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Providers nationwide have been scratching their heads for some time now over how to combat the increasingly problematic issue of clinical downgrading of diagnosis-related groups (DRGs) by auditors.

Mount Sinai Health System in New York City might not have the solution – but it sure does have a game plan.

The System’s Vice President of Administration, Dr. James Jones, laid it all out during a recent edition of Talk-Ten-Tuesdays, the weekly Internet radio broadcast hosted by ICD10monitor.com.

“I would consider (DRG downgrading) a battle in the big war (for) delivering healthcare at a cost that’s acceptable for our country,” Jones said.

When Mount Sinai first started noticing a rush of downgrades, the System, which employs more than 7,000 physicians, averaged about 250 of them per month, Jones noted. Today, he said, Mount Sinai is juggling about two to three thousand at any given time, all in various stages of adjudication.

About a year and a half ago, the System’s leadership determined that a new strategy was a must.

“The first thing we did was make contact with our managed care department to do a full review and inventory of our contracts around DRG reassignments. So we set up some spreadsheets that really identified, by payer, what number of charts they’re allowed to request per year – and also, (we identified) what … the time limits (were),” Jones said. “We did notice that some of the payers were coming back and requesting charts from 2013 earlier this year, and that was outside of our technical allowance of two years for some of these payers.”

The second thing the System did was set up a centralized mailbox, managed by patient financial services (PFS) and revenue cycle, with a notification going out to all payers asking them to use it.

“(This way) we’ll know exactly how many charts are requested, per payer, are requested at any given time in our system,” Jones explained. “When you get your estimated payment and it’s underfunded by the payer, this automatically lets you know that there’s been a change in their DRG through some mechanism on the back end at the payer, so we have a way of tracking this at the PFS level. Once the tracking is done, it’s passed off to a new department which we call the DRG denial department … (which is) made up of a director, a medical director, administrative staff, and about six to seven physician advisors, whose sole responsibility is to write appeal letters around DRG reassignment.”

When that department receives a referral, a DRG validator will review the chart for coding, and if it’s determined that the coding was acceptable, they’ll pass it down to a medical director for a second look, Jones added. If both agree that the chart should be subject to an appeal, it’ll be passed along to one of the physician advisors to draft one.

“We also track in that process, through software, exactly what are the CCs and MCCs that are getting removed from the DRG, so we have an idea of what diagnoses the payers are going after,” Jones said. “And every month we have a report out that goes back out to the CDI (clinical documentation improvement) staff, our physician advisors, HIM (health information management), PFS, and ultimately to the CFO of the health system, where we go and look at the percentage of charts that are being reassigned or DRGs that are being reassigned monthly.”

It’s not a cure-all. But it works.

“The one beauty of this is it gives you the opportunity, once you have full transparency about what’s happening at your health system or at your hospital regarding DRG assignments … (to) have a strategy on how you’re going to fight it,” Jones said. “We’ve had some success … with managed care, discussing some of the vendors that some payers are using, and we’ve been able to have some vendors removed who were not following coding guidelines in the last six months.”


Mark Spivey

Mark Spivey is a national correspondent for RACmonitor.com, ICD10monitor.com, and Auditor Monitor who has been writing and editing material about the federal oversight of American healthcare for more than a decade.

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