DRG Coding Advisor: Medicare focuses on reducing billing errors

Payment error prevention programs ongoing

Medicare trustees released their annual report in mid-March, and the picture they painted was not pretty. Costs are projected to triple over the next 75 years, and if the gap between revenues and expenditures doesn’t narrow, at worst the fund will be depleted; at best, benefits will be significantly reduced. The Office of Inspector General (OIG) issued its own report in March, "Review of Potentially Excessive Medicare Payments — United Government Services." That report found that billing errors on 13 outpatient claims cost taxpayers nearly $400,000, and another $1.3 million for incorrectly billed pharmacy charges was paid.

Medicare solvency concerns not new

The OIG’s anecdotal info and the data contained in its and the trustee’s report are not revelatory. Questions about Medicare solvency have been on the minds of program administrators, political leaders, and the general population for a number of years. After a 1998 OIG report revealed that the program lost $12.6 billion in improper payments, the Payment Error Prevention Program (PEPP) was created.

The national initiative, launched in 1999, reviewed thousands of medical records from all over the country to determine what percentage of claims contained coding errors, particularly those that resulted in overpayment by Medicare. The goal was to pinpoint problem areas and develop tools to reduce the error rate by 50% by 2002.

Two years into the PEPP program, quality insurance organizations (QIOs) contracted to oversee data collection and analysis found that there were indeed errors in coding. Most of the errors fell into one of four primary areas:

• coverage issues;

• insufficient documentation of services provided;

• medical necessity issues;

• incorrect coding/DRG assignment.

Late last summer PEPP morphed into the Hospital Payment Monitoring Program. The name changed, but the mission remained the same: to reduce billing/coding errors. Based on the data collected and analyses provided by state QIOs, tools were developed that could be used to track trends and reduce coding errors.

30% of Oregon records had potential errors

OMPRO, a Portland, OR-based nonprofit health care quality improvement organization that works with Oregon’s Medicare recipients, was one of the first state organizations to engage in PEPP activities. OMPRO reviewed 305 records over a two-year period and found that 30% of them had potential coding errors. There were 10 errors in particular that consistently came up in the records reviewed by OMPRO. (See table, below.) According to the federal Department of Health and Human Services, OMPRO’s findings were consistent with patterns found nationally. OMPRO created educational materials such as tip sheets for coders and physicians and DRG audit tools for Medicare compliance programs.

One area in which a number of QIOs have found billing errors is short-stay admissions. "Short-term stays were being billed using an inpatient DRG instead of an outpatient care with observation DRG," says Christopher Richards, RHIA, program integrity liaison and manager for MassPRO, a health care quality improvement organization based in Waltham, MA. MassPRO adapted the Texas Medical Foundation’s short-stay admission tree and distributed the adapted tool to providers.

Free tool aids in medical record review

The Texas Medical Foundation also created PEPP DAT, a free electronic data abstraction tool designed to help hospitals perform inpatient medical record review and trend data for payment errors. The tool, programmed in MedQuest, allows users to generate reports based on type of billing errors, accuracy of DRG assignment, and appropriateness of admissions data. The program is free (go to www.tmf.org/pepp/peppdat.html to get more details).

Health Care Excel, the Medicare QIO for Indiana and Kentucky, took full advantage of technology, creating documentation tip sheets for hand-held computers on diagnoses such as acute chest pain and angina, cerebrovascular/cardiovascular accident, transient ischemic attack, pneumonia, and septicemia. The tip sheets also are available in PDF and Word formats (you’ll find them at www.hce.org/Medicare/mcareHPMP.html#Educational).

[Editor’s note: The "2003 Annual Report of the Boards of Trustees of the Hospital Insurance and Supplementary Medical Insurance Trust Funds" can be accessed at www.cms.hhs.gov/publications/trusteesreport/. "Review of Potentially Excessive Medicare Payments — United Government Services" (A-01-02-00516) can be found at http://oig.hhs.gov/oas/reports/region1/10200516.htm.]