What is Principal Diagnosis in Inpatient Medical Coding

In this post we are going see about “what is principal Diagnosis in inpatient Medical Coding". We will review how and why we need to pick a Principal diagnosis, what is at stake and what the rules are.

Let’s start by clarifying what the principal diagnosis is in practical terms: well, in short, it’s money. In most cases, for inpatient stays, the principal diagnosis will decide how much reimbursement a facility receives. Whatever the principal diagnosis is will get plugged into the MS-DRG grouper.

The software Medicare uses to help calculate payment for acute episodes of care - what then performs all kinds of calculations and logical steps, and assigns the patient to one of the MS-DRGs, the Diagnosis Related Groups.

This will determine how much the facility gets paid for this given patient. If we assign the wrong principal diagnosis at the beginning of this process, the case will either not get paid at all, or it will get paid but at an erroneous rate.

When incorrect payments happen, 2 things can follow:

1. The hospital can go broke from all the unpaid treatment they provided but coded wrong, or

2. The facility makes a lot of unjustified profit on services provided but up coded, and they will get in trouble for that.

As you can see, assigning the principal diagnosis correctly is imperative not just from a financial but an ethical viewpoint as well.