As the HHS Office of the Inspector General (OIG) ramps up scrutiny around costly high-severity level claims, conventional wisdom holds that upcoding is the primary culprit. However, an internal review of data pulled from a cohort of MDaudit customers indicates the problem goes beyond upcoding to include issues with bundling and insurance eligibility.
Earlier this year, the OIG issued a data brief in which it analyzed paid Medicare Part A claims for inpatient hospital stays from FY 2014 through FY 2019, a pre-pandemic timeframe that provides “important lessons for improving the accuracy of inpatient hospital billing.”
Problematic Upcoding
What the OIG found was an increase in hospital stays at the highest – and most expensive – severity level of almost 20% during the five years it analyzed. Those stays accounted for nearly half ($54.6 billion) of all Medicare spending on inpatient stays and are particularly vulnerable to upcoding.
A sample of 20 MDaudit customers performing risk-based hospital audits also show the significance of denials related to highly complex conditions. The denials were valued around $29B in 2020 (includes all charges, not only those specific to Medicare).
Tellingly, nearly one-third of the high-severity stays examined by the OIG had a surprisingly short length-of-stay and more than half had only one diagnosis qualifying them for payment at the highest severity level. Further, hospitals varied significantly in how they billed these stays. For instance, 5% of facilities billed between 80% and 100% of their stays at the highest severity level with only one major complication – which the OIG notes are also particularly vulnerable to upcoding.
In all, Medicare paid hospitals $26.8 billion for stays that reached the highest severity level with just one diagnosis that was considered a major complication. That’s approximately $10 billion more than Medicare would have paid if these stays had been billed without the single major complication. Among the high-severity MS-DRGs that are most likely to have stays billed with just one major complication are those for kidney and urinary tract infections, pneumonia, chronic obstructive pulmonary disease, and renal failure.
Beyond Upcoding
An examination by Hayes of 2020 MDaudit cohort data, however, found that potential upcoding wasn’t the only thing increasing the risk of CC/MCC audits. Approximately 1/3 of the denial reasons were related to bundling, coding and eligibility categories and accounted for ~$23B in charges.
For example, the OIG report specifically calls out MS-DRG 871 septicemia or severe sepsis with a major complication as the most frequently billed MS-DRG in FY 2019. Medicare paid $7.4 billion for 581,000 of these stays. While examining a sample of MDaudit customers, denials in 2020 showed 10% were attributed to MS-DRG 871 and 870 for inpatient stays. MS-DRG 871 (Septicemia) denials alone were valued around $1B. However, the lion’s share of denials was associated with Bundling, Coding and Eligibility.
Mitigating Audit, Denial Risks
Regardless of whether the risk is an audit or denials, failure to take proactive measures to address the issues will result in a significant financial hit to healthcare organizations’ bottom lines. That’s why now is an ideal time for compliance teams to implement processes and technologies that will aid in identifying these at-risk cases to correct issues, prospectively, before they leave the facility.
Now is also the time to enhance retrospective audit plans to include an analysis of denials data to identify and address root causes of these issues.
Holistic revenue integrity strategies that bring together the strengths of prospective and retrospective auditing can help contain risk as it relates to upcoding. For example, MDaudit Enterprise enables prospective auditing that leverages augmented intelligence and natural language search to help healthcare organizations get ahead of potential problems by detecting anomalies in at-risk claims in near real-time. By customizing the platform to automatically flag high-dollar CC/MCC claims, potential problematic cases can be identified and audited from the outset.
In terms of retrospective auditing, MDaudit Enterprise’s Revenue Optimizer is a powerful analytics discovery tool that automates the previously manual process of mining thousands upon thousands of claims lines across denials to identify problematic trends for process improvement. It combs through the organization’s remit data to uncover the root cause of denials and deliver actionable insights that mitigate avoidable denials.
To understand the power of MDaudit Enterprise, consider this. In 2020, a sample of 20 customers performed risk based hospital audits on charges totaling ~$500M on DRG codes and ~$538M on Diagnoses. But that is just the value of the charges audited, the system identifies all charges and allows organizations the ability to find anomalies to focus auditing efforts on the greatest at-risk charges allowing them to make the biggest impact possible on the bottom line.
2020 MCCs and CCs were heavily impacted by the pandemic. Chronic condition’s morbidity and mortality levels increased dramatically when combined with Covid-19 infection. Our platform provides the appropriate tools to audit/review and support your organization’s efforts to defend your service to your patients during this scrutiny. Taking steps now to automate retrospective and prospective auditing enables healthcare organizations to not only maximize revenue opportunities, but to also transition to a risk-based revenue cycle management approach that strengthens the bottom line at a time when it is most needed.
