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While most hospitals struggle to implement the prospective payment system for outpatient services, a government program is working to reduce payment errors on the inpatient side. The Wisconsin Medicare peer review organizations (PRO) is viewing this program as an opportunity to educate hospitals on coding, utilization management and documentation activities to reduce billing errors.
The Health Care Financing Administration’s (HCFA) Sixth Scope of Work (Aug. 1, 1999, to Jan. 31, 2003) for Medicare PROs directs them to initiate a Payment Error Prevention Program (PEPP). The PEPP is patterned after HCFA’s Health Care Quality Improvement Program, which involves analyzing and changing the patterns of care to improve quality in the health care system. The PEPP is designed to assist hospitals in reducing payment errors for Medicare inpatient stays in acute-care hospitals reimbursed under the diagnosis-related groups (DRG) reimbursement system.
The first phase of state implementation began in August 1999; the second began in November 1999. Wisconsin began implementing the program in the final, Feb. 1, 2000, phase. Madison-based MetaStar, Wisconsin’s PRO, has a three-year contract with HCFA, during which the overall payment error (over- or underpayment) is to be reduced and a program is to be put in place to prevent future payment errors.
The Wisconsin PEPP program has two parts, explains Bill French, MBA, RHIA, vice president, PEPP for MetaStar. First, the PEPP staff review randomly selected records to establish a baseline error rate for Wisconsin. "Basically, it is a scorecard for the PRO," he says. Any process improvement activity requires a baseline against which to determine if improvement has been made.
The records are selected from Medicare claims data from October 1997 through September 1998 by a Clinical Data Abstracting Center (CDAC) under contract to HCFA. Each state has the same number of records selected. "They are reviewed as part of a national payment error sample," French says.
The CDAC reviews the records using the InterQual criteria for the admission necessity and the Coding Clinic (ICD-9-CM system) for DRG assignment. "They do not apply any review above the initial screening," he explains. The CDAC then forwards any records with potential coding or utilization problems to MetaStar for review.
"These records may not say anything about any particular hospital because such a low number of charts from any one facility are reviewed," French says. MetaStar applies the "full case review" process to any records referred by the CDAC. Cases with potential problems are sent to physician reviewers. Letters are sent to the hospital for comment prior to a final determination. The hospital has the same appeal rights as in any DRG or admission validation accomplished by the PRO. Corrections for underpayment or overpayment will be forwarded to the fiscal intermediary (FI).
Although the PEPP is a mandatory program, MetaStar is taking a collaborative and educational approach, French says. In the past, programs such as this included chart review but not a lot of feedback. In addition to the CDAC chart reviews, MetaStar, through analysis of claims data, identifies hospitals and specific records where there may be potential payment error problems. Hospitals receive their lists and an on-site visit by the PEPP staff is scheduled.
When the PEPP staff visit hospitals, they work with them to identify root causes, develop a process improvement plan, and remeasure to determine if improvement is realized. "When we visit the hospitals, we try to accomplish more than just a coding and utilization review where we look over the charts," French says. "We look at the coding programs and the utilization programs they have in place. We try to share what we consider to be the basic components of a program."
MetaStar looks at identified records during the visit, but the records do not receive full case review; therefore, no payment adjustments are initiated. Instead, the PEPP staff make recommendations back to the hospitals. "We ask that their internal coding management, evaluation, or internal review programs review our recommendations," French says.
The PEPP staff have an entrance interview with the facility and an exit interview. "We provide them with written follow-up," he says. "We ask them to respond to the written report." MetaStar also tries to determine common needs of the hospitals. "That’s the whole purpose of the program — to provide something back to the state that might be helpful in preventing future payment errors," he says.
For example, one of the resources MetaStar provides is a seminar on coding septicemia. "Septicemia, a generalized infection vs. localized infection, has been a problem for coders because of unclear documentation," he explains. Another tool is a model compliance plan. The plan, developed by the Texas PRO, is made available to hospitals to assist in developing and updating compliance plans.
MetaStar’s DRG validation of charts referred by the CDAC has found that slightly more hospitals were underpaid than overpaid. French explains, "If it’s a lower payment, the hospital can appeal." On the utilization side of the CDAC chart, payment is taken back if the admission is denied. "Again, that is a small number," he says. Payment adjustments are made only on the charts referred by the CDAC for establishment of the national payment error rate.
MetaStar has yet to find a pattern of errors that it considers fraudulent. If it did, it would discuss the findings with the HCFA regional office, and a decision would be made about whether the review would be escalated. "Our approach is to address the issues and work with the hospitals to solve the problems resulting in payment errors," French says. "Sometimes guidance from one federal contractor may appear to conflict with another federal contractor. We work with all the federal contractors involved in Medicare payment to achieve consistency."
To help on this front, MetaStar has formed an advisory group. Membership includes United Government Services (FI), Wisconsin Physician Services (Part B Carrier), Wisconsin Rural Health Cooperative, State Medical Society, Wisconsin Health and Hospital Association, Wisconsin Health Information Management Association, and the Healthcare Financial Management Association. In addition to achieving consistent understanding of the Medicare program, this group is designed to provide feedback about the PEPP to MetaStar and communicate information about the program back to the advisory group organizations.
The problems that MetaStar is finding in its records review are not surprising to the PRO. No. 1 on the list is documentation, particularly on the charts referred by the CDAC. "A lot of it is basic. It’s the same kind of issues we have had forever," French says. The CDAC only sends MetaStar the records regarding individual hospitalizations. "We don’t get clinic notes or previous or subsequent admissions," he says. Most of the problems involve not having the documentation in the individual patient record to indicate:
"One challenge is that physicians understand terminology differently than it is used in the coding system," French says. "Documentation is just so key," he adds. "Hospitals have been busy this last spring and summer with implementation of APCs [ambulatory classification payments]. I think it has heightened the need for and appreciation of timely, accurate documentation." MetaStar is providing recommended minimum documentation requirements to assist providers in including essential elements of information in the medical record.
MetaStar has been fairly well-received at the hospitals it has visited — about 35 so far — because of its educational approach, French says. "We try to give them more feedback and provide some basic tools on which to build coding and utilization programs in a compliance environment." Development of tools is based on the need for improvement identified in hospital visits. In most cases, lessons learned can be shared with other hospitals with similar problems.
(Editor’s note: This material was prepared by MetaStar, the Wisconsin Peer Review Organization, under a contract with the HCFA. The information presented does not necessarily reflect HCFA policy.)