The Financial Truth About ICD-10 Coding Accuracy: Two DRGs to Watch

April 18, 2017 8:49 am

Inaccurate ICD-10 coding may result in a potential loss of $1.149 million across 612 inpatient cases, or an average of $1,877 per inpatient case.

The financial impact of inaccurate ICD-10 coding is just beginning to emerge, according to a coding accuracy report by Central Learning published in early 2017. The study reveals growing concern for coding quality and correct DRG assignment.

The report identified two inpatient DRGs with particularly high potential for revenue loss due to poor coding accuracy—DRG 226 and DRG 455. It is important for revenue cycle executives to monitor and improve accuracy for these two DRGs as part of a complete denials prevention or management program to protect reimbursement and mitigate audit risk.

Most Concerning DRGs Revealed

Overall, the report suggests a potential loss of $1.149 million across 612 inpatient cases, or an average of $1,877 per inpatient case. Extrapolated across a healthcare organization’s average number of inpatient discharges per month, the benchmark loss per case represents a significant financial red flag.

The DRGs with the most concerning revenue losses in the report were DRG 226 and DRG 455. DRG 226, cardiac defibrillator implant without cardiac catheterization with major complication or comorbidity (MCC), carried a potential reimbursement loss of $8,790 per case due to poor coding quality and faulty DRG assignment. DRG 455, combined anterior/posterior spinal fusion without complication or comorbidity (CC)/MCC, carried an even higher potential reimbursement loss of $9,196 per case when coded inaccurately.

Inpatient coders have a critical responsibility to ensure the accuracy of DRG assignments. Differences in DRGs and payments should be scrutinized to determine whether changes in DRGs are correct or the result of coding errors.

ICD-10 Complexity Impacts DRG

There are several reasons why DRG 226 and DRG 455 emerged as troubling areas for payment. These include missed procedure codes and incorrect surgical approaches or techniques.

Missed or incorrect procedure codes. The ICD-10 procedural coding system is more granular and based on entirely different decision trees than its ICD-9 predecessor. While procedures under ICD-9 required only a single code, ICD-10 requires multiple codes.

For example, when ICD-10 code 0JH608Z, Insertion of Defibrillator Generator into Chest Subcutaneous Tissue and Fascia, Open Approach, is reported alone, DRG 245 AICD Generator Procedures is assigned. However, when code 0JH608Z is reported along with code 0JPT0PZ, Removal of Cardiac Rhythm Related Device from Trunk Subcutaneous Tissue and Fascia, Open Approach, to indicate a generator replacement, a DRG for Cardiac Defibrillator Implant (DRGs 226 through 227) is assigned, resulting in a higher payment to the facility.

Coders must also understand the devices—pacemakers versus defibrillators. Replacement, revision, repositioning, insertions, and upgrades are all variables that can affect DRG assignments. Correct coding and DRG assignments for these cases requires closer scrutiny of operative reports and deeper understanding by clinical coders.

Incorrect surgical approach or technique Operative notes are complex. In ICD-10, coders are required to fully understand the procedures performed. DRG 455, combined anterior/posterior spinal fusion without CC or MCC, is a common example of a miscoded surgical approach or technique code assignment. Operative reports for these patients should specify both anterior and posterior approaches—and both must be coded correctly. Multiple positions and techniques are commonly used by surgeons, but not thoroughly understood by most coders, resulting in frequent miscoding and improper DRG assignments for DRG 455.

3 More ICD-10 Concerns

Beyond new complexity in procedure coding, code sequencing, the use of a seventh character in ICD-10, and the need for more extensive record reviews all contribute to coding accuracy.

Code sequencing. Code sequencing errors result in faulty DRGs in some cases. Sequencing of codes drives the selection of the principal diagnosis, especially if there are co-existing conditions present on admission (POA). Coders must select and assign codes in the correct order to guarantee the highest level of payment while also ensuring compliance with correct coding guidelines.

The guidelines involving sequencing require codes to be listed in order based on severity of illness (SOI) and resources utilized. Codes with a higher SOI and resource utilization are often the same codes that alter DRGs from lower to higher payments.

Seventh characters. Seventh characters within diagnosis (ICD-10-CM) coding also play a role in correct code assignment. These digits represent initial, subsequent, or sequela. The assignment of the same injury code with a different seventh character—initial versus subsequent—can result in differences in DRG assignment, which has a significant impact on reimbursement.

More extensive record reviews. In ICD-10, it is best practice to review the entire medical record versus only summary documents. Coders can no longer rely solely on discharge summaries or other review reports to correctly assign codes. Nor can they tap into memorized codes because ICD-10 is new for everyone—even experienced coders.

Steps for Mitigating Risk

Coders, coding management, and revenue cycle leaders all contribute to successfully protecting revenue and mitigating risk in ICD-10. For coders, a thorough review of all medical record documentation and operative reports is required. This requires more time to accurately code each case with five points in mind:

  • Ensure correct assignment of all principal and secondary diagnosis and procedures codes.
  • Identify CCs and MCCS and ensure all codes are sequenced correctly.
  • Confirm that all diagnoses are supported by clinical documentation that is complete and legible and query providers if documentation is unclear.
  • Avoid relying solely on the encoder or electronic health record for final code assignment, which is especially true for any CC/MCC secondary diagnoses that meet the definition of a reportable diagnosis.
  • Stay current on coding guidelines as codes are updated every October and new American Hospital Association Coding Clinics are released quarterly.

It is the coder’s responsibility to code with integrity, aimed at reduced compliance risk and maximum reimbursement. Lack of accuracy and compliance with current coding guidelines and clinical documentation procedures always results in significant negative impacts to organizations’ revenue streams.

From a management perspective, more frequent assessments of coder knowledge, DRG accuracy audits, and targeted education are recommended in ICD-10.

Assess coder knowledge. Coding managers should assess coder knowledgeby providing coding teams with the same set of sample cases. Answers should be compared with expert-vetted answer keys to score performance.

DRG accuracy audits. Whether performed by internal coding experts or an external business partner, DRG accuracy audits should be conducted at least quarterly to determine financial impacts that result from incorrect DRG assignments. Some hospitals are moving to monthly external audits to remediate errors before they escalate.

Targeted education: Based on coder knowledge assessment and DRG accuracy audit findings, conduct timely and targeted coding staff education. Inclusion of clinical documentation improvement specialists and physicians is recommended as part of an organizationwide denials prevention program.

DRGs are ultimately determined by principal diagnoses, secondary diagnoses, principal procedures, secondary procedures, POA, discharge status, and patient gender—all items that coding professionals are responsible for.

Bottom Line and Quality Care Impacts

Healthcare organizations’ goals are to ensure accurately coded data to reflect the severity of patient populations while ensuring appropriate payments for care. Coding accuracy directly affects attainment of these goals.

Because Medicare and many insurers pay according to DRGs, the accuracy of all components is essential for proper claim payments and financial health. Coding accuracy will become even more important as the Centers for Medicare & Medicaid Services and other payers expand value-based reimbursement and as ICD-10 codes form the foundation for accurate quality reporting.


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