Spike in pneumonia coding settlements sparks concern

Hospitals hoping the government’s pneumonia upcoding initiative had receded into the past should take no such solace. "There was a lull in the action for a good part of last year, but now we are seeing a reawakening in that area," asserts health care attorney Greg Luce of Jones Day in Washington, DC.

Luce says the current status of the government's overall pneumonia upcoding initiative, launched last year, is a mixed bag. "We have not seen very many coding investigations that we thought were particularly well-founded," he reports. But he adds that the sometimes "disproportionately large" settlements continue to roll in.

Two weeks ago, Columbia Regional Hospital in Kansas City, MO, agreed to pay $359,254 to settle charges that it improperly coded Medicare and Medicaid claims for pneumonia patients who were treated at the hospital between 1993 and 1996.

According to Assistant U.S. Attorney Andrew Lay, who negotiated the agreement for the government, the hospital routinely used diagnosis codes for a more complex form of pneumonia than was actually warranted.

Also last month, Lankenau Hospital in Wynwood, PA, and Methodist Hospital in Philadelphia, agreed to pay $303,000 and $103,000 respectively to settle charges that they improperly submitted claims for pneumonia due to "other specified bacteria" when medical records failed to support the diagnoses.

"The government’s statistics tend to be less than reliable, and the changes in coding practices are not always attributable to a change in consultants or an effort to recoup reimbursement," Luce argues.

Instead, he says, those changes are often due to appropriate actions taken by hospitals such as a review of charge description masters or the purchase of coding software. Ironically, Luce says that is the very thing the government wants, for hospitals to code more accurately.

"The government's theory has been that sudden upcoding — such as changing DRG-89 to DRG-79 — can only be attributable to efforts at increased reimbursement without appropriate medical decision making, and that is just not true," argues Luce. The fact is that hospitals routinely downcoded to DRG-89, he counters, and it was only in about 1992 with the advent of Medicare payment changes that hospitals started focusing on how they were coding.

In short, Luce argues that the incidence of DRG-89 vs. DRG-79 prior to that period is not evidence of anything. "It would not even be admissible as evidence in a lot of courts because the fact that there was a change is subject to too many variables," he asserts.

Luce also challenges the government's notion that the use of consultants renders the increase in coding intensity suspect. "It should be just the opposite," he asserts. "If a hospital had a responsible coding consultant who advised them that [the data] indicate that it should be nonspecified pneumonia, then they should do that."

"I would always challenge the government’s data and reviewers," Luce concludes. "We had a case where the government was relying on a reviewer that did not realize the difference in ICD-9 codes between bacterial and viral pneumonia — and that is pretty fundamental."