Updated on: November 29, -0001

Could DRG Downgrading be Illegal?

By
Original story posted on: September 28, 2016

The possibility that diagnosis-related group (DRG) downgrading might be illegal was given added credence by a listener survey conducted this past Monday that revealed 14 percent of respondents thought the practice warranted a criminal investigation by the U.S. Office of the Attorney General.

The survey was conducted during this week’s edition of Monitor Mondays, the live Internet radio broadcast produced by RACmonitor. The survey asked listeners how they would characterize the denials of clinical diagnoses by third-party auditors. A majority of the respondents (61 percent) characterized DRG downgrading as the use of algorithms as a substitute for medical judgment when auditors review Medicare claims data.

“What best characterizes DRG downgrading?” the survey asked listeners. Fourteen percent responded that the program, although abusive, was still legal, while 14 percent felt that DRG downgrading should be referred to the U.S. Attorney General for investigation to determine if criminal acts are involved.

A combined 13 percent responded that the practice was important to catch fraud, but not being administered well by the auditors.

Here are the survey results:

What Best Characterizes DRG Downgrading 

IMPORTANT PART OF AUDITING TO CATCH FRAUD

4%

IMPORTANT PROGRAM, NOT ADMINISTERED WELL BY AUDITORS

9%

PROGRAM SHOULD BE RE-THOUGHT SINCE ALGORITHMS SUBSTITUTE FOR MEDICAL JUDGMENT

61%

AN INSTANCE OF ABUSE AND NOT-TRANSPARENT PRACTICES BY AUDITORS BUT STILL LEGAL

14%

POSSIBLY BE REFERRED TO THE ATTORNEY GENERAL TO SEE IF CRIMINAL ACTS ARE INVOLVED

14%

 

 

 

 

   

The subject of DRG downgrading possibly being criminal was first raised in a story by RACmonitor investigative reporter and New York attorney Edward Roche. Roche reported that mere auditing by Recovery Auditors (RAs) had morphed into their using computerized techniques to pick targets for audits. Roche wrote that an entire industry had emerged specializing in processing Medicare claims data and finding “sweet spots” on which the RAs could focus their attention.

James Jones, an MD with Mount Sinai Health System and a guest on the last Monitor Mondays, responded to the survey responses by saying that it was important for all payers to review the charts, acknowledging the possibility of errors therein but also noting that it happens “less than 5 percent of the time.”

“In my opinion, I think there is some criminal activity,” Jones said, responding to the survey question. “I think there are payers that are using third-party vendors that are not using federal guidelines, and they’re taking money back and changing codes of our patient population. And I think it has to stop. It’s an illegal activity, in my opinion."  

What approach might hospitals take in bringing the DRG downgrading issue to the attention of regulators and lawmakers? 

“The level of frustration among hospitals is so great (that) consideration is being given to pooling legal efforts to stop this abuse,” Roche said. 

“One possibility is to compile specific predatory practices, then have a legal team match these to possible violations of statutes,” he added. “Once the match is found, then petition the attorney general to consider criminal charges.”   

A second course of action, Roche suggested, could involve pressing lawmakers for stricter regulation and development of a list of proscribed practices. 

“Something similar happened in the credit card industry in the past,” Roche said. “Rules regarding the timing of mailings, notification, and appeal rights were tightened up.”  

About the Author 

Chuck Buck is the publisher of RACmonitor and the executive producer and program host of Monitor Mondays. 

Contact the Author 

cbuck@panaceainc.com 

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Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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