On September 23, 2010, CMS released the next two installments in the series of articles focusing on high dollar improper payments discovered during the RAC Demonstration. The two articles, which focus on Inpatient Hospitals, address High-Risk Vulnerabilities for Medical Necessity and DRG Validation.

Medical Necessity

MLN Matters number SE1027 lists the 17 procedures for which the RAC Demonstration found the highest amount of improper payment prior to any appeals because the documentation submitted did not support providing the services at the inpatient level of care rather than in a less invasive setting.

Please click here to view table: "17 Medical Necessity Vulnerabilities for Inpatient Hospitals"

While providers should review their exposure under these select procedures, they would be remiss to not heed and ensure compliance with CMS's documentation recommendations.

CMS Documentation Recommendations

CMS recommends that providers:

  • Document any pre-existing medical problems or extenuating circumstances that make admission medically necessary;
  • Enter "N/A" in fields that are not applicable to demonstrate that the questions were reviewed and considered rather than overlooked;
  • Explain why a contradiction, if any, exists between entries in the medical record;
  • Adequately document significant changes in the patient's condition or care issues that may impact the review determination; and
  • Ensure that information that may affect the billed services acquired after physician documentation is complete be added in accordance with the accepted standards for amending a medical record.

DRG Validation

MLN Matters number SE1028 lists four of the high risk inpatient hospital coding vulnerabilities that RAC Demonstrators denied because the medical record documentation did not support the codes billed.  

Please click here to view table

CMS explained that in many instances, hospitals incorrectly reported surgical code 33.27, Closed Endoscopic Biopsy of the Lung, when surgical code 33.24, Closed Endoscopic Biopsy of the Bronchus, should have been used because the medical record indicated that the bronchus was the site of the biopsy, not the lung.

Additionally, CMS stressed that the attending physician must specifically identify the principal diagnosis, while the provider must ensure that the secondary and "other" diagnoses are properly documented. CMS encourages all diagnoses, along with a list of all procedures performed, be included on the discharge summary to facilitate their identification upon review.

It is important that providers ensure proper documentation and coding practices, especially given CMS's recent approval of medical necessity reviews for the permanent RACs.