Reimbursement
MS-DRG(MS-DRG)
In one line
Medicare's inpatient hospital payment classification system.
Definition
Medicare Severity Diagnosis-Related Groups classify inpatient stays into payment groups based on diagnosis, procedures, age, and complications. Each MS-DRG carries a relative weight; the hospital is paid a bundled rate regardless of actual cost.
CMS updates MS-DRG definitions and relative weights each year through the IPPS rule, using cost reports and claims data. Groups often have tiers for no complications, complications (CC) and major complications (MCC). If a new device is costly and the DRG payment does not reflect it, manufacturers may request a DRG reassignment or an NTAP.
Why it matters
For inpatient device-based procedures, MS-DRG assignment determines whether the hospital is paid enough to cover the device cost. Inadequate MS-DRG mapping is a major commercial barrier; NTAP and new technology reassignment are remedies.
Common pitfalls
- •Hospitals may inadvertently undercode or overcode, leading to incorrect reimbursement and potential audit scrutiny.
- •Device manufacturers might misunderstand how device costs are incorporated into MS-DRG payments, impacting market access strategies.
- •A lack of proper documentation for a device or procedure can lead to an unfavorable MS-DRG assignment.
- •Assuming that an innovative MedTech product will automatically receive adequate reimbursement without specific CMS pathways like NTAP is a common mistake.
- •Failing to consider the impact of MS-DRG assignment on post-market surveillance costs or potential recalls can lead to financial strain.
Sources