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When reviewing MS-DRG validation denials, some detective work may be needed to identify all of the factors that led to the denial determinations. During these investigations, there are lessons to be learned to mitigate the risk of future denials.

These lessons can be categorized as follows:

  • Coding: The primary objective of MS-DRG validation audits is to confirm that cases are being coded accurately, resulting in the correct MS-DRG assignments. Review of any denials may lead to the identification of educational opportunities for coding professionals, with such education related to official coding guidelines, index and tabular instructions, and American Hospital Association (AHA) Coding Clinic advice. Some of the most common MS-DRG denials are related to principal diagnosis selection and involve cases with only one complication or comorbidity code (MCC or CC). MS-DRG denials make excellent case studies for educational purposes.
  • Documentation: A well-documented medical record is necessary to support final code and MS-DRG assignment. With the rapid transition to electronic medical records in the inpatient setting, coding professionals are seeing a significant increase in the volume of overall medical records without necessarily seeing an improvement in the quality of the information needed to support the coding process. Examples include the need for improved documentation of clinical evidence to support diagnoses and procedures, physician education related to specificity available in the ICD-9-CM classification system, revisions to physician documentation templates, and the proper use and maintenance of problem lists on inpatient records.
  • Processes: A thorough review and trending of MS-DRG denials may result in the identification of process improvement opportunities. Examples include developing or revising internal auditing processes, performing final coding without discharge summaries, reassessing the process for combining accounts for billing purposes, querying practices, and verifying discharge disposition assignments and admission orders.
  • Systems: Occasionally, the review of MS-DRG denials will lead to the discovery of issues related to how data flows throughout your hospital’s registration, coding and billing systems, electronic claims software, and/or payors’ systems.  It’s helpful to include a review of the UB-04 claim form and remittance advice when investigating MS-DRG denials to compare the coded, billed, and paid MS-DRG information. 

Although the bulk of audit response activity is related to reviewing and appealing denials, there are also lessons to be learned in cases reviewed by recovery auditors that resulted in no findings.

These cases may provide insight into what is working well so that those actions can be repeated. In the end, the goal is to receive the proper MS-DRG reimbursement for the inpatient services provided.

Take the time to investigate denials fully, to identify opportunities to make improvements, and to take action to get it right up front for similar cases in the future.   

About the Author

Sandra Routhier is a senior healthcare consultant for Panacea Healthcare Solutions. Sandra has more than 25 years of experience in health information management, revenue cycle, project management, and information systems. Sandy is a Registered Health Information Administrator (RHIA), Certified Coding Specialist (CCS), and Approved ICD-10-CM/PCS Trainer through the American Health Information Management Association (AHIMA), and is past president of a regional chapter of the Michigan Health Information Management Association (MHIMA). Sandy is also a contributing editor to the MedLearn Publishing coding newsletter, Getting It Right Upfront.

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