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Comprehensive Error Rate Testing

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Diagnosis-Related Group Claims Reviewed for IPPS Providers

This notice is intended to educate IPPS providers on the CERT program findings for DRG claims reviewed. Trending analysis disclose that the top errors are related to medical necessity and accurate assignment of ICD/HCPCS codes or assignment of DRG on the claim.

Medical Necessity

Medical necessity errors were found when providers admitted patients for inpatient status when the beneficiary’s condition does not support this level of care. Services should have been supplied at an outpatient observation status. The medical record must indicate that inpatient hospital care was medically necessary, reasonable, and appropriate for the diagnosis and condition of the beneficiary at any time during the stay. The beneficiary must demonstrate signs and/or symptoms severe enough to warrant the need for medical care and must receive services of such intensity that they can be furnished safely and effectively only on an inpatient basis. Inpatient care rather than outpatient care is required only if the beneficiary's medical condition, safety, or health would be significantly and directly threatened if care was provided in a less intensive setting.

National Government Services stresses the importance of utilization reviews of all patients to ensure that beneficiaries are correctly admitted for the level of care that the beneficiary’s condition requires. Consider the options of placing the patient in observation or remaining in recovery postoperatively and discharging with the support of home care after surgery.

Billing/Coding Requirement

ICD coding errors were found on inpatient claims during the DRG validation review process. During the DRG validation it was noted the medical records do not support the primary and/or secondary ICD codes on the claim. The diagnostic and procedural information and the discharge status of the beneficiary, as coded and reported by the hospital on its claim, must match both the attending physician's description and the information contained in the beneficiary's medical record. Be sure that Coding of ICD procedure codes accurately match the procedures described in the medical records. CERT review has found error and made correction causing a significant change in DRG and reimbursement.

Providers should determine the principal diagnosis, which, after study, is determined to have resulted in the beneficiary's admission to the hospital. The principal diagnosis (as evidenced by the physician's entries in the beneficiary's medical record) must match the principal diagnosis reported on the claim form (see 42 Code of Federal Regulations [CFR] 412.46). The principal diagnosis must be coded to the highest level of specificity. An inappropriate diagnosis is defined as having no bearing on the current hospital stay. Including an inappropriate diagnosis on the claim will result in removal of the ICD and revision of the DRG assignment. For example, a diagnosis "Symptoms, Signs, and Ill-defined Conditions," may not be used as the principal diagnosis when the underlying cause of the beneficiary's condition is known.

Related Content

Centers for Medicare & Medicaid Services (CMS) Internet-Only Manual (IOM) Publication 100-08, Medicare Program Integrity Manual, Chapter 6, Section 6.5. (257 KB)

Diagnosis-Related Group Claims Reviewed for IPPS Providers
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