits V38.1 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2021. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V38.1 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. 
• V38.1  Definitions Manual Table of Contents - Full Titles - HTML Versions
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V38.1  MAINFRAME Software (ZIP)
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V38.1, ICD-10 PC Software (ZIP)

The MS-DRG Java zip file has been updated to include a missing dependency required for testing. The MS-DRG Java API and calling example documentation has been updated to include references to this dependency as well as corrections to make method naming consist. The MS-DRG and MCE Java Mainframe deliverables have updated install guide PDF with corrections for clarity. There were no changes made to the functionality or content of MS-DRG or MCE.

Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Java Beta Version 38.1 MAINFRAME Software (ZIP)   - UPDATED 5.24.21

Inquiries related to this Java Beta version of the Grouper should be directed to  [email protected]

Errata (PDF) : A document describing the changes from Version 38 to Version 38.0 R1

• Definition of Medicare Code Edits V38.0 R1 (ZIP) :  The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2021. Zip file contains a PDF and text file that is 508 compliant
• ICD-10 MS-DRG Definitions Manual Files V38.0 R1 (ZIP) :  A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. 
• V38.0 R1 Definitions Manual Table of Contents - Full Titles - HTML Versions 
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V38.0 R1 MAINFRAME Software (ZIP)
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version V38.0 R1, ICD-10 PC Software (ZIP)

This is a supporting file for the FY 2021 IPPS/LTCH PPS Proposed Rule  

We are providing a test version of the ICD-10 MS-DRG GROUPER Software, Version 38, so that the public can better analyze and understand the impact of the proposals included in the FY 2021 IPPS/LTCH PPS proposed rule. This test software reflects the proposed GROUPER logic for FY 2021.  For additional information regarding the Version 38 Test GROUPER please see the file titled CMS-1735-P Table 6P.1a below.

In addition, users are able to view the draft version of the ICD-10 MS-DRG Definitions Manual, Version 38. 

• Proposed ICD-10 MS-DRG Definitions Manual Files V38 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the proposed ICD-10 MS-DRG Grouper logic. 
• Proposed ICD-10-CM/PCS MS-DRG V38 Definitions Manual Table of Contents - Full Titles - HTML Version
• Medicare Severity Diagnosis Related Group (MS-DRG) Test Grouper Software and Medicare Code Editor (MCE) Version 38, ICD-10 PC Software (ZIP)
• CMS-1735-P Table 6P.1a (ZIP) : An Excel file that contains the mapped Version 38 FY 2021 ICD-10-CM codes and the deleted Version 37 FY 2020 ICD-10-CM codes that should be used for testing purposes with users’ available claims data.
• Definition of Medicare Code Edits V37.2 (ZIP) :The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2020. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files V37.2 (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. 
• V37.2 Definitions Manual Table of Contents - Full Titles - HTML Versions
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 37.2   MAINFRAME Software (ZIP)      
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 37.2, ICD-10 PC Software (ZIP)  
• Definition of Medicare Code Edits V37.1 R1 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2020. Zip file contains a PDF and text file that is 508 compliant
• ICD-10 MS-DRG Definitions Manual Files V37.1 R1 (ZIP)   : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic.  
• ICD-10-CM/PCS MS-DRG V37.1 R1 Definitions Manual Table of Contents - Full Titles - HTML Versions - UPDATED
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 37.1 R1   MAINFRAME Software (ZIP)  
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 37.1 R1, ICD-10 PC Software (ZIP)   (ZIP)
• Definition of Medicare Code Edits v37 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2020. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files v37 R1 (Updated September 19, 2019) (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic.
• ICD-10-CM/PCS MS-DRG v37 R1 Definitions Manual Table of Contents - Full Titles - HTML Versions-UPDATED - Opens in a new window    
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper MAINFRAME Software and ERRATA, v37 R1 (Updated September 18, 2019) (ZIP)    
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 37, ICD-10 PC Software - Opens in a new window
• Definition of Medicare Code Edits v36 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2019. Zip file contains a PDF and text file that is 508 compliant.
• Errata and ICD-10 MS-DRG Definitions Manual Files v36 R1 (Updated October 09, 2018) (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic. 
• ICD-10-CM/PCS MS-DRG v36 R1 Definitions Manual Table of Contents - Full Titles - HTML Versions (Updated October 12, 2018)
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 36, ICD-10 Software - Opens in a new window    
• Definition of Medicare Code Edits v35 (ZIP) : The ICD-10 Definitions of Medicare Code Edits file contains the following: A description of each coding edit with the corresponding code lists as well as all the edits and the code lists effective for FY 2018. Zip file contains a PDF and text file that is 508 compliant.
• ICD-10 MS-DRG Definitions Manual Files v35 (Updated September 12, 2017) (ZIP) : A zip file with the ICD-10 MS DRG Definitions Manual (Text Version) contains the complete documentation of the ICD-10 MS-DRG Grouper logic.
• ICD-10-CM/PCS MS-DRG v35 Definitions Manual Table of Contents - Full Titles - HTML Versions (Updated September 13, 2017)
• Medicare Severity Diagnosis Related Group (MS-DRG) Grouper Software and Medicare Code Editor (MCE) Version 35 R1, ICD-10 Software (ZIP, 125MB) - Opens in a new window    

HCPCS-MS-DRG Definitions Manual and Software

The 21 st Century Cures Act requires that by January 1, 2018, the Secretary develop an informational “HCPCS version” of at least 10 surgical MS-DRGs.  Under the HCPCS version of the MS-DRGs developed for this requirement, to the extent feasible, the MS-DRG assignment for a given service furnished to an outpatient (billed using a HCPCS code) is as similar as possible to the MS-DRG assignment for that service if furnished to an inpatient (billed using an ICD-10-PCS code).

The HCPCS-MS-DRG definitions manual and software developed under the requirements of section 15001 of the 21st Century Cures Act (Public Law 114–255). Questions about the posted HCPCS-MS-DRG definitions manual and software can be directed to [email protected] .

• HCPCS-DRG V1.0 Software, User Manual, Definitions Manual, and Test Case Files - Opens in a new window    

HHS is committed to making its websites and documents accessible to the widest possible audience, including individuals with disabilities. We are in the process of retroactively making some documents accessible. If you need assistance accessing an accessible version of this document, please reach out to the [email protected] .

DISCLAIMER: The contents of this database lack the force and effect of law, except as authorized by law (including Medicare Advantage Rate Announcements and Advance Notices) or as specifically incorporated into a contract. The Department may not cite, use, or rely on any guidance that is not posted on the guidance repository, except to establish historical facts.

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What Are Diagnostic-Related Groups (DRG)?

Fixed fees for services ensure hospitals don't run up costs unnecessarily

• How It Works
• Case-Mix Complexity
• Why DRGs Exist
• Impact on Care

Frequently Asked Questions

A diagnostic-related group (DRG) is how Medicare (and some health insurance companies ) categorize hospitalization costs to determine how much to pay for your hospital stay. Instead of paying for each individual service, a predetermined amount is set based on your DRG.

The DRG is based on your primary and secondary diagnoses, other conditions (comorbidities), age, sex, and necessary medical procedures. The system is intended to make sure that the care you need is the care you get, while also avoiding unnecessary charges.

This article discusses diagnostic-related groups. It explains how DRGs factor into Medicare payments and how this designation may impact your care.

What Are Diagnosis-Related Grouping (DRG) Systems?

Since the 1980s, the DRG system has included both:

• An all-payer component for non-Medicare patients
• The Medicare-Severity Diagnostic-Related Group (MS-DRG) system for Medicare patients

The MS-DRG system is more widely used and is the focus of this article.

MS-DRG System

Under Medicare’s DRG approach, Medicare pays the hospital a predetermined amount under the inpatient prospective payment system (IPPS). The exact amount is based on the patient’s DRG or diagnosis.

Long-Term Care

A different system called the Long-Term Care Hospital Prospective Payment System (LTCH-PPS) is used for long-term acute care hospitals.

It’s based on different DRGs under the Medicare Severity Long-Term Care Diagnosis-Related Groups system (MS-LTC-DRGs) .

How Do DRGs Work?

When you’re discharged from the hospital, Medicare will assign a DRG based on the main diagnosis that caused the hospitalization, plus up to 24 secondary diagnoses.

Every person is different, and two patients with the same condition might need very different types of care. As such, the DRG can also be affected by your:

• Primary diagnosis
• Secondary diagnoses
• Comorbidities
• Necessary medical procedures

How Payment Amounts Are Set

To determine DRG payment amounts, Medicare calculates the average cost of the resources needed to treat people in a particular DRG.

This base rate is then adjusted based on various factors, including the wage index for a given area. For example, a hospital in New York City pays higher wages than a hospital in rural Kansas, which is reflected in the payment rate each hospital gets for the same DRG.

For hospitals in Alaska and Hawaii, Medicare adjusts the non-labor portion of the DRG base payment amount because of the higher cost of living .

Adjustments to the DRG base payment are also made for teaching hospitals and hospitals that treat many uninsured patients .

The baseline DRG costs are recalculated annually and released to hospitals, insurers, and other health providers through the Centers for Medicare and Medicaid Services (CMS).

If the hospital spends less than the DRG payment on your treatment, it makes a profit. If it spends more than the DRG payment treating you, it loses money.

What Is Case-Mix Complexity? 

Case-mix complexity is used in tandem with DRGs. The term refers to distinct patient attributes that may affect the cost of care. These include:  

• Severity of illness
• Treatment difficulty
• Need for intervention
• Resource intensity

Case-mix complexity is generally used to denote patients with a poor prognosis or greater severity of illness, treatment difficulty, or need for intervention.

It factors in complications or comorbidities (CC) and can include hospital-acquired conditions, such as a surgical site infection or a pulmonary embolism following joint-replacement surgery.

To healthcare providers , case-mix complexity refers to the patient’s condition and the type of treatment they need.

To hospital administrators , it indicates the degree of resources needed and how much that will cost.

Insurance regulators use these to determine how much they pay.

What Is the History of the DRG System?

Before the DRG system was introduced in the 1980s, the hospital would send a bill to Medicare or your insurance company that included charges for every bandage, X-ray, alcohol swab, bedpan, and aspirin, plus a room charge for each day you were hospitalized.

This incentivized hospitals to keep you for as long as possible, perform as many procedures as possible, and use more supplies.

As healthcare costs increased, the government looked for ways to control costs while encouraging hospitals to provide care more efficiently. The DRG system is what resulted.

DRGs changed how Medicare pays hospitals.

What Is the Impact of DRGs on Health Care?

The DRG payment system encourages hospitals to be more efficient and reduces their incentive to overtreat you. This has both benefits and drawbacks for patient care.

The DRG system is intended to standardize hospital reimbursement and:

• Improve efficiency
• Reduce length of stay
• Lower costs of treatment 

For a patient, the DRG system makes it less likely for the hospital to order unnecessary tests.

It can also mean you may be discharged earlier than if the DRG wasn't in place, allowing you to recover in the comfort of your home.

The diagnostic-related grouping system also has its drawbacks. For patients, this includes:

• Possible decreased quality of care : For example, the necessity of tests is determined by an administrative formula, which may not fit every patient’s needs.
• Upcoding or receiving a more severe diagnosis than necessary , which can cause undue worry and stress for patients and their loved ones
• Being discharged too early or moved to a rehabilitation or long-term care facility too soon, as a way to save the hospital money
• Increased odds of hospital readmission due to early discharge

For hospitals, the reimbursement methodology affects the bottom line. As a result, many private hospitals channel their resources to higher-profit services.

To counter this, the Affordable Care Act (ACA) introduced Medicare payment reforms, including bundled payments and Accountable Care Organizations (ACOs).

Still, DRGs remain the structural framework of the Medicare hospital payment system.

Discharge Rate

Hospitals are eager to discharge you as soon as possible and are sometimes accused of discharging people before they’re healthy enough to go home safely.

Medicare has rules that penalize a hospital in certain circumstances if a patient is readmitted within 30 days. This is meant to discourage early discharge—a practice often used to increase the bed occupancy turnover rate.

Outpatient Services

Hospitals are often eager to open beds for incoming patients. As a result, the hospital may discharge patients to an inpatient rehab facility or home with a visiting nurse service or other home health support.

Discharging patients sooner rather than later helps the hospital make a profit from the DRG payment. However, Medicare requires the hospital to share part of the DRG payment with the rehab facility or home healthcare provider to offset the additional costs associated with those services.

The IPPS payment based on your Medicare DRG also covers outpatient services that the hospital (or an entity owned by the hospital) provided in the three days leading up to the hospitalization.

Outpatient services are typically covered under Medicare Part B, but this is an exception to that rule, as the IPPS payments come from Medicare Part A.

The main benefits are increased efficiency, better transparency, and reduced average length of stay.

These are all medical codes, but they each have different meanings:

• ICD (international classification of diseases) : Classifies a patient’s diagnosis
• CPT (current procedural terminology) : Describes services a healthcare professional provides to a patient
• DRG (diagnostic-related group): Categorizes hospital services using information from a patient’s diagnosis (ICD), treatment provided (CPT), and other factors

Value Health Care Services. What is a Medicare severity-diagnosis related group (MS-DRG)?

Centers for Medicare and Medicaid Services. Design and development of the diagnosis related group (DRG) .

Centers for Medicare and Medicaid Services. Medicare payment systems .

Zhang L, Sun L. Impacts of diagnosis-related groups payment on the healthcare providers' behavior in China: a cross-sectional study among physicians . Risk Manag Healthc Policy . 2021;14:2263–76. doi:10.2147/RMHP.S308183

Catalyze. Accountable care organizations (ACOs) .

Centers for Medicare and Medicaid Services. Hospital-wide all-cause unplanned readmission measure .

Mihailovic N, Kocic S, Jakovljevic M. Review of diagnosis-related group-based financing of hospital care .  Health Serv Res Manag Epidemiol . 2016;3:2333392816647892. doi:10.1177/2333392816647892

By Elizabeth Davis, RN Elizabeth Davis, RN, is a health insurance expert and patient liaison. She's held board certifications in emergency nursing and infusion nursing.

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