We are all familiar with the financial success of the three-year Recovery Audit Contractor Demonstration Project, which as of March 27 yielded nearly a billion dollars in improper overpayments collected from providers. News that may not be as familiar is that, according to a recent report that includes updated appeals statistics through June 30, providers have appealed only 19.6% of the initial RAC determinations, and, of these, a mere 6.8% have been overturned. With numbers like these, it's clear that the rollout of the permanent RAC program in 2009 poses a serious financial risk to the health of acute-care hospitals nationwide.
False sense of security
Hospitals with foresight in preparing for the permanent RAC program are capitalizing on the opportunity to learn from the three state demonstration projects. They are doing this by focusing on the coding and medical necessity issues identified during the project, reviewing their PEPPER reports and redirecting resources to potentially problematic areas. They are also devoting greater resources to validating and monitoring the accuracy of ICD-9 code and MS-DRG assignment, and initiating corrective action when appropriate.
More commonly, though, hospitals are only focusing on ensuring the accuracy of ICD-9 code and MS-DRG assignment, and adhering to medical necessity screening criteria in determining appropriateness of inpatient versus outpatient designation. While this focus of energy constitutes a positive step in the RAC preparation process, two fundamentally important subsets that provide for continued financial exposure are not being addressed: clinical coding accuracy and medical necessity.
Clinical coding accuracy
Coding errors are defined as inaccurate coder assignment of principal and/or secondary diagnoses resulting in inaccurate DRG assignment. Accurate ICD-9 code and DRG assignment are predicated upon complete and accurate clinical medical record documentation—documentation that supports a patient's clinical presentation, medical workup and management throughout as part of the hospitalization. While achievement of the benchmark standard of coding accuracy (between 90% and 95%) is commendable, it should not be construed in and of itself as a measurement of readiness for a RAC audit, because coding accuracy does not necessarily equate to clinical coding accuracy.
Clinical coding accuracy is dependent upon physicians providing accurate, effective, and complete clinical medical record documentation that is reflective of patient acuity and risk of morbidity and mortality. Such documentation ensures that coding professionals have the information they need to make appropriate ICD-9 code and DRG assignments.
Clinical coding accuracy also requires that coding professionals have a reasonable understanding of medical necessity—and the knowledge and skills to recognize the difference between principal diagnosis and clinical principal diagnosis. They must also know when to ask more questions, and how to construct a good query. The following is an interesting case study on these challenges.
Myocardial Infarction vs. Acute Coronary Syndrome