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March 2020

Audit Alley: Leveraging Prebill Audits to Combat Denials
For The Record
Vol. 32 No. 2 P. 6

Benjamin Franklin promised us two certainties in life: death and taxes. If Mr. Franklin were alive today in the era of artificial intelligence, predictive analytics, and computer-assisted coding and physician documentation, there’s a possibility he might add a third certainty to his list: payer denials.

Just as infection control departments in hospitals have transitioned into infection prevention departments, denial management teams have employed a key mitigation strategy that manages and, whenever possible, prevents denials before they occur. Even if successfully appealed, a claim denial costs an organization an average of $118 per claim to rework, according to the Change Healthcare Healthy Hospital Revenue Cycle Index. Nationally, that represents $8.6 billion in cumulative annual administrative costs.

If losing up to 3.3% of net patient revenue from all-cause denials wasn’t enough to grab the attention of hospital administrators, the declining rate of appeal success should be. According to the Advisory Board’s Revenue Cycle Survey, by the fourth quarter of 2017, the median success rate for appeals of claim denials had dropped to 45% for private payers and 41% for Medicaid, while the median success rate for Medicare claim denials appeals had risen to 64%.

Regardless, a robust appeals process should not be the primary line of defense against denials. Successful denials prevention begins with transparency, collaboration, and a willingness to change ineffective or inefficient processes.

A successful clinical documentation improvement (CDI) program should result in fewer clinical validation denials. It’s important that denials that remove complications/comorbidities (CCs) or major CCs (MCCs) in an effort to downgrade a diagnosis-related group (DRG) or any shifts related to the selection of an alternate principal diagnosis that result in a lower-paying final DRG are shared with the coding and CDI teams. This information serves as a baseline prior to any process improvement efforts.

Denials can reveal important areas to focus on from provider query and education perspectives. It’s also important to identify whether payers are denying CCs and MCCs that are added via the concurrent or retrospective query process. This should be accounted for in reported program financials and may require a review of the clinical criteria used for queries in relationship to payer guidelines. However, payer guidelines should not dictate code assignments.

A robust prebill audit and DRG validation process should result in fewer denials over time, as well as ensure optimal reimbursement. Most hospitals require a second-level review before a claim for particular DRGs are billed—eg, an operating room procedure unrelated to principal diagnosis—but it is equally important to include encounters with a high probability for denial in the list of prebill DRGs. Findings from the prebill process should be tracked, trended, and shared with the coding and CDI teams. Together with the denials data, the prebill audit findings should be incorporated into the organization’s other audit and education plans.

From a prebill perspective, there are several key opportunities that coders and CDI teams should be capitalizing on to prevent some of the most common types of DRG-related denials.

Uncertain Diagnoses
For both principal diagnosis as well as secondary diagnoses, the Official Coding Guidelines are consistent: “If the diagnosis documented at the time of discharge is qualified as probable, suspected, likely, questionable, possible, or still to be ruled out, compatible with, consistent with, or other similar terms indicating uncertainty, code the condition as if it existed or was established.” The term “concerned for” was also confirmed as falling within the uncertain diagnoses guideline by AHA Coding Clinic in the first quarter of 2018.

If an uncertain diagnosis that affects the DRG is not documented on the discharge summary or the final progress note just prior to discharge, coders should be querying to confirm whether the uncertain condition was still present at the time of discharge or definitively ruled out. Failure to do so opens the door for the payer to disqualify the diagnosis on the basis of coding rules rather than clinical validation.

Conflicting Documentation
According to general coding guidelines, if there is conflicting medical record documentation, either from the same clinician or different clinicians, the patient’s attending provider should be queried for clarification.

At first glance, this concept appears fairly straightforward; however, there are subtleties that must be considered. It’s common to review a chart and see a documented discharge diagnosis that appears to be solid but then after reading the narrative, the provider can appear to be talking themselves out of the diagnosis.

For example, “Elevated Troponin, likely NSTEMI” is documented as a discharge diagnosis but elsewhere in the document it is further explained that the patient’s workup was unremarkable and there was no evidence of ischemia. While not explicit, this type of implied conflict can be used by a payer to deny the validity of the diagnosis if a query was not generated. Again, if there is documentation that could be perceived as conflicting and the diagnosis affects the DRG, coders should be querying to confirm whether the condition was present and treated or definitively ruled out.

Another opportunity that payers will use to their full advantage is conflicting documentation between the attending provider and a specialty consultant. Although attending providers have the final word from a coding perspective, if their final diagnosis is in conflict with documentation from a specialist, this may result in a denial.

For example, if the single CC or MCC on an encounter, such as heart failure, is documented by the attending provider but the cardiologist who followed the patient has documented that there is no evidence of heart failure, a query should be issued to present the conflict and confirm whether the condition was present and treated or definitively ruled out. Once again, failure to query opens the door for the payer to disqualify the diagnosis on the basis of coding rules, rather than clinical validation. In addition, failure to reconcile conflicting information is a quality and medico-legal issue.

General coding guidelines state there must be a cause-and-effect relationship between the care provided and the condition, and an indication in the documentation that it is a complication. If the complication is not clearly documented, query the provider for clarification.

Unfortunately, this is an area where an assumption may result in a denial. The guideline does not say that if the complication is not documented, do not code it and drop the bill. In many instances, the complication code can affect the DRG assignment based on associated sequencing mandates. If a potential complication that affects the DRG is not documented, coders should query to confirm whether the condition is a complication of the device, care, or procedure. Conversely, a complication code should not be assigned if the documentation of a cause-and-effect relationship is unclear.

Although success rates are declining, this should not discourage organizations from appealing denials. Because the Official Guidelines for Coding and Reporting are part of the HIPAA code set standards, following them is not optional—even for payers.

Although the importance of issuing clinical validation queries on a prebill basis cannot be stressed enough—especially in the absence of any obvious clinical criteria—the conventions for ICD-10-CM do provide strong support for appealing clinical validation denials: “The assignment of a diagnosis code is based on the provider’s diagnostic statement that the condition exists. The provider’s statement that the patient has a particular condition is sufficient. Code assignment is not based on clinical criteria used by the provider to establish the diagnosis.”

This should always be included in the appeal’s supporting evidence.

Most professionals in this arena understand the vital importance of measuring and analyzing denial data, identifying the root causes of the denials, and creating action plans to address the highest volume and/or highest value issues. However, this can be a task that is much easier to accomplish in theory than in reality.

Like many areas of the health care revenue cycle, denials have been historically managed in silos with technical denials, medical denials, partial payments, claim suspensions, and discrepancies all being managed by different teams or multiple functional areas being responsible for monitoring a single denial category without a clear delineation of roles and responsibilities.

It’s important for health care organizations to studiously evaluate whether management and prevention of denials can be successfully undertaken in-house or whether outsourcing to a vendor or a consultant with expertise will result in more favorable outcomes. In some cases, employing a combination of both internal and external resources can be the ticket to success.

— Amy Czahor, BSHIM, RHIT, CDIP, CCS, is a coding and audit consultant with Medical Audit Resource Services, Inc (MARSI).