DRG 884 (Psychoses) and DRG 885 (Organic Disturbances and Mental Retardation)

Published 12/16/2019

Each of the Medicare Severity Diagnosis Related Groups (MS-DRG) is defined by a particular set of patient attributes which include principal diagnosis, specific secondary diagnoses, procedures, sex and discharge status.

DRG 884 (Organic Disturbances and Mental Retardation) is classified as a Major Diagnostic Category (MDC) 19 – Mental Diseases and Disorders. (The MS-DRG Definition Manual, Version 32.)

DRG 885 (Psychoses) is classified as a Major Diagnostic Category (MDC) 19 – Mental Diseases and Disorders. (The MS-DRG Definition Manual, Version 32.)

Inpatient psychiatric facilities (IPFs) include freestanding psychiatric hospitals and certified psychiatric units in acute care hospitals or critical access hospitals. IPFs provide routine hospital services and psychiatric services for the diagnosis and treatment of mentally ill persons. Section 1812(b)(3) of the Social Security Act ("the Act") imposes a 190-day lifetime limit for care in freestanding psychiatric hospitals, but this limit does not apply to certified psychiatric units.

Medicare provides payment for inpatient psychiatric treatment when provided to a patient who requires 24 hours of daily care in a structured, intensive and secure setting for patients who cannot be safely and/or adequately managed at a lower level of care. Daily physician (M.D./D.O.) supervision, 24-hour nursing/treatment team evaluation and observation, diagnostic services, and psychotherapeutic and medical interventions are provided within these settings.

Patients admitted to inpatient psychiatric hospitalization must be under the care of a physician who is knowledgeable about the patient and is responsible for certifying/recertifying the need for inpatient psychiatric hospitalization. The patient must require “active treatment” of his/her psychiatric disorder. The patient or legal guardian must provide written informed consent for inpatient psychiatric hospitalization in accordance with state law. If the patient is subject to involuntary or court-ordered commitment, the services must still meet the requirements for medical necessity in order to be covered by Medicare.

IPFs must meet requirements related to admission, medical records, personnel, psychological services, social services and therapeutic activities. 

IPF guidance can be found within Palmetto GBA Local Coverage Determination (LCD): Psychiatric Inpatient Hospitalization (L34570) for:

  • Coverage and benefits
    • Indications
    • Admission Criteria (Intensity of service/Severity of illness)
    • Active Treatment
    • Discharge Criteria (Intensity of service/Severity of illness)
    • Limitations
  • Documentation/Billing Requirements
    • Certification/Recertification
    • Initial Psychiatric Evaluation
    • Physician Orders
    • Plan of Treatment
    • Progress Notes (Physician/General)
    • Limitations

Common Medical Review Denials

  • 56900: Auto Denial — Requested Records not Submitted
  • 55503: LCD Denial — no medical necessity
  • 5J504: Need for Service/Item Not Medically and Reasonably Necessary
  • 5J502: Info Submitted Does Not Support Dates Billed
  • 5D700: No Valid Plan of Treatment Present

that do not support that the services are reasonable and necessary;Failure to provide documentation to support the necessity of test(s) or treatment(s) may result in denial of claims or services. This includes medical records:

  • in which the documentation is illegible; or
  • where medical necessity for inpatient psychiatric services is not appropriately certified by the physician

Common CERT Errors

  • Error Code 21: Insufficient Documentation
  • Error Code 25: Medically Unnecessary Service or Treatment

The majority of Medicare Fee-for-Service (FFS) improper payments are due to documentation errors where the Centers for Medicare & Medicaid Services (CMS) could not determine whether the billed items or services were actually provided, were billed at the appropriate level, and/or were medically necessary. A smaller proportion of Medicare FFS improper payments are payments for claims where CMS determined they should not have been made or should have been made in a different amount, representing a known monetary loss to the program.Improper payments are not always indicative of fraud, nor do they necessarily represent expenses that should not have occurred. For example, instances where there is insufficient or no documentation to support the payment as proper are cited as improper payments under current Office of Management and Budget guidance.

To ensure that your claims will be reviewed and processed without problems please refer to the following links for education and guidance concerning documentation and billing:

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