Health Information Management

Combat potential undercoding due to fear of RAC denials

JustCoding News: Outpatient, March 10, 2010

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Although many providers have tried to curb undercoding over the years, the flurry of activity from Recovery Audit Contractors (RAC) during the last few months has contributed to a proliferation of coding inaccuracies of this nature.

“There’s been a general tendency to undercode at some facilities for a while now. I just think it has gotten worse with fear of RAC audits,” says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc., in Marblehead, MA. “That’s not what CMS intends. They intend for us to be reimbursed correctly for what we do.”

Hoy sees missing charges and undercoding so frequently that she believes most hospitals are underpaid. “We miss so much at hospitals because we aren’t sure how to bill for it or are afraid we will receive denials and be accused of fraud,” Hoy says.

But Hoy stresses that in the event of an audit, coders should not be afraid to defend their work, especially if they have good education, resources, and processes in place for support. She knows of a facility that received DRG validation requests and subsequent RAC denials based on their coding. But when the facility went back to the RAC to defend their coding, the facility ultimately discovered that the RAC auditor responsible for determining these denials incorrectly applied outpatient coding rules when reviewing inpatient records.

In addition to the obvious potential for lost reimbursement, Hoy points out that undercoding can also seriously affect facilities’ quality data. If a facility has a problem with undercoding, the coding to report patients’ severity of illness may not reflect the seriousness of their condition. The patients may appear less sick than they are, while showing more serious outcomes and the facility will appear to be providing poor quality care. “[Undercoding] affects how quality data reports out to the public,” she says.

For Sherry L. Lawson, an internal auditor in the corporate compliance department at Cumberland Medical Center in Crossville, TN, a jump in query volume indicated to her facility’s RAC team that potential undercoding could be a problem, creating a focus for the team. 

“We had 99 queries to physicians in six months just about [congestive heart failure (CHF)],” says Lawson, whose RAC team meets weekly. “Coders are just very cautious about making inaccurate coding decisions during these financially volatile times.”

CHF cases often involve one or more comorbidities and tend to be fairly complex, therefore these clinical scenarios often result in a high volume of queries by coders and a greater chance for them to undercode.

For similar reasons, Lawson’s facility has also intensified its focus on coding for sepsis and septicemia. Because the coders fear overcoding for these conditions, they can be overly conservative, which sometimes leads to undercoding, she says.

Conduct regular audits

In an effort to keep up with the pace of the RACs, Lawson says the RAC team at her facility performs internal audits on every CMS-approved issue that Connolly has identified for their region. “We choose a different DRG each week, and we dissect those charts” she says. “Our RAC team is focused on the past so we can make sure we’re doing the right thing in the future.”

At Lawson’s facility, case managers try to get answers from physicians at the outset to help ensure clarity in the record. “If we can get answers upfront from the physicians, physicians are happier too” she says. “They prefer to be queried during the patient’s stay rather than weeks later.”

Neither undercoding nor overcoding is desirable, so Lawson says her HIM and coding staff members have stepped up efforts to really tune into what’s documented in the chart. They try to be proactive about ensuring that they’re in compliance and meeting CMS coding and documentation requirements.

“I feel confident in our case managers and our coding staff and clinical people on the floor—documentation is everything,” Lawson says.

Make coder education a priority

Education from within the organization as well as from external associations (e.g., American Health Information Management Association, American Academy of Professional Coders) is vital to promoting coder confidence achieving accurate coding, Lawson says.

Hoy agrees. “I think that confidence is the key to avoid undercoding,” she says. If coders are constantly working on their jobs and don’t take that time for education, that’s what leads to coding mistakes, including undercoding. So ensure coders have the time and resources they need to focus on education and review coding guidelines.

Also, consider involving the whole RAC team in education efforts, says Lawson. For instance, it wasn’t just her facility’s coders but their entire RAC team, including physicians, hospitalists, and case managers who all recently tuned in to HCPro’s February 19 audio conference, “Sepsis Coding and Documentation: Case Studies to Prevent Common Mistakes.”

Include coders on the RAC team

Having a coder representative on the RAC team is paramount to helping the coding team maintain confidence, Lawson says.

“That coder on the RAC team communicates information back to the coders, and it helps to open up a lot of communication with ancillary departments,” says Lawson, adding that this representative can then educate fellow coders on the RAC issues and the mistakes the RAC team identifies in their audits of charts each week.

This representative can also help shed light on the revenue cycle process to others in the coding department and help explain their role and the effects their coding has on the overall process.

The bottom line is that to ensure coder confidence and accurate coding, you must have communication. “If coders have any doubts, they should always consult the physicians. Case managers are also a great resource, and the coders are a great resource to the case managers,” Lawson says. “They just aid each other. Communication is the key to it all.”

Editor’s note: Sherry L. Lawson is an internal auditor in the corporate compliance department at Cumberland Medical Center in Crossville, TN. E-mail her at

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