In the demonstration project, there were five areas on which RACs focused, identifying a concentration of coding errors or medical necessity questions.

Area 1.  Excisional Debridements

In complex reviews the RACs found consistent coding errors in relative to excisional debridement in inpatient hospitals. Hospitals routinely erroneously coded non-excisional debridement (defined as nominal, or including no cutting away of tissue) as excisional debridement. In most such cases the physician noted in the medical record simply that “debridement was performed” and it was coded 86.22 (excisional debridement), when in fact it should have been coded as non-excisional, or 86.28.

Area 2.   Inpatient Rehabilitation

These were complex-review cases challenging the medical necessity of inpatient versus SNF/outpatient rehab needs. In certain cases, a patient with a single knee replacement was admitted to IRF. The claim was subsequently denied following a complex review that determined medical necessity criteria was not being met.

Hospitals and IRFs need to ensure they are following CMS guidelines for medical necessity of IRF admission versus SNF or outpatient. Patients needing rehabilitative services require a hospital level of care if they need a relatively intense rehabilitation program that requires a multidisciplinary, coordinated team approach to upgrade their ability to function.

There are two basic requirements that must be met for inpatient hospital stays for rehabilitation care to be covered:

  • The services must be reasonable and necessary (in terms of efficacy, duration, frequency, and amount) for the treatment of the patient’s condition


Medicare recognizes that determinations of whether hospital stays for rehabilitation services are reasonable and necessary must be based upon assessments of each beneficiary’s individual care needs. Therefore, denials of services based on numerical utilization screens, diagnostic screens, diagnosis or specific treatment norms – the “three-day rule” or any other “rules of thumb” – are not appropriate. Be sure your facility is following HCFA Ruling 85-2 and refer to the Medicare Benefit Policy Manual (section 110) should there be any questions about this particular area.

Area 3.    Principal Diagnosis – Coding Errors: Complex Reviews

For these complex review cases, the coded principal diagnosis did not match the principal diagnosis code documented in the medical records. The most common DRGs with this problem were DRG 475, Respiratory System Diagnoses, and DRG 468, Extensive OR Procedure Unrelated to Principal Diagnosis. When the RACs determined a mismatch between code and diagnosis, they issued overpayment request letters for the difference between the amount of the incorrectly coded services and the amount of the correctly coded services.

A common example of this identified during the demonstration period pertained to the code for respiratory failure (code 518.81). In these cases, 518.81 was listed as the principal diagnosis, but the medical record indicated that sepsis (code 038.0-038.9) was the principal diagnosis.

Area 4.   Wrong Diagnosis Code – Coding Errors: Complex Reviews

For these complex review cases, a common error was found in the code assignment of septicemia. In these cases the medical record had shown a diagnosis of urosepsis, not septicemia or sepsis. Also, blood cultures were negative and other documentation did not meet coding guidelines for septicemia.

By changing the diagnosis code to urinary tract infection (UTI) as coding guidelines require for a diagnosis stated as urosepsis, this caused the claim drop to a lower DRG. The RAC determined that the claim was INCORRECTLY CODED and issued a repayment request letter for the difference between the payment amount for the incorrectly coded procedure and that of the correctly coded procedure.

Other examples of coding errors commonly identified by RACs were for units of Neulasta and billing for colonoscopies. For Neulasta, in the past, the billing code for the drug (Pegfilgrastim) indicated that providers should bill for one unit oneach milligram of drug delivered.   CMS previously had changed the definition of the billing code for Neulasta to indicate that providers should bill one unit for each vial of drug delivered. In some cases the hospital billed for six units of Neulasta while the RAC determined that five units of service were MEDICALLY UNNECESSARY and issued payment request letters for the unnecessary vials. For colonoscopies, a common finding was the reporting of multiple colonoscopies performed in a single 24-hour period. The codes (45355, 45378, 45380, 45383, 45384, 45385) submitted on the claim were invalidated by the RACs.

Area 5.  Outpatient Speech Therapy: Automated Reviews

In these cases, the outpatient hospital billed Medicare for 15-minute blocks of therapy while the code definition specified that the code is per session, not per 15 minutes.  As such, the units billed exceeded the approved number of sessions per day. The RAC determined that the excessive services billed were MEDICALLY UNNECESSARY and issued a repayment request letter for the payment amount of the unnecessary services. Facilities should refer to CMS Claims Processing Manual 100-4, Chapter 5; Section 20.2, which clarifies billing for untimed codes. The section can be found at:

About the Author

Linda Schwab,
RHIT, CC, is the manager of coding operations for The Coding Group, a Division of IRM. She has 25 years of HIM/Coding experience. Her past work includes serving as assistant director HIM, coding manager, HIM coordinator for Colorado HHA, DRG and facility coding auditor and educator.

Contact the Author:


Share This Article