The 2017 Inpatient Prospective Payment System (IPPS) final rule has codified in very direct terms a policy ruling that coders may not choose to assign (or not assign) codes based on clinical criteria. The physician’s diagnosis is king, even if the clinical indicators may fail to support it.

The initial reaction from many coders was that this finally vindicates them in a way that might get auditors off their backs when they code what the physician documents. On that front, I believe they are correct. It will not, however, stop auditors from denying inpatient claims based on medical necessity. 

I think a few points need to be clarified here. One of those points is that this guidance is really not new. In spite of the fact that many facilities have chosen to ignore certain diagnoses provided by physicians due to audit concerns, the official guidance has always been that the facility is supposed to report the diagnosis documented by the provider directly responsible for patient care. I believe that the cooperating parties have recognized the trend towards diagnosis censorship, and the new guidance is an official directive to those facilities not in compliance ordering them to cut it out. 

Another point of clarification is that the guidance doesn’t indicate that a coder shouldn’t hold a record and query if confronted with diagnoses that do not appear to be supported.    

I believe this emphasizes the need for a strong documentation improvement program, rather than providing a directive that we just report whatever a doctor says without any attempt at clarification. Recent publications by the American Health Information Management Association (AHIMA) indicated a desire to put clinical validation at the forefront of the discussion on advanced coder practice, most likely because AHIMA knew what was coming.

Now, on to the task of figuring out how we will officially address the issues. If a facility does not have a clinical documentation improvement (CDI) program or if a record makes it to a coder with these problems, the coder has the option of initiating a clarification query. Of course, a good documentation program can help ameliorate such a scenario by providing for concurrent efforts to clarify the diagnosis and indicators present in the record before the chart ever gets to a coder. Now is a good time to reevaluate how well your CDI program is really functioning and what the mission of the program and its roles are. 

So, where is the controversy? More than likely, some facilities will still find themselves in a catch-22. It’s a matter of being caught between a doctor that does not provide the necessary clarification and an auditor waiting in the wings to deny the claim.

As shocking as some may find this, there are still a great many facilities out there with non-cooperative physicians or failing documentation programs whose main strategy to avoid these sorts of denials is to filter out the reported codes. A good number of physicians out there still do not buy into any sort of documentation improvement efforts or simply dismiss them as a function of a profiteering revenue strategy. The facility coder, auditor, or solution leader simply does not have the professional latitude to elect not to report a diagnosis they believe will be problematic.   While it can be argued that such facilities were always in violation of coding guidelines, the new wording in the final rule really drives the point home.   

On the other side of the coin, the insurance contracts and Medicare rules will continue to note that hospitals are not allowed to bill for (report) diagnoses not supported by clinical evidence. Auditors will certainly be employing the strategy of requiring coders to report the problematic diagnosis codes while also denying claims on the grounds of medical necessity.   

Obviously, these opposing approaches would not be employed on the same record, but rather in a staged series of audits over time. The strategy is to give up a little up front on some low-weighted diagnoses to create behavior modification and then slam them later by denying the higher-weighted diagnosis codes. I am not sure if I am complaining here or expressing my admiration for the ingenuity. We opened the door for these sorts of tactics via the policies we put into place. Can we really blame them for taking advantage?

In the coming year, my belief is that escalation procedures for poor documentation will begin increasing at hospitals across the nation. The more common documentation offenders at facilities are going to start receiving far greater scrutiny, and administrative support for efforts focused on more audit-proof documentation is likely to be on the rise.

About the Author

Allen R. Frady is a senior consultant for Optum360. His experience includes areas in management, implementation, education and clinical practice.  With 20 years in healthcare, he provides clients assistance in the areas of documentation, program implementation and compliance.  His background includes critical care nursing, coding, auditing, utilization review, and documentation improvement.

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Allen Frady will appear on Monitor Monday, Aug. 22, 10-10:30 a.m. ET to discuss the auditing issues associated with the new guidelines.

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