Note from the ACDIS Director: Latest OIG report—alarm bells, or much ado about nothing?

by Brian Murphy

The Office of the Inspector General (OIG) dropped their latest bombshell. It concerns the findings of a large audit, revealing possible widespread upcoding in inpatient stays. You can read it in full here.

The key takeaways from the report are eye-opening and likely quite concerning for anyone working in the CDI or coding fields:

• Hospitals increasingly billed for inpatient stays at the highest severity level—the most expensive level—from fiscal year (FY) 2014 through FY 2019.
• There are indications that these stays are vulnerable to inappropriate billing practices, such as upcoding.
• CMS should conduct targeted reviews of MS-DRGs and stays that are vulnerable to upcoding, as well as the hospitals that frequently bill for them.

The report summarizes an OIG analysis of Medicare Part A claims for inpatient hospital stays during the examined period. The OIG found that the number of inpatient stays at the highest severity level increased almost 20% from 2014 to 2019 and accounted for nearly half of all Medicare spending on inpatient hospital visits. Over the same period, however, the OIG found that the average length of stay (LOS) for a high severity-level diagnosis decreased from 6.9 to 6.4 days, opening the door to questions about whether CCs and MCCs billed by hospitals were appropriate in all instances.

Obviously, the results of this report are of huge concern, and possibly indicative of upcoding. If you stopped reading there, that might be the conclusion you reach, and panic might be justified. But what many commentators and industry analysts missed is that CMS largely disagreed with the OIG’s findings, and therefore did not concur that it should conduct targeted reviews of MS-DRGs that are vulnerable to upcoding.

My mouth hung open just a bit when I read this portion of CMS’ commentary to the OIG, and my head was nodding in agreement:

Without conducting targeted medical review, it is unclear whether the trend could be explained by other factors such as increases in efficiencies of care, advancements in technology, the transition to ICD-10-CM, and other changes during this period. These factors are important to consider when analyzing billing trends. For instance, patterns of care for conditions such as neoplasms, orthopedics and structural heart disease, have recently transformed due to advancements in biomedicine, resulting in improved clinical outcomes for patients. These advancements in biomedicine have been accompanied by further advancements in medical coding practice and the 2015 implementation of ICD-10-CM. Improvements to coding software have promoted coding sophistication in recent years to accommodate the new diagnosis classification introduced by ICD-10-CM, and led to the nationwide expansion of clinical documentation specialists that utilize medical record documentation review to ensure that all relevant conditions throughout the patient’s hospitalization are accurately captured in medical records.

CMS also cites the diligent work it has been doing all along with RAC reviews, prepayment reviews, and follow-up education.

So, what are we to make of this audit, and the OIG/CMS exchange? Here are my takeaways.

• CDI work continues to be practiced well, and there is no presumption of fraud or need for guilt in doing work that leads to improved CC/MCC/Hierarchical condition category capture and higher payments, if the resources match and the physician agrees using his or her independent clinical judgement. CMS has said time and again that “we do not believe there is anything inappropriate, unethical, or otherwise wrong with hospitals taking full advantage of coding opportunities to maximize Medicare payment as long as the coding is fully and properly supported by documentation in the medical record (FY 2009 IPPS final rule)” and that remains true today.
• Because the bar to inpatient admission is getting higher, I believe that patients who clear this hurdle are most likely sicker. And because treatments are getting better (sepsis, for example, is being caught earlier and hit with more aggressive treatments), severely ill patients can be discharged sooner than prior LOS trends might assume.

Personally, I believe this latest OIG report is not cause for undue alarm in the CDI or coding industries. Statistical analysis of claims data is not enough to prove guilt. Billing data can only point to spending trends; it cannot meaningfully distinguish whether a diagnosis was valid or not, or if the documentation in the chart supports the diagnosis. Only the hard work of chart-by-chart auditor review can determine that, and this OIG report is not that. Instead, the OIG punted that work to CMS, recommending that that agency do this work.

Audits are important, and necessary, as there are and will always be some bad actors (take a look at the OIG’s daily work prosecuting actual fraud—it’s pretty sobering). Unfortunately, that is an element of human nature. But it appears CMS is reluctant to perform chart audits to the level the OIG would like, even though there have been reports that the Biden administration will be more receptive to opening Recovery Audit Contractor (RAC) activity.

If the Medicare Trust Fund is truly in jeopardy due to increased spending, what needs to happen is the DRG weights need to be recalibrated, and/or the payment systems refined or perhaps reformed. That to me is the cleanest fix, rather than this continued threat/counterthreat, audit and recoup, appeal and overturn, costly and inefficient mess that is our current healthcare system.

These are my thoughts and yours may vary.

I do recommend reading this report in full, reading ACDIS’ coverage, and doubling down on compliance. Make sure you follow the ACDIS Code of Ethics in your daily work. But don’t be afraid to keep doing the work that CDI professionals do.

Editor’s note: Murphy is the director for ACDIS. Contact him at bmurphy@acdis.org.