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DRG Coding Vulnerabilities in the Recovery Audit Program

The Centers for Medicare & Medicaid Services (CMS) intends to reduce the Comprehensive Error Rate Testing (CERT) error rate by correcting vulnerabilities identified by Recovery Auditors and other Medicare contractors during DRG Validation reviews. DRG Validation review focuses on the hospital’s selection of principal and secondary diagnoses and procedures on a claim. Recovery Auditors found that a significant amount of claims contain incorrect principal diagnoses.

The Uniform Hospital Discharge Data Set (UHDDS) defines principal diagnoses as the condition responsible for occasioning the patient’s admission to the hospital. UHDDS Guidelines for coding and reporting secondary diagnoses allow the reporting of “any condition that is clinically evaluated, diagnostically tested for, therapeutically treated, or increases nursing care or the length of stay of the patient.”

CMS found that hospitals often code patient records prior to receiving the complete medical record. As Recovery Auditors review the entire medical record when performing DRG validation reviews, hospitals that code prior to receiving the entire report, e.g. without the discharge summary or operative reports, increase their chance of coding errors. Early progress notes may indicate that the patient has one condition, but continuing workup and evaluation determines something entirely different. Therefore, coders must have access to the complete record in order to assign accurate codes. Coders must also clarify any conflicting diagnoses by attending physicians and consultants in order to limit their exposure to Recovery Auditors, who will review data from the entire medical record.

CMS suggests that all Inpatient Hospital providers that submit Fee-For-Service (FFS) claims to Medicare Fiscal Intermediaries or Part A/B Medicare Administrative Contractors (MACs) take the necessary steps to meet Medicare’s documentation requirements and avoid unnecessary denial of their claims. For assistance in implementing a compliance program to identify and correct potential audit risks, or preparing for and defending RAC and other Medicare, Medicaid and Third Party payor audits, please contact a Wachler & Associates attorney at 248-544-0888.