Master the upcoming ICD-10 code and IPPS changes! Prepare your team for the upcoming changes taking effect on October 1. Discover the benefits of IPPSPalooza and how it can drive your success. Click here >

Explosive OIG Report Raises Red Flags for Providers, CDI Professionals 

The report underscores federal authorities’ recent assertions that coding errors are generating ample unwarranted reimbursement.

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) just released a data brief titled “Trend Toward More Expensive Inpatient Hospital Stays in Medicare Emerged Before COVID-19 and Warrants Further Scrutiny,” and its findings warrant attention by all healthcare executives and leadership. This study, with accompanying identified results and trends, serves to potentially reinforce the OIG and Centers for Medicare & Medicaid Services (CMS) viewpoint of ongoing “upcoding” or “miscoding” in the hospital setting generating additional reimbursement that may not be warranted under the MS-DRG system. “Upcoding” is defined as the practice of billing at a higher level than warranted.

In November 2018, the OIG added to its Work Plan an item called Assessing Inpatient Hospital Billing for Medicare Beneficiaries, wherein similar concern with upcoding in hospital billing was outlined. So, what are the ramifications for hospital executives and leadership, including leadership of clinical documentation integrity (CDI) programs? The answer lies in the findings, as identified in this study. Let’s take a deep dive into these matters and determine a direct correlation between compliance and financial risk.

Key Report Findings
A brief overview of the report is in order, to provide a context of why the study was initiated. In the 2019 fiscal year (FY), prior to the COVID-19 pandemic, Medicare spent $109.8 billion for 8.7 million inpatient hospital stays. In 2016, hospitals billed Medicare $114 billion for inpatient hospital stays, accounting for 17 percent of all Medicare payments.

Improper payments to hospitals continue to be problematic, as evidenced by the Comprehensive Error Rate Testing (CERT) contractor, with the improper payment rate for inpatient MS-DRG stays in 2019 pegged at 5.2 percent, equating to $4.8 billion. Nearly 80 percent of improper payments made to hospitals was attributable to just two categories: insufficient documentation and medical necessity. Thus, the continued focus by the OIG and CMS on monitoring provider coding and billing to drive down improper provider reimbursement through studies such as the most recent report will continue.

This study looked specifically at Medicare Part A claims for payments made from FY 2014 through FY 2019, checking for noteworthy trends in coding and billing over time that warrant further investigation. Notable study findings include the following:

  • The number of stays at the highest level of severity increased almost 20 percent from FY 2014 through FY 2019, accounting for nearly half of Medicare spending on inpatient stays.
  • The number of stays billed at the lower severity levels decreased, with relatively stable length of stays. In comparison, the average length of stay for the high-severity DRGs actually decreased during the study time period.
  • Over half of the stays (54 percent) billed at the highest severity level in FY 2019 reached that level because of just one diagnosis, most often a complication or comorbidity or major complication or comorbidity (CC/MCC).
  • Collectively, Medicare paid hospitals $26.8 billion for stays that reached the highest severity level with only one diagnosis that was considered an MCC.
  • Hospitals varied significantly in their billing of stays at the highest severity level in FY 2019. Five percent of hospitals billed between 52 and 79 percent of their stays at the highest severity level, with a comparatively short length of stay.
  • The most frequently billed MS-DRG in FY 2019 was sepsis or severe sepsis with a major complication (MS-DRG 871). Hospitals billed for 581,000 of these stays, for which Medicare paid $7.4 billion.

Examining the Significance
Monitoring list-serves that I participate in and discussing the significance of the OIG report with colleagues (including physician advisors, CDI leadership, and revenue cycle professionals), I found that reaction varied. One physician advisor expressed reservation about the results of the report, offering the opinion that with the trends of more patients in observation status, coupled with many services being provided in the outpatient setting, it is no surprise that hospitals are billing at higher severity levels. As for length of stay decreases associated with higher-severity DRGs, another physician advisor attributed this to advances in medicine, detecting and identifying patients with sepsis and other clinical conditions earlier, and initiating effective treatments earlier, with subsequent shorter of length of stays. Other colleagues felt the results of the report were not surprising, given the fact that most hospitals and health systems have invested heavily in CDI programs, engaging consulting companies to provide guidance on how best to structure and operate programs to facilitate “optimal reimbursement.”

I fully support hospitals billing and coding for optimal reimbursement, provided that the physician clinical documentation is robust, supporting the diagnoses coded and billed with resulting MS-DRGs. Unfortunately, this is far from the norm, given the fact that CDI program processes as a whole are structured to improve reimbursement versus actually achieving clinical documentation improvement and integrity through measurable meaningful, sustainable improvement in physician behavioral patterns of documentation. Witness the fact that nearly 80 percent of improper payments for inpatient hospital stays were attributable to insufficient documentation and medical necessity – the latter related to poor physician documentation.

The Reality of CDI Programs
My deep experience in the CDI profession – beginning even before the profession was known as “CDI” – coupled with ongoing chart reviews from a coding perspective, especially over just the last few years, has made me aware of a more aggressive approach in CDI programs as a whole. Most programs have evolved into something of an “arms race,” in a quest to increase reimbursement from payors through increased CC/MCC capture, generating a higher case mix index (CMI). Chief financial officers have been led to believe that such programs can be revenue generators, enhancing finances through hiring professionals to issue queries to capture CCs/MCCs. They have employed sophisticated software programs, peddled by consulting companies, to prioritize record reviews with optimal opportunity for improvement. Key performance indicators (KPIs) used in most programs center around task-based activities that promote more chart reviews with more queries, to catch more CCs/MCCs that may or may not be supported by explicit physician documentation of the patient story, complemented by accurate reporting of the physician’s clinical judgment and medical decision-making. It is these factors that lead to DRG downgrades and clinical validation denials.

The OIG’s findings of hospitals billing higher-severity DRGs with shorter length of stays, and a majority of these high-severity DRGs being billed with just one MCC, are not surprising. The crux of CDI is to capture CC/MCCs, and in many instances, staffers, in their quest to meet KPIs, see this task as the endgame of chart review – and they then move on to the next case. CC/MCC capture is viewed as a victory as part of CDI processes, especially if it optimizes the MS-DRG. It also is not surprising that the increase in high-severity MS-DRG levels being billed is concentrated in just eight MS-DRGs, with DRG 871 (sepsis) with MCC the number one MS-DRG billed. CDI has been conditioned to query for this diagnosis as part of training by consulting companies that promise CFOs a marked increase in CMI and reimbursement – if engaged by the hospital to “improve documentation.”

Heeding the Results
The best course of action for CFOs is not to take the most recent OIG report lightly. Inaction is not a viable option, in the interests of proactivity in ensuring that one’s CDI program and coding are working in tandem to ensure complete and accurate physician documentation supportive of patient care – and the need for hospital care, culminating in compliant and truly optimized coding with sustainable reimbursement. A best practice is to engage in an outside, non-traditional assessment of one’s current CDI program, consisting of an objective review that identifies potential compliance and financial risk associated with CDI activities. Based upon assessment findings and recommendations, then initiate action to enhance program performance, including processes that facilitate real improvement in physician documentation, with a bent towards preemptive denials avoidance. Realizing optimized revenue achieved through the query process without processes that lend themselves to quality and completeness of physician documentation will continue to subject hospitals to increased risk, as identified in this most recent OIG report.

To review the report, go online to

Print Friendly, PDF & Email

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Mastering the Two-Midnight Rule: Keys to Navigating Short-Stay Admissions with Confidence

Mastering the Two-Midnight Rule: Keys to Navigating Short-Stay Admissions with Confidence

The CMS Two-Midnight Rule and short-stay audits are here to stay, impacting inpatient and outpatient admissions, ASC procedures, and Medicare Parts C & D. New for 2024, the Two-Midnight Rule applies to Medicare Advantage patients, requiring differentiation between Medicare plans affecting Case Managers, Utilization Review, and operational processes and knowledge of a vital distinction between these patients that influences post-discharge medical reviews and compliance risk. Join Michael G. Calahan for a comprehensive webcast covering federal laws for all admission processes. Gain the knowledge needed to navigate audits effectively and optimize patient access points, personnel, and compliance strategies. Learn Two-Midnight Rule essentials, Medicare Advantage implications, and compliance best practices. Discover operational insights for short-stay admissions, outpatient observation, and the ever-changing Inpatient-Only Listing.

Print Friendly, PDF & Email
September 19, 2023
Secondary Diagnosis Coding: A Deep Dive into Guidelines and Best Practices

Secondary Diagnosis Coding: A Deep Dive into Guidelines and Best Practices

Explore comprehensive guidelines and best practices for secondary diagnosis coding in our illuminating webcast. Delve into the intricacies of accurately assigning secondary diagnosis codes to ensure precise medical documentation. Learn how to navigate complex scenarios and adhere to coding regulations while enhancing coding proficiency. Our expert-led webcast covers essential insights, including documentation requirements, sequencing strategies, and industry updates. Elevate your coding skills and stay current with the latest coding advancements so you can determine the correct DRG assignment to optimize reimbursement, support medical decision-making, and maintain compliance.

Print Friendly, PDF & Email
September 20, 2023
Principal Diagnosis Coding: Mastering Selection and Sequencing

Principal Diagnosis Coding: Mastering Selection and Sequencing

Enhance your inpatient coding precision and revenue with Principal Diagnosis Coding: Mastering Selection and Sequencing. Join our expert-led webcast to conquer the challenges of principal diagnosis selection and sequencing. We’ll decode the intricacies of ICD-10-CM guidelines, equipping you with a clear grasp of the rules and the official UHDDS principal diagnosis definition. Uncover the crucial role of coding conventions, master the sequencing of related conditions, and confidently tackle cases with equally valid principal diagnoses.

Print Friendly, PDF & Email
September 14, 2023
2024 IPPS Summit: Final Rule Update with Expert Insights and Analysis

2024 IPPS Summit: Final Rule Update with Expert Insights and Analysis

Only ICD10monitor delivers what you need: updates on must-know changes associated with the FY24 Inpatient Prospective Payment System (IPPS) Final Rule, including new ICD-10-CM/PCS codes, plus insights, analysis and answers to questions from the country’s most respected subject matter experts.

Print Friendly, PDF & Email
2024 IPPS Summit Day 3: MS-DRG Shifts and NTAPs

2024 IPPS Summit Day 3: MS-DRG Shifts and NTAPs

This third session in our 2024 IPPS Summit will feature a review of FY24 changes to the MS-DRG methodology and new technology add-on payments (NTAPs), presented by senior healthcare consultant Laurie Johnson, with bonus insights and analysis from two acclaimed subject matter experts

Print Friendly, PDF & Email
August 17, 2023

Trending News