Payer Clinical & Coding Denials are Increasing

Action taken by payers is seen as increasing.

Having been on the receiving end of audits, and also having been an individual who has conducted them, I know the mindset from both sides of this equation. The one element to this equation that has changed over time is the increase in payer denials: those that are now clinical- and coding-focused, often resulting in more auditing to be conducted. It is now a very normal and regular part of the healthcare business to receive many payer denials. Despite dedicated efforts to improve clinical documentation and coding, and ensure that claims are clean and accurate, there has been a steady rise in claim denials, which brings about mounting concerns, struggles, and challenges for hospitals, health systems, and physician practices.

For the hospital inpatient setting in particular, the use of payer technology and data analytics has opened wider the door for questions to be raised about particular ICD-10-CM or PCS code(s). This technology includes but is not limited to artificial intelligence (AI), with which, paired with use of electronic health records (EHRs), a computer system can scan, search, and identify potential clinical or coding discrepancies that result in questions to be raised, a review to be conducted, and a denial to be sent.

Payer denial letters come to the hospital through a variety of avenues, sometimes taking more than a month to get to the right department or individual who will review the denial, review the medical record, and determine if an appeal is justified. With the technology we have today, we ultimately should be able to shorten this timeframe down to one or two days, but that’s another issue to solve for another day.

Granted, mistakes due occur: not enough documentation, not specific-enough documentation, conflicting documentation, the wrong ICD-10-CM code, an improperly sequenced code, and even the discharge disposition being wrong, etc. So that alone is a task that requires daily attention and effort. Those mistakes or errors that occur in a systemic and/or deliberate manner are ones the compliance officer will want to get involved in.

When one thinks about the depth and inner workings of these payer denials, we all know that the intent is to reduce the payment to the hospital or facility, with the inference that the diagnosis submitted is wrong or should be reported differently. Even once a medical record review has taken place, there are indications questioning the physician provider diagnosis. But having the diagnosis documented isn’t enough; there must also be clinical evidence by way of clinical criteria, also documented in the medical record. That “criteria” may come from the physician, research, a medical society, the hospital, the healthcare system, or even the payer. This use of clinical criteria ambiguity results in questioning clinical judgement of the individual responsible for the care of the patient, and then ultimately questioning the documentation and coding.

Whether the MS-DRG, APR-DRG (severity of illness) or the HCC is in question, it all comes down to the documentation and coding. Some of the key questions that come up in relation to clinical and coding denials are:

• Is the diagnosis documented (needed more than once in the encounter/record)?
• Is the documented diagnosis only in the query?
• Is the diagnosis supported by clinical indicators, clinical evidence, and/or clinical criteria?
• Are the supporting clinical indicators “significant enough” to truly justify the diagnosis?
• Are the clinical criteria of the payers being met? Or that of the facility? Or both?
• Was the correct principal diagnosis selected (including the sequencing)?
• Did the additional (secondary) diagnoses meet Uniform Hospital Discharge Data Set (UHDDS) guidelines for reportable additional diagnoses? This could be reflective of:
  • Clinical evaluation;
  • Therapeutic treatment;
  • Diagnostic procedures;
  • Extended length of hospital stay; or
  • Increased nursing care and/or monitoring
• Was the correct ICD-10-CM/PCS code assigned (compliantly, with the alpha/tabular, and following the Official Guidelines)?

This all leads to several industry trends we are seeing surrounding some specific diagnoses that are being targeted in inpatient payer denials. The following is not an all-inclusive list:

• Sepsis (any): whether as a principal diagnosis or as an additional diagnosis; Sepsis 3 versus Sepsis 2 criteria being challenged, with the payers using Sepsis 3; challenging the clinical evidence and criteria to support the code;
• Respiratory Failure (all types – acute, chronic, or acute and chronic): whether as a principal diagnosis or as an additional diagnosis; challenging the clinical evidence and criteria to support the code;
• Acute Kidney Injury (nontraumatic): whether as a principal diagnosis or as an additional diagnosis; targeting the KDIGO criteria to determine if it was met to support the code;
• Encephalopathy (any): often as an additional diagnosis; challenging the clinical evidence and criteria to support the code;
• Malnutrition (any): as an additional diagnosis; not accepting just a co-signature from the provider on the dietary note, clinical evidence documentation and the providers actual documentation on the diagnosis; and
• Pneumonia (particularly “aspiration”): whether as a principal diagnosis or as an additional diagnosis; challenging the clinical evidence, assessment, and treatment, plus the diagnosis outside the dietary note by the provider.

So yes, of course, tracking of denials with a formal denial management team/group is vital to gather, trend, and handle the influx of denial letters requesting the removal of one or two ICD-10-CM and ICD-10-PCS codes, whether based on clinical criteria or on the Coding Guidelines (including alpha/tabular).  This tracking provides another opportunity for greater awareness and education, for coding, clinical documentation improvement (CDI), and providers.

Speaking of tracking and opportunities, there is one American Hospital Association (AHA) Coding Clinic edition that I’ve seen come up repeatedly in payer denials as part of their rationale for the removal of the code assignment. That is the 2016 fourth-quarter guidance regarding “Clinical Criteria and Code Assignment,” in which the payers will state that they have applied their own clinical criteria, and this then allows the assigned code(s) to be removed. The last sentence of this Coding Clinic states, “a facility or payerss may require that a physician use a particular clinical definition or set of criteria when establishing a diagnosis, but this is a clinical issue outside the coding system.”  

A lot can be said about this statement alone, but I would say that there is a great opportunity here for each of you to write to AHA Coding and request a re-evaluation of this guidance, as it has created significant disparity in the reported of ICD-10-CM codes for encounters. If our Coding Guidelines tell us that a diagnosis must be documented for it to be coded and reported, then now is the time to take a step back and look for improved guidance – and wording that drives consistency, continuity, and overall accuracy.

In summary, let’s think about the following when it comes to payer denials:

• Know which payers are denying your inpatient diagnosis/procedure codes that impact severity of illness and/or revenue.
• Understand the payer rationale for denials (and categorize them).
• Conduct your own review of the medical record and determine if an appeal is warranted.
• Collect data (i.e., demographics, ICD-10-CM/PCS, rationale, etc.) and track and trend it over time.
• Share the data, put it into meaningfulness statistics, charts, and/or graphs, and then discuss what it means and what can be learned.
• Determine key long-term actionable results to be taken (i.e., audits, education, contractual changes).

Payer denials are here to stay, so time and effort needs to be applied to the challenges and struggles that these bring.

References:

AHA Coding Clinic Q4 2016; https://acdis.org/articles/tip-know-when-report-secondary-diagnoses#:~:text=Consider%20the%20following%20questions%20before%20reporting%20secondary%20diagnoses%3A,query%20for%20a%20more%20specified%20or%20definitive%20diagnosis%3F