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RAC DRG Coding Vulnerabilities Identified, Guidance for Inpatient Hospitals Addressed by New CMS Article

By correcting vulnerabilities identified by Recovery Audit Contractors (“RACs”) and similar Medicare contractors, the Centers for Medicare and Medicaid Services (“CMS”) hopes to reduce the rate of mistakes uncovered by the Comprehensive Error Rate Testing (“CERT”) program. Diagnosis Related Group (“DRG”) Validation review is one of the processes RACs utilize to review Medicare claims submitted in the Fee-for-Service (“FFS”) program. CMS recently published a MLN Matters article intended for all Inpatient Hospital providers who submit FFS claims to Part A/B Medicare Administrative Contractors (“MACs”) or Medicare Fiscal Intermediaries (“FIs”), addressing frequently encountered DRG coding issues.

The principal and secondary diagnoses and procedures indicated on a Medicare claim submitted by a hospital are scrutinized during a DRG Validation review, and a large number of incorrect principal diagnoses have been discovered on the reviewed claims. Although hospitals may elect to code before the patients’ medical records are complete (e.g., prior to receiving the discharge summaries), CMS warns that hospitals utilizing this approach do so at their own risk. Hospitals are responsible for accurate records which properly reflect the patients’ procedures and conditions. Without the opportunity to review entire medical records when coding, hospitals raise the possibility of coding errors. RACs, in comparison, have access to complete medical records when reviewing the hospitals’ claims.

When coding claims with conflicting or contradictory information in the record, the coder should clarify the discrepancy with the attending physician. In the alternative, if the coder fails to seek clarification from the attending physician, hospitals are encouraged to code the version of the record documented by the attending physician per “Coding Clinic, First Quarter 2004.” Note, however, that the failure of an attending physician to indicate a consultant’s diagnosis in the record is not a conflict. In other words, if the consultant indicates a diagnosis in the record and the attending physician does not, coding the consultant’s diagnosis is acceptable. Actual coding discrepancies occur when physicians name the identical condition different things (e.g., sprained ankle and fracture).

It is vital that clinical evidence is present in the medical record to justify coding. CMS states that, the “Uniform Hospital Discharge Data Set (UHDDS) Guidelines for coding and reporting secondary diagnosis 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.” The article further reads that, “[w]hen determining the principal diagnosis, all documentation by licensed, treating physicians in the medical record must be considered.”

The ICD-9-CM Guidelines for Coding and Reporting may be accessed here.

For more information regarding compliance or for assistance with audit defense, please contact Abby Pendleton, Esq. or Jessica L. Gustafson, Esq. at (248) 996-8510 or (212) 734-0128. More information may also be obtained at the HLP website.

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