Part: 1
The Office of Inspector General wrote in their Data Brief in 2021, that in fiscal year 2019 (FY 2019) Medicare spent 109.8 billion dollars on 8.7 million inpatient hospital stays for Medicare beneficiaries or $12,620.69/stay. This was pre-COVID pandemic spending. The share of the Gross Domestic Product (GDP) devoted to health increased sharply from 17.6% in 2019 to 19.7% in 2020, the largest increase in the history of the NHE reports. From FY 2014 through FY 2019, the trend on billing was shorter lengths of stay (30% of stays) billed at a higher severity level.
A reasonable consideration would be that patients with more complex conditions would require longer lengths of stay unless they leave against medical advice, are transferred to another acute facility, or expire. This means that of the billions spent for inpatient stays the likelihood for upcoding of claims had a strong risk potential. One diagnosis code alone that indicates severity level, is severe protein calorie malnutrition. This is one of 100s of individual codes that can and do increase reimbursement to a hospital. A patient may have a higher severity level and be treated for it and the hospital deserves to be reimbursed for this treatment. However, Medicare found in July 2020 that hospitals overbilled Medicare 1 billion dollars by assigning one code – severe protein calorie malnutrition inappropriately. Let’s consider another example of a patient with a principal diagnosis of pneumonia with a major complication and comorbidity (MCC) of acute respiratory failure with hypoxia. The base DRG pays $4175.00. The same patient with an additional diagnosis of acute respiratory failure with hypoxia (MCC) is paid at $8505.00. This is a significantly different payment.
This white paper discusses a few of the potential forces for inaccurate coding and will be part of a series related to the topic of overpayments by insurance companies to hospitals for inpatient facility claims. The series will discuss various forces impacting overpayments including the implementation of ICD-10-CM/PCS, clinical documentation improvement (CDI) programs, documentation, electronic health record impacts, coding, and technology advancements in coding. The series will also offer solutions to the growing concerns related to overbilling insurance companies to address the overpayments which are occurring from insurance companies to hospitals. The over-arching question is how hospitals react when Federal Covid-19 funding goes away
The Background
There are 745 codes and many are broken into severity groupings which either contain a complication or co-morbidity code (CC) or a major co-morbidity code (MCC). They are also broken into Medical or Surgical DRGs. For the purpose of this series, (although there are other factors) what drives payment is the principal diagnosis code, secondary diagnosis code(s) that are associated with severity of illness (CC/MCC) and procedures performed. Coding is based strictly on documentation. When documentation is incomplete or unclear, there are industry standards that require clarification by either coders or clinical documentation specialists with the attending physician who is chiefly responsible for the patient’s care.
When ICD-10-CM and ICD-10-PCS was implemented in October 2015, there were many changes to the classification system which required documentation training for more specificity, extensive coding training and multiple system upgrades. Hospitals rushed to prepare for the change(s) with banks even offering lines of credit in case operations were impacted that could potentially cause financial distress for Hospitals and patients. Coders became in high demand and clinical documentation improvement programs were implemented, in many cases, prior to the implementation of ICD-10-CM/PCS. Hospitals brought in consultants and education programs to assist with the transition, and many promised a “return on investment.”
Many experienced coders retired or moved from the hospital payroll to vendors specializing in contract coding due to pay increases and substantial bonuses leaving gaps in key roles in the revenue cycle and, also, creating a reduction in mentors for new coders.
Businesses saw an opportunity to “make money” off coding. The rate for contract coders, at that time, was between $90-$150/hour with coders having the potential to make $50-$60/hour in addition to bonuses. In an effort, to reduce administrative costs, there was a consideration to offshore coding for reduced rates. Larger healthcare systems took the lead in this practice with many other health systems following this lead. Some companies completely
off -shored this function to reduce administrative costs and burden without adequate consideration concerning the quality of coding. Along with this professional organizations potentially saw an opportunity for larger memberships and began offering certification training and testing to overseas candidates.
At the same time there were also technology advances with computer “assisted” coding AND documentation which includes auto-suggested codes based on documentation. This allowed for coders who may have just graduated to potentially start coding right out of a certificate program but perhaps without the technical skill, oversight and understanding of the United States Healthcare system, English language nor the complexity of coding rules. Many coders were thrown into a high production and complex system and coding rules environment, in the midst of a major administrative overhaul without adequate training and onboarding. Hospitals may not have had adequate bandwidth to onboard contractors and contract companies had inadequate knowledge or access to support the onboarding process. In essence, this created a “sink or swim” atmosphere as well as an opportunity for a situation rife with overpayments by insurance companies. Although quality controls were most likely in place, it is not possible that every claim was audited prior to bill submission either by the hospital nor the contract coding company. Unfortunately for payers these scenarios remain true today and are affecting payments to hospitals that are not substantiated through a deep dive audit of the medical record. If coders raised concerns about the offshoring or outsourcing of coding, there sometimes was backlash such as a coder with 97% accuracy suddenly having a less than industry acceptable accuracy rate.
Although ICD-10-CM/PCS was implemented almost 10 years ago, the rules, codes, official guidance, and atmosphere change yearly and, as of 2022, there are updates biannually. This requires the same processes again related to system upgrades, education of people and more quality controls.
A recent example of this is related to the implementation of extensive coding guidelines concerning COVID-19 due to the global pandemic. In an unprecedented move the coding classification was updated in the middle of the year due to a need to be able to track COVID-19 patients and utilization. New codes in both ICD-10-CM and ICD-10-PCS were created to accommodate the pandemic and there was again a learning curve at every level of healthcare
Key Issues Affecting Overpayments
Concerning the implementation of ICD-10-CM/PCS on October 15, 2015 the key points then and now to consider are:
- Lack of proper training in coding
- Inadequate mentorship
- Lack of quality controls by hospitals and vendors
- Coders being pushed for production over quality to meet organizational financial and quality key performance indicators (KPI)
- Complete outsourcing/offshoring of revenue cycle functions without adequate responsibility by the organization
- Lack of system training related to electronic health records in order to code accurately (reviewing the entire record)
- Auto-suggested codes by encoders that are “approved” by coder but not supported by the entire record
- Inadequate documentation by the care team (for example conflicting documentation)
- Incomplete medical records
- Non-compliant queries
- Code assignment without clinical validation support
- Inadequate coding controls allowing multiple users to impact code assignment
Key Solutions to Improve Overpayments
Solutions to thwart overpayment to hospitals by insurance companies include:
- External Audits (and a lot more of it) to identify overpayments. This is based on a detailed review by the OIG (randomly selected) of 40 high severity claims where 19 of the 40 claims were found to be paid in error and not substantiated by the medical record. This is an accuracy rate of 55% compared to the national recommendation of 97% and is based merely on one hospital’s findings.
- Adequately trained and experienced Auditors that have 10-15 years of experience. Auditing is complex and requires experience. It requires education more than a certificate program, a thorough understanding of the complexities of reimbursement, the requirements of documentation prior to bill submission and clinical understanding of anatomy, physiology, medical terminology and critical thinking concerning the interplay between people, processes and technology.
- Technology to review batches of claims and identify high risk DRGs, particularly codes and lengths of stay that trend to overpayment.
- If results are found (trends) a plan to continue Audits until resolution of the trend.
- Contractual obligations to avoid overpayments.
- Reporting to assist payers in trend identification
- Recouping overpayments for the viability of the plan and care of patients served.
When vendors, who offshore, were asked about coding accuracy; this information was not provided due to internal policies leaving transparency inadequately tracked. For third parties conducting reviews this information is often not allowed to be released and the companies who do support improved coding production/accuracy appear to be based on “acceptance of code” rates which doesn’t necessarily mean accuracy based on the legal health record.
References
Butler, Mary. “Computer-Assisted Coding Reality Check.” Journal of AHIMA 90, no. 6 (June 2019): 10-13 Book excerpt: The pros and cons of CAC April 25, 2018CDI Blog – Volume 11, Issue 83.
Butler, Mary. “Analyzing Eight Months of ICD-10” Journal of AHIMA 87, no.6 (June 2016): 15-22.
Carey, Susan. “The Business Reality of HIM Outsourcing: Explained.” Journal of AHIMA 90, no. 1 (January 2019): 20-22.
CMS.gov. “National Health Spending in 2020 Increases due to Impact of COVID-19 Pandemic.” Office of the Actuary. Office of Actuary. December 15, 2021
OIG, Medicare Compliance Review for Lafayette General Medical Center for Claims Paid During 2013 and 2014 (A-06-15-0022), March 2016. Doi: National Health Spending in 2020 Increases due to Impact of COVID-19 Pandemic | CMS
OIG, Hospitals Overbilled Medicare $1 Billion By Incorrectly Assigning Severe Malnutrition Diagnosis Codes to Inpatient Hospital Claims (A-03-17-00010), July 2020.
Powell, Timothy, CPA. Computer Assisted Coding – Potential and Problems. ICD10Monitor, March 2019. Doi: https://icd10monitor.com/computer-assisted-coding-potential-and-problems/.
