On March 10, President Obama issued an executive memorandum to the heads of federal executive departments and agencies, directing them to "expand their use of Payment Recapture Audits, to the extent permitted by law and where cost-effective."

"Payment Recapture Audits," a newly coined term, refers to the efforts of various entities to collect payments made "in error." During the last several months we have witnessed a rapid upswing in denials from a variety of these entities. In a prior article, I addressed the DRG validation process and how we were observing new challenges to correctly coded diagnoses.

J. A. Thomas & Associates (JATA) began to receive from our clients examples of unprecedented, creative repayment demands from the denial industry. It is apparent that the current guidelines for compliant, consistent, sufficient, non-conflicting and clinically supported diagnoses have been subjected to new interpretations and applications. In other words, citing previous practice based on official guidelines is no longer sufficient to prevent demands for repayment.

The issue for many hospitals is not whether such denials ultimately can be won on appeal, but rather the staff expense of going through a lengthy appeals process.

To assess national trends, we have requested that client hospitals send us examples of the types of denials they currently are experiencing. Remember, these are cases selected by hospitals to illustrate what they feel is an inappropriate denial process. We subsequently have aggregated and analyzed these responses, including an assessment of which contractors were involved.

Our initial findings reveal the following:

Analysis:

While this initial data is limited, it is clear that certain RACs and QIOs seem to be "out front" in developing innovative denial strategies. While a given hospital may not have been subject to any of these specific strategies yet, understanding what is occurring across the nation can give advanced warning of potential denials. Clearly, commercial payers and state Medicaid review agencies also have entered the fray.

Principal Diagnosis Denials

Principal diagnosis denials are most common, with certain diagnoses shown above being primary targets.  Acute respiratory failure is a principal diagnosis with generally accepted criteria, including observed clinical findings. The challenge here often is that acute respiratory failure is present at the time a decision to admit is made, but it is documented poorly by the subsequent treating physician performing a history and physical later in the day - often after the acute symptoms requiring admission have improved markedly. Clearly, the emphasis here must be on accurate concurrent documentation at time of admission. Sepsis is another diagnosis "under fire." This is due in part to reviewers challenging whether the patient was "sick enough" to warrant the diagnosis, whether or not he or she met appropriate diagnostic criteria.

One example of a particularly innovative denial approach involved a patient admitted with an "elevated troponin." A hospitalist documented "elevated troponin" and consulted a cardiologist, who made the clinical diagnosis of a "subendocardial myocardial infarction," which was well-documented.  The hospitalist, however, continued to document "elevated troponin." The coder appropriately coded the patient's principal diagnosis as "subendocardial myocardial infarction," the condition warranting admission to the hospital. On review, the DRG assignment for the myocardial infarction was denied on the basis of "conflicting diagnoses" between the hospitalist and the consultant, with the admonition that the coder should have identified the "conflicting diagnoses" and selected the hospitalist's diagnosis - which is not a diagnosis at all. If the hospital did not appeal or perhaps lost an appeal, what is the proper next step? Should the hospital remove the coding of the MI? Does the medical record now accurately reflect the patient's clinical condition? The quality implications of creative denials are substantial.