A recent report from the HHS Office of the Inspector General (OIG) turned heads across the healthcare industry after pointing to a notable rise in inpatient hospital stays where upcoding was believed to be the culprit. Compliance professionals who have been in the healthcare industry any length of time know what’s next: targeted billing reviews by the Centers for Medicare and Medicaid Services (CMS) around hospital stays that are vulnerable to upcoding.
More specifically, the OIG analysis from FY14-FY19 found that hospitals are “increasingly billing for inpatient stays at the highest severity level, which is the most expensive one,” and that inpatient stays accompanied by a significant medical condition—representing the highest cost stays—grew by 20%. In contrast with high severity growth, medium- and low- severity inpatient stays dropped by 22% and 12% respectively. Based on the findings, one analysis suggests that kidney and urinary tract infections, pneumonia and renal failure were conditions likely to have a classification as high severity.
That was before the COVID-19 pandemic. In 2020, data from the Hayes cohort of hospital claims (representing approximately 42 million claims) reveal that denials related to DRG 871 (Septicemia or severe sepsis)—also the most frequently billed MS-DRG in FY19— were valued at around $1 billion, making up about 10% of denials. Notably, the lion’s share of denials was associated with bundling, coding and eligibility, accounting for approximately $23 billion in charges.
Bottom line: there is a lot of money at stake. Given the ongoing increase and lengthy adjudication period, providers can expect more auditing around inpatient cases with major comorbidity (MCC) and comorbidity (CC) of high-severity levels. In today’s lean climate, hospitals and health systems need to minimize risk that could lead to non-compliance and future loss of revenue.
Holistic revenue integrity strategies that bring together the strengths of prospective and retrospective auditing can go a long way towards containing risk as it relates to upcoding. Within this framework, hospitals and health systems can leverage technology to bring compliance and billing teams together in a collaborative way, while taking three key steps to improve the outlook.
1. AI-backed prospective auditing: Augmented intelligence and natural language search can help healthcare organizations get ahead of potential problems by detecting anomalies in at-risk claims in near real-time. When systems are customized to automatically flag high-dollar CC/MCC claims, potential problematic cases can be identified and audited from the outset.
2. Technology-enabled retrospective auditing: Manual efforts to mine thousands upon thousands of claims lines across denials and identify problematic trends for process improvement are typically a non-starter for most resource-strapped compliance departments. Advanced analytics discovery tools exist that can’t comb through denials within minutes and deliver actionable insights.
3. Consider the Impact of Bundling and Insurance Eligibility: The conventional view as it pertains to up-coding presently is that it’s a “coding” problem. Yet internal data from Hayes suggests that bundling and insurance eligibility are also culprits. Bundling, which is the process of linking medical services together under one code, is a common practice in today’s billing departments.
While it can create efficiencies and improve patient care, it is also fraught with potential for error.
4. Tracking and learning from your external audits: As multiple external audit requests come in from federal and state payers throughout the year, having a technology platform to manage all those requests and leveraging analytics and insights post-audits with cross-functional teams to learn and improve can help tremendously to avoid huge penalties and fines associated with upcoding.
Today’s provider organizations face substantial financial challenges in the wake of COVID-19 and must mitigate the risks associated with the coming CMS audit storm. Upcoding risk is one area that hospitals and health systems especially need to focus on in terms of applying progressive revenue integrity strategies that get out in front of problems. The best models draw on the power of advanced technology to holistically address revenue cycle and optimize financial performance.
About Ritesh Ramesh
Ritesh Ramesh is the Chief Operating Officer at Hayes and leads the customer experience and technology teams, overseeing product management, engineering, customer success, implementation/training, technical support and security of the MDaudit Enterprise auditing and revenue integrity platform. Ritesh has more than 17 years of technology experience with deep expertise in emerging technologies, Cloud, Digital and AI.
Before joining Hayes, Ritesh had a successful track record in the professional consulting industry working with several business and technology leaders across multiple industries in driving next-generation digital, analytics and technology initiatives enabling customer experience improvements, revenue growth, operational excellence in their respective businesses. Ritesh has an MBA from MIT Sloan School of Management and a Master’s in Computer Science from the Illinois Institute of Technology.