Updated on: June 22, 2012

Latest Region C Review Excludes Medical Necessity, Focuses on MS-DRGs

By
Original story posted on: December 16, 2009

carolSpencer

Recently, Connolly, Inc., the Recovery Audit Contractor (RAC) for Region C, announced the 24 MS-DRGs listed below as "approved issues." Connolly has now scheduled these MS-DRGs for DRG validation and discharge disposition review.*

 

At this time, medical necessity is excluded from the review.

 

2008 Medicare Data Reported

 

MS-DRG Identifiers

MS-DRG Numbers

Relative Weights

Transfer DRG(s)?

Major Chest Procedures with MCC, with CC, and without MCC/CC

163

164

165

4.9978

2.5953

1.8036

Yes

Other Respiratory System Operating Room (OR) Procedures with MCC, with CC, and without MCC/CC

166

167

168

3.6912

2.0264

1.3433

Yes

Respiratory System Diagnosis with Ventilator Support 96+ Hours

207

5.1055

Yes

Upper Limb and Toe Amputation for Circulatory System Disorders with MCC

255

2.4110

Yes

Major Small and Large Bowel Procedures with MCC, with CC, without CC/MCC

329

330

331

5.1666

2.5589

1.6224

Yes

Major Gastrointestinal Disorders and Peritoneal Infections without CC/MCC

372

1.3072

Yes

Inflammatory Bowel Disease with CC

386

1.0616

No

Other Digestive System Diagnoses with CC

394

0.9519

No

Cirrhosis and Alcoholic Hepatitis with MCC

432

1.679

No

Coagulation Disorders

813

1.3532

No

Septicemia Without Mechanical Ventilation 96+ Hours with MCC, without MCC

  • Extensive OR Procedure Unrelated to Principal Diagnosis with MCC, with CC, without MCC/CC

871

872

981

982

983

 

 

 

1.8222

1.1209

5.0238

3.0783

1.9948

Yes

  • Non-extensive OR Procedure Unrelated to Principal Diagnosis with MCC, with CC, without MCC/CC

987

988

989

3.4406

1.8792

1.1009

Yes

 

Steps to Take to Prepare

The four steps described below will help you prepare for the upcoming RAC focus.

 

1.   Run look-back data from October 1, 2007 through September 30, 2009 for the above MS-DRGs. Perform a probe review (25 cases) beginning with your highest volume and highest revenue MS-DRGs. Most likely, these will be the sepsis DRGs and the major small and large bowel procedure DRGs. Although lower volumes, the extensive and non-extensive operating room (OR) procedures unrelated to principal diagnosis may result in high dollar recoupment because of the high RWs of these MS-DRGs. This is the same for the major chest and the respiratory system OR procedure MS-DRGs.

 

2.   Quantify your improper payment by underpayment dollars and overpayment dollars and adding together to report a paid claims error rate (PCER) (total improper payment dollars divided by the total net dollars paid to the hospital by Medicare), which you can pull from the remittance advice. Benchmark your PCER to the PCER reported on the last Comprehensive Error Rate Testing (CERT) report (November 2008).

 

If your PCER is significantly higher than the one reported by the Centers for Medicare & Medicaid Services (CMS), ask yourself why that is the case. If it is significantly under CMS, then ask the same question. Is the audit methodology consistent with CMS? Is there a reason for your hospital to have a higher or lower PCER?

 

Drill into the root cause-including people, process and technology-to understand gaps, inconsistencies, and missing education, policies/procedures, and technology that can be implemented to mitigate future risk.

 

3.   Prioritize MS-DRGs with the highest improper payment risk and determine next steps. Is a second probe sample required? (If so, double the amount of the first probe sample.) Determine cases that need re-payment. Track all account numbers that are re-paid to the Medicare fiscal intermediary (FI) or administrative contractor (MAC) to be able to easily identify these cases to the RAC if it requests that in a future demand letter. Determine if the coding error was isolated or systemic. If isolated, provide education, correct process issues, implement additional controls and safeguards. If systemic, consult your compliance officer and legal.

 

4.   Track and trend results and report to your hospital board to keep them abreast and involved in all issues and repayments identified as a result of pre-emptive RAC audits.


 

Sample 300-bed Hospital Risk for Improper Payments

The following table has been created using the parameters defined above. Specifically, the first column refers to the sample hospital look-back volume and applies to the time period of October 1, 2007 through September 30, 2009. The third column refers to the PCER reported in the November 2008 CERT report.

 

 

Sample
Volume

MS-DRGs

PERCENT

Potential RAC Recovery

Medical Necessity

Incorrect Coding

Both

8

163

 

$0

$3,094

$3,094

16

164

 

$0

$2,545

$2,545

0

165

1.2%

$0

$0

$0

12

166

 

$0

$5,985

$5,985

4

167

4.3%

$0

$1,790

$1,790

0

168

 

$0

$0

$0

14

207

11.1%

$0

$39,931

$39,931

40

329

0.9%

$0

$11,119

$11,119

40

330

4.6%

$0

$23,940

$23,940

10

331

2%

$0

$1,707

$1,707

18

372

 

$0

$10,283

$10,283

0

386

 

$0

$0

$0

28

394

9.5%

$13,902

$972

$14,874

8

432

 

$1,853

$1,853

$3,705

0

813

12.9%

$0

$0

$0

162

871

 

$9,695

$66,944

$76,639

30

872

6.4%

$1,207

$8,331

$9,537

6

981

 

$3,454

$5,054

$8,508

10

982

5.2%

$1,871

$2,737

$4,608

2

983

 

$503

$736

$1,239

4

987

 

$4,031

$4,031

$8,061

6

988

10.9%

$3,099

$3,099

$6,199

2

989

 

$647

$647

$1,295

420

Total

$40,261

$194,797

$235,058

 

Case Study 1 (Major Small and Large Bowel Procedures)

A hospital with 40 cases of MS-DRG 329 for a look-back period with a CERT PCER of 0.9 percent may result in $11,119 of improper payments. MS-DRG 330 with a CERT PCER of 4.6 percent on 40 cases may result in $23,940 of improper payment. MS-DRG 331 with a CERT PCER of 2 percent on 10 cases may result in $1,707 of improper payment. Total improper payment for the small and large bowel procedure MS-DRG would be estimated at $36,766.

 

What are the likely coding issues causing the RAC to investigate this MS-DRG?

  • Sequencing of principal diagnosis based on the Uniform Hospital Discharge Data Set's (UHDDS) definition "reason after study patient is admitted."
  • For all MS-DRGs with MCC/CC, validate that possible and probable diagnoses are confirmed at the time of discharge (as still possible and probable or confirmed)
  • Procedure: Assess and verify the accuracy of the procedure code assignment.

 

What are some best practices to prevent incorrect coding that contribute to improper payment?

  • Send all MS-DRGs 329, 330, 331 to a lead coder or auditor for a prebill review for correct procedure code assignment, sequencing of principal diagnosis, MCC code assignment, and query opportunities.
  • Provide one-on-one physician education starting with the highest volume attending physician/surgeon if documentation opportunities are identified in MS-DRGs 329, 330, 331.
  • Assess and verify the accuracy of the discharge status code assignment. CMS has identified 273 MS-DRGs where a patient's discharge or transfer disposition (noted by patient status code on the UB-04 billing form) may influence the final MS-DRG payment. These discharges are viewed as transfers (qualified discharges) by CMS, and reimbursement is paid on a reduced per-diem rate rather than receiving the full MS-DRG payment. This inpatient prospective payment system post-acute care transfer (PACT) policy applies to claims coded with patient discharge status codes of 03, 05, 06, 62, 63, and 65 who are at or below the geometric mean length of stay for the MS-DRG. Correct discharge status assignment is essential for correct reimbursement under the PACT policy.
  • Implement a clinical documentation program and team to improve physician documentation in the medical record before discharge and coding.
  • Develop a continual monitoring process to evaluate what is billed on the UB-04, paid on the remittance advice versus what was actually coded and assigned by the coder on the patient abstract summary.

 

Case Study 2 (Sepsis)

MS-DRG 871-septicemia w/o MV greater 96+ hours w/ MCC-is likely the highest volume MS-DRG for most hospitals.


 

What are the likely coding issues causing the RAC to investigate this MS-DRG?

  • Sequencing of principal diagnosis based on the UHDDS's definition "reason after study patient is admitted."
  • MCC upcoding compare your MCC capture rate to CMS's to determine if your hospital is an outlier.
  • For all DRGs with MCC/CC, validate that possible and probable diagnoses are confirmed at the time of discharge (as still possible and probable or confirmed).
  • Ambiguous and conflicting documentation by physicians and consultants on urosepsis, bacteremia, sepsis, UTI, etc.
  • The patient clinically may not represent the acuity of disease process for this MS-DRG. Most hospitals discharge patients significantly under Medicare's geometric mean length of stay (GMLOS), which is 5.5 days.
  • Successful query process is not in place to clarify discrepancies before billing, and/or a physician liaison/advisor position is not in place to identify and clarify concerns of clinical indicators and documentation issues.

 

What are some best practices to prevent incorrect coding that contributes to improper payment?

  • Send each DRG 871 to a lead coder or auditor for prebill review for sequencing of principal diagnosis and MCC code assignment and for query opportunities.
  • Provide one-on-one physician education starting with the highest volume-attending physician for DRG 871 with identified documentation opportunities.

 

Case Study 3 (Procedures Unrelated to Principal Diagnosis)

Due to their high relative weights, MS-DRGs 981, 982 983 (extensive OR unrelated to principal diagnosis) and--although lower volume-MS-DRGs 987, 988, 989, (non-extensive OR procedure unrelated to principal diagnosis) may impact large dollars of recoupment.

 

For example, MS-DRG 982 is reported with a 5.2 percent PCER on the last CERT report. Take all your look-back Medicare revenue and multiply it by 5.2 percent. You will have your potential recoupment exposed. For MS-DRG 988, take all your look-back Medicare revenue and multiply it by 10.9 percent PCER, and you will have all of your potential recoupment exposed.

 

What are the likely coding issues causing the RAC to investigate this MS-DRG?

  • Sequencing of principal diagnosis based on the UHDDS's definition "reason after study patient is admitted."
  • For all DRGs with MCC/CC, validate that possible and probable diagnoses are confirmed at the time of discharge (as still possible and probable or confirmed).
  • Validate the accuracy of the procedure code assignment.

 

What are some best practices to prevent incorrect coding that contributes to improper payment?

  • Send DRGs 981, 982, 983, 987, 988, 989 to a lead coder or auditor for pre-bill review for both sequencing of principal diagnosis and MCC code assignment and for query opportunities.

 

  • Although medical necessity is excluded from review at this point, it is important to start evaluating these procedures for appropriateness in the inpatient setting. Refer these cases to the case management department. This was the third highest dollar recoupment error type during the demonstration period.

 

  • Implement and develop a clinical documentation improvement (CDI) program and team to improve physician documentation in the medical record before discharge and coding. Inpatient coding compliance is an identified risk associated with major Medicare reimbursement system changes as presented in the CMS final rule.

 

 

In summary, the best defense against RACs is a highly effective and flexible audit and monitoring program that quantifies coding errors as a system (administration, medical staff, management, coders, physicians, clinical documentation specialists) and reports the financial impact of coding errors. Existing programs may need to be re-evaluated, re-designed, and re-energized. The new program will succeed when it is designed as an integrated approach between the financial and clinical team with nothing less than 100 percent accountability for improvements and lasting results for their respective part of the error rate.

 

 

______

*In its announcement, the RAC indicated that the review applies to the following states Alabama, Colorado, Florida, Georgia, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Texas.

 

 

Information Source: Connolly has cited the following references:

  • ICD-9-CM for Hospitals Volume, 1, 2, and 3
  • ICD-9-CM Official Guidelines for Coding and Reporting Section II, A, B, C, D, E F, G, H (2007 to 2009)
  • Medicare Program Integrity Manual, Chapter 6.5.3, Section A-C, DRG Validation Review

 

 

About the Author

 

Carol Spencer is a senior healthcare consultant with Medical Learning, Inc. (MedLearn®), St. Paul, MN, and specializes in RAC review and data analysis.

 

Contact the Author

(cspencer@medlearn.com)

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