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Have Confidence Coding the Top 6 Diagnoses Payor Auditors Target [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Laura Legg, Director of Revenue Integrity Services at BESLER, to discuss how to build confidence coding the 6 diagnoses payor auditors target.

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Highlights of this episode include:

  • Background behind why these six diagnoses were chosen for this topic.
  • Why clinical validation is an important component when documenting these diagnoses.
  • What tools can hospitals use to ensure data accuracy and improved clinical documentation?
  • Four steps that hospitals should take after receiving a payer denial.
  • And more…

Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast.

No hospital likes to get audited by their payers. But today, I’m joined by Laura Legg who is the Director of Revenue Integrity Services here at BESLER. And she is going to talk to us about how you can build confidence coding the top six diagnoses that most payers audit.

Laura, welcome back to the show.

Laura Legg: Thank you, Mike. I’m happy to be here.

Mike: So Laura, you recently did a webinar on this particular topic. And you focused on six diagnoses. How did you determine which six to include?

Laura: Well Mike, I really thought about the denials that I, myself, have worked on in the past. And I’ve also read a lot of literature about what people are receiving.

So, the six that I chose were encephalopathy, acute blood loss anemia, malnutrition, pleura effusion, atelectasis and acute respiratory failure. And those six diagnoses really are what I term MVP’s in the coding world, along with many other diagnoses that we call MCC’s or CC’s.

So these are diagnoses that are complications, major complications and co-morbidities, that do increase DRG payment. Another reason I chose them, Mike, is that they’re very high volume and high risk as far as documentation is concerned. And they have certainly captured the attention of our payers.

Now, noticeably, the diagnosis of sepsis was not included in my list which is probably the most reviewed diagnoses that we have that payers are looking at. And the reason that I didn’t include sepsis is it takes an entire hour to talk about sepsis with its three different definitions, its clinical indicators, and really all of the risk reduction processes that hospitals do right now for this very expensive and life-threatening condition. So maybe that’ll be a webinar that we do in the future.

Mike: Yeah, I’m sure that would be of interest to everyone out there. Laura, how would you say that these different diagnoses actually catch the attention of payers?

Laura: Well, I think they caught the attention of payers due to the keywords “clinical validation.” And clinical validation is a very important key component of being able to document, to satisfy everyone, including payers, for these diagnoses codes.

Coders are instructed to sign a diagnostic code according to physician documentation. But sometimes, a discussion and questions about what documented diagnosis is, and the clinical evidence of it (or lack of clinical evidence to support it) can often end without resolution. And that really leaves coders in a bit of a pickle as they try to discern if a code can be applied or not.

So, if the documentation doesn’t fully and clearly support these six diagnoses, this is where a clinical validation query can come in. If it is billed without this, the payer can often suggest removing the code and decreasing the DRG payment with what we’ve termed a clinical validation denial.

Mike: And Laura, are there are clear documentation guidelines for physicians to follow?

Laura: You know, Mike, there really aren’t. There are some guidelines. Now, the Centers of Medicare and Medicaid Services do reinforce that all documentation has to be consistent with other parts of the medical record. And if an entry by the physician contradicts with documentation found elsewhere, clarification is needed. And that’s where a query or question comes in.

With the initiation of clinical validation audits, that now extends that instruction to diagnostic statements and their correlating clinical criteria.

So often, physicians are unaware of the precise terminology required to allow proper coding. And sometimes coders are not always properly trained and may not recognize diagnoses that need to be clarified before billing.

So, successfully bridging this divide depends on having clinical documentation specialists, working with the physicians, and also educating coders, so they have the knowledge to discern whether or not to query.

Mike: Laura, can you further explain the term clinical criteria for us?

Laura: I can, Mike. Clinical criteria is just really simply the signs, the symptoms, and the test results that define a diagnosis. So really, if you have a diagnosis say of pneumonia, you’d expect to see documented certain signs and symptoms. You’d expect to see the results of a chest x-ray. So those are all clinical criteria that would validate the diagnosis of pneumonia.

Now, coders and CDI staff should evaluate all the documentation and the chart and the data when necessary, and then query a conflict or inconsistency, including discrepancies between clinical criteria and physician documentation. Physicians must support their diagnostic statements or diagnostic documentation with clinical criteria and how it is met or not met.

Mike: Laura, what tools can hospitals use to ensure data accuracy and improved clinical documentation?

Laura: Well, Mike in our industry, one of the most valuable tools for ensuring that is an effective and compliant physician query process. So, CMS recognizes and supports the appropriateness of physician queries, but they do have some rules around those. They can’t be leading in nature, and they can’t introduce new information into the medical record.

So, CMS only allows to use the physician query to the extent that it provides clarification and is consistent with other medical record documentation.

Now, there’s a couple of professional organizations that have established industry standards. And those are the American Health Information Management Association and the Association for Clinical Documentation Improvement Specialists. So those are two really good industry resources for query practices.

Mike: Laura, during the webinar, you talked about what to do if your organization receives a payer denial. And of course, hospitals are doing all kinds of things to try to reduce that risk up front. But they’re still getting audited for some of these high-risk, high volume diagnoses. What do you make of that?

Laura: They are. And we’ve all been through this, Mike. And I know, as an HIM director, I have had a pile of denials on my desk. And it can be really overwhelming.

But as payroll audits have expanded over the last decade, there’s been increasingly more emphasis on the use of correct codes and code specificity and appropriate clinical criteria to support the codes. And I don’t see that changing anytime soon.

One of the reasons is, as ICD-10 increases in specificity, we get more codes, and they become more specific. Our documentation must change and become more specific along with those codes.

Another thing to point out really, Mike, that is important is US payers paid out billions of dollars last year for claims with a diagnosis of those I have in my webinar as well as a diagnosis of sepsis, heart failure and pneumonia. So it’s no wonder that they’re reviewing those records to make sure they’re getting proper codes and DRG assignments, so that they know their money’s being well-spent.

Mike: Makes sense! Laura, could you just take a few minutes and summarize how you think hospitals can lower their risk of payment denials?

Laura: Absolutely! Mike, accurate and compliant documentation is a game-changer. So it really is a top priority for every facility out there.

Also, a good query practice, as I mentioned earlier, that’s compliant with CMS rules and regulations.

Timing is very critical also. If you can be doing some concurrent reviews and looking at these high-risk diagnoses and communicating with the physician while the patient’s still in house. That’s a pre-bill, and that’s really important.

One of the things I’ve done in my past, Mike, is to develop hard stops for these high-risk, high volume diagnoses. So any time we had a patient admitted with sepsis, we just did a hard stop before the bill went out and started asking a few questions early on. About 24 hours after admission, we start asking the right questions like do we have the documentation from the physician necessary to prove this case is sepsis.

So, those are some of the things that you can do.

Now, retrospectively, you can also track your queries and see what diagnoses might be missing, as well as tracking your denials and what diagnoses that payers are sending denials for.

And then, of course, using all of that information, Mike, focus your education for coders for CDI specialists and for physicians around the results of that information.

Mike: Laura, what advice do you have for a hospital that has received a payer denial? What should they do after that?

Laura: Well Mike, this is really important because I know that there are some people who just never get to that pile of denials on their desk.

And so, knowing in our industry that many of those denials can be overturned if they’re reacted to appropriately and timely, it really does need to be a team effort—with a dedicated team with uninterrupted time. This isn’t something that you can multitask with. It really needs to be a focused look at.

So, I really have a few steps, Mike, that I’ll quickly describe.

Step one, identify exactly what they’re denying and why. Now, their letters can be wordy. So you need to have someone who’s experienced with reading these letters that can identify quickly exactly what they’re denying and why.

Step two, if they provide you with references in their letter to the official coding guidelines or through the use of the American Hospital Coding Clinic, be sure to check that they’re accurate in their description as well as their interpretation of those different resources because, often, in the past, I’ve discovered that maybe the coding clinic they quoted wasn’t really relevant to the case they were reviewing.

Step three, Mike, is as you review the record, counter point for point and identify what document was referenced. So be sure you go back in the EMR. And if they have a reference to something in the progress notes, be sure that you read it for yourself to make sure that what they reviewed and what they put into their letter was complete and is present in the medical record.

And step four—last but not least—look for supporting documentation in both provider notes and non-provider notes. There are some diagnoses in ICD-10 coders are allowed to code using non-provider notes such as nursing notes. So be sure that you’re looking at the whole picture.

And then, Mike, also, when you write your appeal, it’s really important that you go back to your documentation and review it thoroughly. Ask yourself some questions. Is it well-documented? Is it consistently documented? Have you met all the criteria to assign the diagnoses?

Once you’ve done that, then you can draft yourself an appeal letter. And in your appeal letter, you should actually begin by restating the reason for the denial. Indicate clearly that you disagree.

Then in the next paragraph, counter point each point that they have made in their denial. Say the results of your second review, what did you find. Are their references accurate? If not, point those out.

And I find it really important to just be very direct and concise in your communication back to them.

And at the bottom of the letter, always give a brief summary. And then, I always end with a thank you, Mike, because I’ve learned that you get more with honey than vinegar.

So, that’s kind of how I approach writing my appeal letters.

Mike: Great information, Laura. And of course, we’ve talked just a little bit about some of the things that you covered in an hour-long webinar. So for our audience, if you’d like to watch that webinar, you can head up to Head over to our Insights section. Click on Revenue Integrity. And you’ll see Laura’s latest webinar there.

I’ll also mention that Laura’s team can help you with DRG validation, outpatient correct coding, as well as auditing and compliance work.

So, if you have some questions around any of the things that we’ve talked about today, would like Laura’s team to take a look at how you’re doing in the coding area, feel free to drop us a line at And we’ll make sure to connect you with her.

Laura, thanks so much for joining us today on the podcast.

Laura: You’re welcome Mike.

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