UB04 PPS Code Code 01: DRG (Diagnosis Related Group)

Overview

The PPS Code 01 is a critical element in the Prospective Payment System used for hospital inpatient billing on the UB-04 claim form ^[1]. In the context of Maryland Department of Health Medical Assistance, the use of PPS codes like Code 01 ensures that claims are processed according to the established Revenue Code Matrix and specific hospital billing instructions ^[1]. The DRG system is designed to categorize hospital cases into groups that are expected to have similar hospital resource requirements, allowing for a standardized payment method rather than billing for every individual service provided ^[1]. Proper utilization of Code 01 is essential for the Electronic Verification System (EVS) to validate the claim and for the payer to calculate the correct prospective payment ^[1].

When to Use

Code 01 must be utilized when a hospital is submitting an inpatient claim that falls under the DRG-based reimbursement methodology as outlined in the UB-04 Hospital Billing Instructions ^[1]. It is used primarily by acute care hospitals for inpatient stays where the payment is determined by the complexity of the case and the diagnosis rather than a per-diem rate ^[1]. According to the Maryland Department of Health, this code is necessary for the proper adjudication of claims through the Medical Assistance program, ensuring that the hospital's billing aligns with the Revenue Code Matrix ^[1]. It is required for all claims where a DRG assignment is the basis for the "Statement Covers Period" defined in Field Locator 06 ^[1].

Step-by-Step Claim Example

To correctly report Code 01 on a UB-04 claim, the biller must first ensure that all preliminary patient information is accurate, including the Patient Name (FL 08) and the Statement Covers Period (FL 06) ^[1]. First, the biller identifies the appropriate DRG based on the patient's medical record and the diagnoses provided ^[1]. Finally, the biller verifies that the Admission Date (FL 12) and the Type of Bill (FL 04) are consistent with an inpatient stay subject to DRG reimbursement before submitting the claim for electronic verification through the EVS system ^[1].

Common Mistakes & Audit Red Flags

One common mistake is the omission of Code 01 when the Type of Bill (FL 04) indicates an inpatient stay that requires DRG classification for payment ^[1]. Audit red flags often occur when there is a mismatch between the DRG reported and the principal diagnosis or procedures listed elsewhere on the claim ^[1]. Furthermore, using Code 01 for outpatient services or for facilities that are not reimbursed under the prospective payment system can lead to immediate claim denials during the Electronic Verification System (EVS) process ^[1]. Inaccurate reporting of the Statement Covers Period in FL 06 or the Admission Date in FL 12 can also trigger audits, as these dates must align with the period covered by the DRG payment ^[1].

Related Codes/Fields

Field Locator	Field Name	Description
FL 04	Type of Bill	Indicates the specific type of bill, such as inpatient hospital [1].
FL 06	Statement Covers Period	The beginning and ending dates of the period covered by the bill [1].
FL 12	Admission Date	The date the patient was admitted for inpatient care [Maryland Medicaid (Code 01)].
FL 01	Billing Provider	Name, address, and telephone number of the hospital submitting the claim [Maryland Medicaid (Code 01)].

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References

[1] Maryland Medicaid (Code 01) — https://health.maryland.gov/mmcp/provider/Documents/ffs-billing/UB04-Hospital-Billing-Instructions%20%281%29.pdf