Health Information Management

Coders play pivotal role in facilities’ efforts to curb improper payment allegations from auditors

JustCoding News: Inpatient, December 7, 2011

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As hospitals continue to prepare for the implementation of ICD-10-CM/PCS, which takes effect October 1, 2013, staying vigilant and true to established ICD-9-CM diagnostic coding fundamentals must remain a top priority for coders. This includes strict adherence to the Official ICD-9-CM Guidelines for Coding and Reporting, particularly instructions governing principal and secondary code assignment, as well as Coding Clinics.

Through constant educational reinforcement and practical application, coders should have the following official definition (per the Uniform Hospital Discharge Data Set) principal diagnosis ingrained in their minds: "The principal diagnosis condition is that which is established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care."

While this definition seems straightforward, employing this guidance is often challenging and problematic from a clinical documentation perspective. The extent of complete, concise, and clear clinical documentation that physicians and nonphysician practitioners provide varies widely and runs the gamut from stellar at best to nonexistent at worst.

Coders must also maintain relevancy and core competency skill sets in clinical medicine, and properly apply this knowledgebase in the interpretation of clinical documentation.

Adding to the challenges are the conflicting expectations that coders must consistently meet a benchmark industry standard of 95% coding accuracy while at the same time achieving coding productivity levels.

And to round out this mounting pressure cooker, the focus on improper payments has significantly intensified.

Increased focus on Medicare improper payments

A major element of the Patient Protection and Affordable Care Act is to reduce fraud and abuse in the Medicare Program by 50% by 2012.

Largely due to the success of the Recovery Audit Contractor (RAC) demonstration project, Congress authorized in 2009 the extension of the RAC program to all 50 states. Fiscal year (FY) 2010 marked the first year of full-scale RAC activity to identify Medicare provider overpayments and underpayments.

In FY 2010, RACs identified $92.3 million in incorrect payments. Eighty-two percent (or $75 million) of all RAC corrections were collected overpayments. RACs identified 18% (or $16.9 million) in underpayments that have been paid back to providers.

Improper payments on claims fall into three categories:

  • Payment for items or services that do not meet Medicare’s coverage and medical necessity criteria
  • Payment for items that are incorrectly coded
  • Payment for services for which the documentation does not support the ordered service

How coders contribute to improper payments

According to The American Health Information Management Association’s Standards of Ethical Coding, coders should maintain an unwavering commitment to:

1. Apply accurate, complete, and consistent coding practices for the production of high-quality healthcare data.
2. Report all healthcare data elements (e.g., diagnosis and procedure codes, present on admission [POA] indicators, and discharge status) required for external reporting purposes (e.g., reimbursement and other administrative uses, population health, quality and patient safety measurement, and research) completely and accurately, in accordance with regulatory and documentation standards and requirements and applicable official coding conventions, rules, and guidelines.
3. Assign and reporting only the codes and data that health record documentation clearly and consistently support in accordance with applicable code set and abstraction conventions, rules, and guidelines.
4. Query providers (e.g., physicians or other qualified healthcare practitioners) for clarification and additional documentation prior to code assignment when there is conflicting, incomplete, or ambiguous information in the health record regarding a significant reportable condition or procedure or other reportable data element dependent on health record documentation (e.g., POA indicator).
5. Facilitate interdisciplinary collaboration in situations supporting proper coding practices.
6. Advance coding knowledge and practice through continuing education.
7. Demonstrate behavior that reflects integrity, shows a commitment to ethical and legal coding practices, and fosters trust in professional activities.

Despite this commitment to coding ethics, clinical examples of improper coding that lead to RAC-related down-coding and hospital financial recoupments demonstrate how unintentional coding practices can contribute to what RACs deem as improper payment.

Consider the following clinical example. A patient presented to the ED in early in the morning with reported bright red blood per rectum. In their provisional assessment of the patient, the ED physician and the attending physician document in the history and physical (H&P) a diagnosis of acute gastrointestinal bleed. The principal diagnosis after study was that of internal hemorrhoids with bleed.

The coder assigned ICD-9-CM code 455.2 (internal hemorrhoids with other complication) as the principal diagnosis with ICD-9-CM code 578.9 (hemorrhage of gastrointestinal tract, unspecified) as a secondary diagnosis, resulting in MS-DRG assignment of 394 (other digestive assignment diagnoses with CC).

A RAC subsequently reviewed this case, most likely based on the fact that the record contained only one CC, gastric hemorrhage. The RAC ultimately disallowed the CC citing the coding guideline that states providers should not separately code clinical processes inherent to another diagnosis. In this scenario, the gastric hemorrhage was associated with the bleeding internal hemorrhoids, and as such did not warrant a separate additional code.

Compliance newsletter highlights erroneous sequencing

CMS publishes the Medicare Quarterly Provider Compliance Newsletter—Guidance to Address Billing Errors as a mechanism for educating providers on common coding and billing errors identified in the RAC program.

Volume 2, Issue 1 of this newsletter, published in October, highlights a specific case in which official coding guidelines may have not been followed, leading to allegations of improper payment to the billing provider. One may surmise that the coder most likely used the “principal diagnosis analyzer” feature of their coding software, which led to assignment of the principal diagnosis that provided for the highest reimbursement.

A physician admitted an 82-year-old male through the ED after an episode of acute syncope. Following the syncopal episode, the family noted the patient had an episode of nausea, gagging, and vomiting. The ED physician’s impression was syncope. There was no history of a seizure episode reported by the patient's family during this syncopal episode. An electrocardiogram (EKG) performed in the ED showed a paced rhythm. The patient had a significant past medical history of cardiac issues. The physician’s impression on H&P was acute syncope, etiology to be determined. The physician also noted that the patient did not feel like he was incontinent nor did he subsequently have a grand mal type seizure. The patient had a similar episode approximately two and a half months ago, and at that time, there was no apparent reason for his syncopal episode. The patient showed gradual improvement in his symptoms during the hospitalization. Upon discharge, it was noted that the patient's general condition was poor, and he was not a candidate for any type of aggressive cardiac evaluation or intervention due to the patient's significant cardiac history.

Final diagnoses on discharge summary:

  • Acute syncope, probably secondary to cardiac arrhythmia
  • Possible seizure disorder

According to the auditor, the reason for admission was the syncope related to the cardiac arrhythmia, not the seizure disorder. The principal diagnosis, ICD-9-CM code 780.39 (other convulsions), was sequenced incorrectly based on the definition of principal diagnosis and the official coding guidelines on sequencing of the principal diagnosis.

Reinforce commitment to compliant coding

Coders have a duty to remain true, focused, and committed to proper application of coding rules, guidelines, and policies in the face of competing forces inherent to the coding process as discussed above. Appropriate and accurate ICD-9-CM code and MS-DRG assignment is predicated upon consistent application and adherence to these official coding guidelines, policies, and added direction provided by American Hospital Association’s Coding Clinics.

Compliance is the mainstay of coding, achieved by maintaining vigilance in avoiding coding for reimbursement or excessive reliance on encoder tools, which are designed to complement the coding process not supplement it.

Coders should not underestimate the pivotal role they play in their organization’s efforts to be proactive in reducing improper payment allegations related to coding from RACs, Medicare administrative contractors, comprehensive error rate testing, and other initiatives to reduce healthcare costs through second-guessing of providing coding and billing.

Editor’s note: Krauss is an independent revenue cycle consultant based out of Madison, WI. E-mail him at

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