ICD-10-CM/PCS MS-DRG Grouper Part 2

By: Ron Mills

Since Part 1 was posted, our paper with full details of the MS-DRG impact study has been updated and published in the Medicare & Medicaid Research Journal and is available at http://www.cms.gov/MMRR/Downloads/MMRR001_02_A02.pdf.

I want to continue the discussion of grouper architectural changes we started in Part 1, but to justify the biggest innovation – code clusters – I first have to supply some background. We identify four ways to convert an application like MS-DRGs from ICD-9 to ICD-10:


Backward crosswalk. The application stays in ICD-9, but the data it processes, in ICD-10, is mapped back to ICD-9 upstream. We tried this out in the impact study, and discovered that it only works about half as well as replication.

Replication.  The application is modeled as lists of ICD-9 codes, manipulated by logic. The lists of ICD-9 codes are replaced, insofar as possible, by lists of “equivalent” ICD-10 codes, but the logic remains the same. The intent (and to within about 1% the achievement) is to make the ICD-10 version of the application behave exactly like the ICD-9 version.

Speculation. Here one could try to make use of the greater specificity and updated structure of ICD-10 to make an application behave “better” (which, of course, means different things to providers than to payers). But this is done in the absence of ICD-10-coded historical data. So clinical and actuarial experts predict how medical records coded in ICD-10 will look, and the organization assumes the risk after 2013 that their experts are correct.

Optimization. Improving the application with data to back up the change decisions. (I would have preferred “refinement” for this option, since “optimum” implies a level of finality we will never achieve in healthcare financing.)

For our IPPS impact study, CMS asked us to replicate the ICD-9 MS-DRG grouper in ICD-10. It is not difficult to see why. Considered at a very high level, IPPS reimbursement depends on:

  • The MS-DRG grouper logic which assigns DRGs based on diagnoses, procedures, sex, age and discharge status.
  • A set of DRG-specific weights and trim points, based on historical volume and cost data, which characterize the relative resource demands for treating patients in each DRG.
  • Rules for computing a reimbursement based on the DRG weights and trims, and hospital characteristics.

Without ICD-10-coded history, there is no low-risk way to compute the weights and trims that depend on distinctions one can make in ICD-10, but not in ICD-9.

Does this mean that the FY2014 MS-DRG grouper (version 31, the first to use ICD-10, effective 10/1/2013 – assuming the dark side remains unable to delay this further) will be a faithful replication of the FY2013 MS-DRG grouper (version 30, the last to use ICD-9)? At this point, I am obligated to remind you that the MS-DRG specification is a public rule-making process. We won’t know for sure what MS-DRGv31 looks like until the final rule is published in the Federal Register in mid-2013. But so far, there has been no talk of anything other than replication.

How long are we going to be stuck in the ICD-9 world? What follows is my answer – not necessarily CMS’s. But the usual process has been to consider changes to the DRGs in the spring, and to use the previous full year’s MedPAR data to estimate impacts and compute weights and trims. For example, whatever changes might be made to create version 29 (FY2012 DRGs, effective 10/1/2011) would be studied using the FY2009 MedPAR data (10/1/2009 through 9/30/2010). If the same lead times continue after 2013, then a full year of ICD-10 data won’t be available for analysis until the changes for FY2016 (effective 10/1/2015) are being considered.

Until then, the conservative approach to grouper construction is replication. And replication means making the ICD-10 grouper behave as much as possible the way the ICD-9 grouper behaves. When the ICD-10 codes for a condition or procedure are more specific than the ICD-9 codes were, this is no problem – you just make the grouper behave like it used to for all those new codes. The trouble occurs when ICD-9 contains information that ICD-10 no longer does and the grouper is accustomed to using that information.

Here are three examples:

  • In ICD-9, the fifth digit of a whole lot of obstetrics codes told you whether the patient delivered during her hospital stay. In ICD-10, the last digit is now used to tell you which trimester the patient is in. Was there a delivery? The MDC 14 DRG logic wants to know.
  • In ICD-9, there used to be a code (V57.89) for Rehab care. The closest thing in ICD-10 is Z51.89, Aftercare, which is far more general. MDC 23 wants to know if the patient is in for rehab.

In these cases, we had to change the grouper logic to look for procedures, where formerly diagnosis alone would suffice. These examples notwithstanding, the most common difference a replicated grouper has to handle is that between ICD-9 procedures and ICD-10-PCS. The solution – procedure clusters – turns out to have architectural benefits beyond just enabling replication. It will be the topic of Part 3.

Ron Mills is a Software Architect for the Clinical & Economic Research department of 3M Health Information Systems.

18 responses to “ICD-10-CM/PCS MS-DRG Grouper Part 2

  1. Have you done any analysis of the revenue neutrality of the ICD-10 based MS DRG grouper for private health plan populations?

  2. Yes. CMS has had several excellent inquires from early ICD-10 MS-DRG grouper users. Some of them were about mothers and babies, so we inferred that folks who use MS-DRGs on non-Medicare populations were taking a look. Using a million records from an all-payor source we purchase annually, we ran the same impact analysis we had reported on for Medicare patients. It pointed up some significant opportunities for improvement in the version of the grouper that was released in April. We’ve made those improvements and CMS has agreed to release the improved grouper (version 28.0a) at the end of August. Not only does 28.0a perform more acceptably for a private health plan population (weighted decrease of 0.08% or 8 cents per $100) but also appears to performs better on a Medicare population (weighted change 0.00% or less than a half-penny per $100).

  3. Ron,

    Thank you very much for the quick response. I am encouraged to hear that 3M is working on this issue and that CMS will be releasing an improved ICD-10 MS DRG grouper. Here’s an additional question: as you know, unlike Medicare, private health plans pay in various ways (e.g., per diems, case rates, discounts, DRGs, etc.). Does the all payor claims data base that you have enable you to determine whether the essential revenue neutrality you have found with the use of the improved v. 28a hold true regardless of the payment method used by the private health plan? Thanks.

  4. The “revenue neutrality” is a function of the MS-DRG grouper, not of ICD-10. There are very significant differences between ICD-9 and ICD-10. The ICD-10 MS-DRG grouper has been carefully constructed to minimize their impact on computing DRGs (and hence Medicare IPPS payments). Other payment methods will not necessarily do so. How can you project the impact of a non-DRG method? See our article (“Reading the Fine Print on ICD-10 Conversion”) on page 28 of the June AHIMA Journal.


  5. Pingback: ICD-10-CM/PCS MS-DRG Grouper Part 3 | 3M Health Information Systems

  6. Ron, any updates on when the revised version 28.0a grouper you refer to above might be released?

  7. I can’t make any specific predictions about what CMS will do, except to say that we and they had originally intended to have it out by the C&M meeting next week (Sept. 14). However, earthquakes, hurricanes, floods, power outages, v29 and vacations have all had their say. Everyone is working as hard as they can to get it out as soon after C&M as possible.

  8. Ron, many thanks for the very quick response. We will watch for more information at and following the C&M meeting!

  9. James S. Kennedy MD CCS

    Ron: I am grateful for your articles. Has there been any published information as to what the predicted incidences of the ICD-10-PCS codes will be? For example, I was looking at code ICD-9-CM procedure code 03.09 which explodes to approximately 56 codes. That would help me in using the new grouper.

  10. How nice it would be for all of us if that kind of data were universally available. Until there has been a significant amount of dual coding—records being coded in both ICD-9 and ICD-10—and unless some of that is made available for research by the institutions that do it, we won’t have real data on which to make those estimates. The best you can do presently is ask your clinical experts—in this case your spinal guys—for their guesses as to how frequently the 56 different procedures identified in ICD-10-PCS are performed in practice. Alternatively, if you have EHRs and can make the clinical connections between SNOMED (or whatever the EHR is represented in) and those PCS alternatives, you might be able to gather real statistics that way. I’m not aware of any public translation dictionary for SNOMED vs. PCS, though I’d be surprised if someone, somewhere, isn’t working on it.

  11. Ron,

    Thanks for the info. Very helpful.

    I have read a couple of places that the CMS MS-DRG grouper logic is available to the public, but I have not been able to find it anywhere. I would really like to understand the logic and perhaps write an app to assign claims to DRGs for my employer so that we can understand how ICD10 will affect us. Is it true that the grouper logic is available to the public? If so, where can I find it?


  12. CMS releases the grouper definition to the public three ways that I know about. The first, as alterations to last year’s grouper in the Federal Register, isn’t really relevant for ICD-10. (If they do it that way for ICD-10, it wouldn’t be until Spring of 2013.) The second is via the DRG Definitions Manual, posted on the CMS web site at http://www.cms.gov/ICD10/17_ICD10_MS_DRG_Conversion_Project.asp. The Definitions Manual in text form would be the easiest for a computer to read. While the Definitions Manual does give all the code details needed for a grouper, it doesn’t explicitly provide the grouper logic. You can infer the grouper logic from the order of presentation of the DRG sections, which would get you pretty close, but that doesn’t really constitute what a programmer would view as a “specification”. The third way CMS releases the grouper is in a set of text tables that are bundled with the mainframe release. Those tables, which I have talked about elsewhere in this space, do contain a precise specification of the logic, as well as all of the code tables required by the grouper. CMS has not yet announced when the first mainframe release of the ICD-10 grouper will be, but we’re hoping for early in 2012.

  13. Thanks for the swift reply Ron.

    I am familiar with the DRG Conversion Project, but, exactly as you say, couldn’t figure out the exact logic from the Definitions Manual. I guess we will have to wait for the text tables.

    Thanks for the very valuable info. I haven’t found better info than you have given in your comments here anywhere on the Internet. If you know of any good resources for payers regarding the ICD-10 conversion, please point me in the right direction.


  14. Hey Ron,

    We decided that we would like to get the MS-DRG Grouper logic for the latest version of ICD-9 so that we can gain an understanding of it and so that we can iron out the process for obtaining the logic before the ICD-10 version is released

    We would like to know if the tables for determining a precise specification of the logic are on the CD* or if we have to order the tape** to get the tables.

    Here is a quick link to the site with the specific versions I am referring to.

    *CMS Medicare Severity Diagnosis Related Grouper (MS-DRG) with Medicare Code Editor (MS-DRG/MCE) (Version 29.0 R1)
    **CMS Medicare Severity Diagnosis Related Groups (MS-DRG) Grouper (Version 29.0 R1)

    From your comments, I believe that the tape must be purchased in order to get the tables that specify the logic. However, we wanted to be sure as purchasing the tape and using it will be significantly more involved than purchasing and using the CD.


  15. Sorry, as things now stand you’ll have to order the tape and find a friendly mainframe shop who will convert those tables from EBCDIC to your machine’s character representation. The tables being only on the mainframe distribution is a matter of historical precedent, not technology. However, CMS is highly responsive to public comment. If enough of you let them know that you’d like the tables in a more accessible place — for example as additional appendices to the online Definitions Manual — then change is possible.

  16. Thanks Ron,

    I thought that was the case. :(

    I have sent a request to CMS asking for this information on/in current technlogy/format.

    Everyone else who would like this info, please go leave a comment as well!

  17. Hi Ron,
    Is there any indication whether the Version 31.0 (FY 2014) MS-DRG grouper will be able to group claims based on ICD-9 codes for claims that come in with discharge dates prior to October 1, 2013? The code set would be valid since it is based on a discharge date prior to ICD-10 implementation.

  18. Clinically, yes. (All of what I’m going to say next is current expectation. Remember that the MS-DRG grouper is subject to the CMS rule making process and could emerge from that different from where we think it is going.) The plan is to make version 31 a replication in ICD-10 of version 30, an ICD-9-CM grouper (and, if the code freeze holds, probably very little different from version 29, which is out now.) Hence version 31 will be defined in both ICD-9-CM and ICD-10-CM and would be able to handle grouping claims coded in ICD-9-CM. (Now I’m not the resident expert in IPPS but I think that those claims with discharge dates before October 1, 2013 would be grouped in version 30 — and most groupers — certainly 3M’s — are able to switch gears and use an older version and code set when they see an earlier discharge date.) But for analysis, when you want that older discharge grouped according to v31, the clinical definition of the v31 grouper should handle both ICD-9-CM and ICD-10-CM/PCS. Will the grouper you use be able to handle that technically? Depends on the implementation. The groupers I have written handle both 9 and 10 — makes them easier to debug — but they go through levels and levels of marketing-directed value-adding software wrapping before they emerge as products. And what other grouper vendors do is up to them. So I suggest you make your desire for dual code set grouping in version 31 well known to whomever you buy your groupers from.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s