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June 23, 2008

Dirty Tricks
By Judy Sturgeon, CCS
For The Record
Vol. 20 No. 13 P. 6

Be on the lookout for inappropriate DRG denials by your payers.

With nationwide recovery audit contractors (RACs) looming and both Medicare and Medicaid outsourcing payment to managed care payers, hospitals with a patient population paid by diagnosis-related groups (DRGs) must be even more wary when reviewing incorrect payments on their inpatient claims.

Creative denials may be a more politically correct term than dirty tricks, but the end result is the same no matter which term you prefer. Healthcare costs are on a vertical spiral, and profit-seeking insurers must devise ways to ensure that they meet their financial goals. Consequently, hospital billing departments across the country are being inappropriately underpaid at a record pace.

The negative adjustment may take the form of denied authorization on the front end of the encounter or a mispayment after the claim has been submitted. When dealing with a managed care payer that requires prior DRG approval, the optimal course of action is to resolve any disagreements prior to submitting the claim. However, if that opportunity is not seized, several types of criteria (all incorrect) may be utilized by the recalcitrant payer looking to save a couple bucks on the cash outflow side of its budget.

Perhaps the most common type of inappropriate reduction in billed DRG payment is the practice of using utilization review criteria (severity of illness/intensity of service) to delete secondary diagnoses that comprise the complication and comorbidity. The payer’s review staff is often comprised of registered nurses without any ICD-9-CM training, let alone coding credentials. They may even lack basic coding comprehension. Surprisingly, it may be a subgroup of the Centers for Medicare & Medicaid Services (CMS)—Medicaid managed care companies—that is disregarding the criteria of its own governing medical entity. Certainly any payer that can get away with this practice will continue to do so if it is permitted to proceed unopposed and often even when it meets vigorous objections from the provider.

A diagnosis such as anemia may be disallowed by the payer if it is not treated with a transfusion. This is more strict criteria than is required by the CMS for correct coding and DRG assignment. CMS criteria validates secondary diagnoses that affect current patient care by requiring clinical evaluation, or therapeutic treatment, or extended length of stay, or diagnostic procedures, or use of increased nursing care and/or monitoring. (Please note the condition “or” as opposed to the term “and” to verify that only one of these criteria must be met for the secondary diagnosis to be valid.)

For neonates, the patient’s secondary diagnoses may also meet CMS coding validation if they “have implication for future healthcare needs.” Here is another oft-rejected but legitimate justification for retaining secondary diagnoses that increase DRG payment. Examples are congenital anomalies, atrial septal defects, and hernias and hydroceles that require continued monitoring and perhaps even treatment after discharge.

Similarly, the diagnosis of a chronic condition that doesn’t use “significantly more resources” on the affected patient than would typically be used may be rejected for consideration of DRG authorization and payment. Chronic or gestational hypertension delivery DRGs and electrolyte disturbances requiring specialty consults or frequent laboratory tests (clinical evaluation) but not active treatment can be among these noncompliant types of DRG denials. For correct coding and DRG assignment, the use of more resources than another similar patient is not a valid exclusion, according to the CMS.

Another creative approach used to disallow secondary diagnoses that affect the provider’s billed DRG is admission criteria in the review. For example, a patient admitted for an acute exacerbation of asthma who has a secondary diagnosis of a urinary tract infection (UTI) may find the code for the UTI deleted and the payment reduced even though the patient is clearly being treated with antibiotics—if they are not administered intravenously. Had the patient been admitted for the UTI, this would be an appropriate consideration but not in the case of coding validation for a secondary condition.

Using length of stay to determine a DRG is not uncommon. The fact that a patient’s number of days in the hospital is the same as the average length of stay for a lesser DRG does not justify changing the claim to the lesser DRG. If the patient has the documented diagnoses and they are coded correctly by ICD-9-CM rules, the DRG generated by the codes is correct. The average length of stay for any DRG is exactly that—an average, not a criterion.

Using the DRG text itself to determine an approved DRG payment is one of the most contraindicated, erroneous methods used by the uneducated or miscreant payer. A text that reads “with complicating diagnosis” or “with major complication” may seem to be a clear indication to a clinical professional that the diagnosis should be literally complicating the treatment or the surgery in some manner. They will expect major medical complications for the patient due to the DRG description itself.

They will not understand—and probably not believe—the explanation from a coding professional employed by the payer that the coding term is not synonymous with their clinical understanding. A coding “complication” is not an analysis of medical severity. By coding definition, the diagnosis is in some way complicating the resource consumption for the hospital whether or not it is also significantly complicating the patient’s medical condition.

An attempt to noncompliantly lower DRG payment can be done by comparing the hospital claim codes to the physician claim codes. If they don’t match, switching the code from the physician’s claim onto the hospital claim as the principal diagnosis will calculate the DRG at a lower value.

“Blame the software” is another game. The payer may verbally authorize the correct DRG but fail to process it internally. Stall tactics such as this may result in the final payment being the same but still costing the facility man-hours to handle for appeals, as well as lost interest and reduced capital flow in the interim.

Certainly not all payment variances are done in bad faith; some have obvious and possibly correct causes and must be ruled out prior to mounting individual or group appeals by the hospital.

So what do you do? Be aware and proactive. Review your front-end process to ensure that every effort is made to authorize the correct DRG if that is a contractual option. Be certain to have coding and billing experts review contracts before signing them in hopes of avoiding these types of issues prior to treating any of that payer’s patient population.

Carefully analyze any claim that is not paid at the expected reimbursement. Your staff must know the expected reimbursement, which is no easy task. Each payer contract has its own conditions and exclusions, so the billing staff must be savvy to keep them all under scrutiny. Investment in high-end claims software can help you focus your personnel where they will be of the most value. Involve specialized staff in your payment review process: If the payer’s nursing staff doesn’t understand the DRG system, your billing staff probably won’t either.

Finally, don’t forget to network with other hospitals that may have the identical issues with the same payers. A united provider front with assistance from state and national professional associations can significantly increase the effectiveness of your endeavors.

— Judy Sturgeon, CCS, is the hospital coding senior manager at The University of Texas Medical Branch in Galveston and a contributing editor at For The Record. While her initial education was in medical technology, she has been in hospital coding and appeal management for nearly 20 years.