On every RAC finding reported, CMS methodically goes through the specific coding issues uncovered and where providers can find guidance about them. Usually, the guidance that CMS provides is not complicated. Instead, it’s a focus on basic coding rules and examples that providers seem to have forgotten or simply ignored in the rush to get claims out the door.


Understanding what the RACs are looking for and being in compliance with these guidelines could reduce the number of problems uncovered, which is why hospital managers may want to share the relatively simple and basic guidelines below with coding staff.


Anatomy of DRG Validation


Contractors use individuals trained and experienced in ICD-9-CM coding to perform their DRG validations, and the main goal is to verify the accuracy of the hospital’s diagnosis and procedure code assignments that affect DRG assignment. In general, their job is to ensure that diagnostic and procedural information and the beneficiary’s discharge status, as coded and reported by the hospital on its claim, matches both the attending physician’s description and the medical-record information. Reviewers validate principal diagnosis, secondary diagnoses, and procedures affecting or potentially affecting the DRG.


There’s nothing mysterious about RAC reviews. The process of DRG validation they use is based upon the accepted principles of coding practice, consistent with guidelines established for ICD-9-CM coding, the Uniform Hospital Discharge Data Set data-element definitions, and coding clarifications issued by CMS—the same guidelines that hospital coders should be following. As directed by CMS, contractors do not change these guidelines or institute new coding requirements that do not conform to established coding rules.


Digging into the Diagnoses


As stated above, reviewers must ensure that the hospital reports the principal diagnosis and all relevant secondary diagnoses—that is, those that affect the DRG assignment—on the claim.


Hospital coders must identify the principal diagnosis when secondary diagnoses are also reported. When a comorbid condition, complication, or secondary diagnosis affecting the DRG assignment is not listed on the hospital’s claim but is indicated in the medical record, the appropriate code must be inserted on the claim.


If the hospital already reported the maximum number of diagnoses allowed, the contractor will delete a code that does not affect DRG assignment, and insert a new, more appropriate code. Sometimes this action changes the DRG assignment as well as the payment.


The contractor is not required to place additional diagnoses on the claim as long as all conditions that affect the DRG are reflected in the diagnoses already listed, and the principal diagnosis is correct and properly identified. The hospital can list the secondary diagnoses in any sequence on the claim form because the GROUPER program will search the entire list to identify the appropriate DRG assignment.


Principal Diagnosis


The contractor must determine whether the principal diagnosis listed on the claim is the one that, after study, is determined to be the one that resulted in the beneficiary’s hospital admission. The principal diagnosis (as evidenced by the physician’s entries in the beneficiary’s medical record) must match the principal diagnosis reported.


The principal diagnosis must be coded to the highest level of specificity. For example, a diagnosis from chapter 16 of the ICD-9-CM Coding Manual, “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.


Inappropriate Diagnoses


RACs exclude diagnoses relating to an earlier episode that have no bearing on the current hospital stay, delete any incorrect diagnoses and revise the DRG assignment as necessary.


They also verify that the hospital has reported all procedures affecting the DRG assignment on the claim. If there are more procedures performed than can be listed on the claim, they will confirm that those reported include all procedures that affect DRG assignment, and that they are coded accurately.



Return to Basic Training


Keeping the above tasks that RACs perform day in and day out puts their jobs, and perhaps that of hospital coders, into perspective. There are certain steps that must be taken to accurately complete a claim, and taking them proactively may reduce claims denied on the back end of the process.


About the Author


Carol Spencer, RHIA, CHDA, CCS, is a senior consultant with Medical Learning, Inc. (MedLearn®) in St. Paul, Minn. She brings more than 20 years of experience in health information management, coding, teaching, data quality and revenue integrity. She is an accomplished local, regional, and national speaker and author covering topics such as recovery audit contractors (RACs), payment audits, MS-DRG reimbursement systems, ICD-9-CM coding, and is an AHIMA-approved ICD-10-CM/PCS Trainer. Ms. Spencer is a thought-leader in data analytics and an expert on compliance in coding, query, and clinical documentation improvement strategies.

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