April 20, 2016

Are RA denials and ALJ Judgments Legal under the PPACA?

By Allen Frady, RN, BSN, CCS, CCDS

Value-based purchasing, bundled payments, Medicare Advantage, required quality reporting, and many Centers for Disease Control and Prevention (CDC) requirements all have one thing in common: they require reporting along an axis not defined by the Centers for Medicare & Medicaid Services (CMS) in its five criteria for a reportable secondary diagnosis.  

As a reminder, those five criteria are the following:

1) Evaluation by a physician,

2) Monitoring by a physician,

3) Therapeutic management,

4) Increased nursing services, and

5) Increased length of stay.

Frequently, denials are based on an answer to a single question: Did the diagnosis in question meet sufficient severity and intensity that it impacted resource utilization on the part of the hospital? I say that is irrelevant. The Patient Protection and Affordable Care Act (PPACA) legislated quality reporting and pay-for-performance, which requires that the risk adjustment be reported on a sixth criteria. Specifically, does the diagnosis carry weighted value for the required risk adjustment on the basis of poor outcomes, including having a high likelihood of increased costs associated with the long-term management of a condition, increased risk for (frequent) readmission, significant potential impact for future healthcare needs, and most importantly, increased risk of mortality?

A look into every value-based reimbursement model currently in practice and/or underway requires reporting on this sixth form of criteria. The language in the PPACA legislated it as the law. In a great many cases, a diagnosis will have significant impact for the required risk adjustment and will in fact be a diagnosis that the patient carries, yet it will not meet the "resource used during three days" criteria.

The larger-scale value-based purchasing rationale does not dictate that the risk adjustment should/would in any way be based on or impacted by the particular amount of resources utilized in a single (or multiple) inpatient stay. The methodology and research that justifies the methodology is weighted on a statistical analysis of the long-term risk stratification associated with simply having those conditions present.

So the question I pose to you is this: How can the federal government in one law require the use of such reporting in order to effectively communicate the risk required in the reimbursement methodology they are imposing while simultaneously denying reimbursement on a line-item basis for doing the very thing they told us to do – and all on the grounds of a criteria that (as a matter of fact) isn't even part of the Uniform Hospital Discharge Data Set?

About the Author

Allen R. Frady is a senior consultant for Optum360. His experience includes areas in management, implementation, education and clinical practice.  With 20 years in healthcare, he provides clients assistance in the areas of documentation, program implementation and compliance.  His background includes critical care nursing, coding, auditing, utilization review, and documentation improvement.

Contact the Author

Allen.Frady@Optum360.com

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