An Approach to Appealing DRG Denials

Providers must learn to pick their battles in pushing back against questionable recoveries.

Denials pit insurers against hospitals. Despite costly attention, improved clinical documentation remains elusive. Insurers retain premium dollars for their stockholders – not their customers, our patients. They save by downgrading severe diagnoses (MCCs) or removing moderate co-morbidities (CCs). Our appeals preserve hospital revenue in real dollars.

Ridiculous denials are frustrating. Vent, and then, respond.  Are you arguing over the Titanic’s deck chairs? Insurers may correctly identify unsubstantiated diagnoses. If legitimate, return the money. If the DRG or reimbursement doesn’t materially change, where’s the value? Fight the fight worth fighting.

Review their denial points. What typical issues are not mentioned? Insurers perform cursory reviews, often overlooking information and diagnoses that aren’t highlighted in the discharge summary. Your overloaded providers short-change the discharge summaries and don’t update the problem list. A bad mix!

Look for internally consistent documentation, including the physical examination. Be a detective. The best information may lie in the EMS run sheet, nursing notes, ED labs, and ancillary data. Verify that active diagnoses are documented, evaluated, and treated. Chronic diagnoses must be clinically relevant. Document lab values, tests, procedures, and vitals that substantiate the patient’s disease severity or provisional diagnoses. Issues may arise mid-admission and not make it to the problem list. Tell the story.

Insurers can’t debate validated national scoring systems (pneumonia, PSI score; malnutrition, ASPEN score (BMI/labs irrelevant); encephalopathy, Glasgow; renal, AKIN, RIFLE; sepsis, q SOFA, SIRS, NEWS, MEWS; heart failure, MAGGIC, NYHA, GWTG; liver failure, MELD, Maddrey). Define systemic effects or risk change.

Physician advisors (PAs) should provide UR nurses standard national references for first-level appeals to fight outdated or misapplied insurers’ literature. Use consultants’ notes if supportive. We may use more current literature. I refute their points sequentially, summarize the denial’s inaccuracies, confirm our applied DRG, and request an identifiable subspecialty reviewer. While inclusive, it is intended for higher-level appeal reading.

Enticed by lucrative promises, contracted hospitals don’t expect obstacles to billing. Regretfully, they ceded power by allowing unilateral contract changes and limits of two appeals to the insurer. Appealing outside of restrictive contract provisions remains cost-prohibitive. Hospitals need to navigate the restrictions to advocate for their patients (and state laws protecting patients). Any such moves also have to survive in the court of public opinion, where media biases can arise. By representing the patient, the hospital gains lower-cost access to both arbitration and the Administrative Law Judge (ALJ). Otherwise, beyond complaining to CMS, hospitals must accept unsubstantiated denials. If lost income becomes a real target, hospitals may address future contract options. If uncontracted, use all of your appeal levels!

It is hard to not get emotionally involved in ridiculous denials, and fight everything. We are better PAs when, in the moment, we become Don Quixote and fight windmills. Track typical denial points and educate staff to close the gaps. The best way to win appeals remains preventing them, initially. We need to argue to participate in contracting, as a poorly written contract handcuffs our ability to protect the hospital – and, ultimately, our patients.

Programming Note: Listen to Dr. Markiewitz on Monitor Mondays, Monday, March 29 at 10 a.m. Eastern as he reports this story live.


Andrew Markiewitz MD, MBA-Healthcare

Andrew D. Markiewitz, MD, MBA has transitioned from being an orthopaedic hand surgeon to a hospital system physician advisor team member. In the process, he has learned the new world of business that used to be unobserved and behind-the-scenes from most healthcare providers and has realized that “understanding the why” and teaching the reason why will empower any CDI initiatives.

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