Know the risk, evaluate your exposure.
The FY 2019 Inpatient Prospective Payment System (IPPS), which includes the Medicare Severity Diagnosis Related Groups (MS-DRGs), went into effect Oct. 1, 2018. There is one area that did not get much attention regarding the changes that were included in this year’s update: spinal fusions.
During the Coordination and Maintenance Committee meeting held in September 2017, the topic of invalid spinal fusion codes was raised. There were spinal fusion codes, which included the character “Z” for no device. According to the ICD-10-PCS Official Coding and Reporting Guidelines, B3.10a-B3.10c, spinal fusions, require a device. In response to this observation, 87 ICD-10-PCS codes were deleted because they contained the no-device character. These codes did not meet the ICD-10-PCS definitions.
The next step in exploring this topic is understanding why this issue does not stop with the code deletions. If there was no device, then spinal fusion was not the correct procedure. What procedure codes should have been used to code these cases? When spinal fusion is assigned, the most frequent MS-DRG is 460, with a relative weight (RW) of 4.0375. If the procedure was actually a release of the spinal cord, then the MS-DRG would be 520, with a relative weight 1.3141. If the procedure was a reposition of the spinal cord or insertion of internal fixation device without reposition, then the MS-DRG is 517, with a relative weight of 1.3809. The relative weights do not sound impactful, but when converted to dollars, the impact is astounding.
The average payment for spinal fusion (MS-DRG 460) is $28,882.77, with the average Medicare payment $24,458.68. According to the National Summary of Inpatient Charge Data by Medicare Severity Diagnosis Related Groups for FY 16, the frequency was 79,495. The total Medicare payment for this MS-DRG is $1,944,342,766.60. Compare this to the average payment for MS-DRG 520, which is $9,208.77, with the average Medicare payment $6,944.51. If 10 percent of these cases were incorrectly assigned, then there would be a payback of $139,160,426.84, which is a significant chunk of change. This number is arrived at by taking 10 percent of 79,495, which is 7,945.50, and multiplying it by the difference between $24,458.88 and $6,944.51.
It is important to understand this risk and evaluate your exposure.
The first step to identifying your risk is identifying if you have submitted on a claim any of the ICD-10-PCS codes that included no device. You might want to narrow your population by reviewing all claims in the spinal fusion MS-DRGs (453-460, 471-473).
The second step is to complete a second review of these cases to determine what the correct ICD-10-PCS code would be for each identified case.
The third step is to understand your level of exposure. Identify the total number of cases as well as the MS-DRG shift. When you complete that analysis, it is time to contact the compliance officer to determine the best course of action for your facility. In my opinion, it is best to be proactive regarding identified issues.
In summary, determine if you are at risk regarding this latest change to ICD-10-PCS. Educate your coders regarding the correct code assignment for spinal fusion cases — not every documented spinal fusion is actually a spinal fusion, in ICD-10-PCS World.
Be proactive with any findings by involving the compliance officer. Spinal fusion could be the next big target for the Recovery Auditors and payers!
Program Note
Register to attend Laurie Johnson’s webcast on spinal fusion coding today at 1:30 p.m. ET.
Today, I want to revisit a foundational flaw in how federal audit contractors calculate overpayments – a flaw so severe that in any other federal
EDITOR’S NOTE: Ritesh Ramesh, CEO for MDaudit, appeared on Monitor Monday to report his company’s findings on nationwide audit trends. The rate of payer audits
Please log in to your account to comment on this article.
Accurately determining the principal diagnosis is critical for compliant billing, appropriate reimbursement, and valid quality reporting — yet it remains one of the most subjective and error-prone areas in inpatient coding. In this expert-led session, Cheryl Ericson, RN, MS, CCDS, CDIP, demystifies the complexities of principal diagnosis assignment, bridging the gap between coding rules and clinical reality. Learn how to strengthen your organization’s coding accuracy, reduce denials, and ensure your documentation supports true medical necessity.
Denials continue to delay reimbursement, increase administrative burden, and threaten financial stability across healthcare organizations. This essential webcast tackles the root causes—rising payer scrutiny, fragmented workflows, inconsistent documentation, and underused analytics—and offers proven, data-driven strategies to prevent and overturn denials. Attendees will gain practical tools to strengthen documentation and coding accuracy, engage clinicians effectively, and leverage predictive analytics and AI to identify risks before they impact revenue. Through real-world case examples and actionable guidance, this session empowers coding, CDI, and revenue cycle professionals to shift from reactive appeals to proactive denial prevention and revenue protection.
Sepsis remains one of the most frequently denied and contested diagnoses, creating costly revenue loss and compliance risks. In this webcast, Angela Comfort, DBA, MBA, RHIA, CDIP, CCS, CCS-P, provides practical, real-world strategies to align documentation with coding guidelines, reconcile Sepsis-2 and Sepsis-3 definitions, and apply compliant queries. You’ll learn how to identify and address documentation gaps, strengthen provider engagement, and defend diagnoses against payer scrutiny—equipping you to protect reimbursement, improve SOI/ROM capture, and reduce audit vulnerability in this high-risk area.
Only ICD10monitor delivers what you need: updates on must-know changes associated with the FY26 IPPS, including new ICD-10-CM/PCS codes, CCs/MCCs, and MS-DRGs, plus insights, analysis and answers to your questions from two of the country’s most respected subject matter experts.
As AI reshapes healthcare compliance, the risk of biased outputs and opaque decision-making grows. This webcast, led by Frank Cohen, delivers a practical Four-Pillar Governance Framework—Transparency, Accountability, Fairness, and Explainability—to help you govern AI-driven claim auditing with confidence. Learn how to identify and mitigate bias, implement robust human oversight, and document defensible AI review processes that regulators and auditors will accept. Discover concrete remedies, from rotation protocols to uncertainty scoring, and actionable steps to evaluate vendors before contracts are signed. In a regulatory landscape that moves faster than ever, gain the tools to stay compliant, defend your processes, and reduce liability while maintaining operational effectiveness.
Get clear, practical answers to Medicare’s most confusing regulations. Join Dr. Ronald Hirsch as he breaks down real-world compliance challenges and shares guidance your team can apply right away.
Federal auditors are zeroing in on Inpatient Rehabilitation Facility (IRF) and hospital rehab unit services, with OIG and CERT audits leading to millions in penalties—often due to documentation and administrative errors, not quality of care. Join compliance expert Michael Calahan, PA, MBA, to learn the five clinical “pillars” of IRF-PPS admissions, key documentation requirements, and real-life case lessons to help protect your revenue.
During this essential RACmonitor webcast Michael Calahan, PA, MBA Certified Compliance Officer, will clarify the rules, dispel common misconceptions, and equip you with practical strategies to code, document, and bill high-risk split/shared, incident-to & critical care E/M services with confidence. Don’t let audit risks or revenue losses catch your organization off guard — learn exactly what federal auditors are looking for and how to ensure your documentation and reporting stand up to scrutiny.
Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 1 with code CYBER25
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24
