Clinical Validation Versus DRG Validation

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Original story posted on: August 7, 2017
Medicare celebrated its birthday on July 30. It was 52 years ago, on the morning of July 30, 1965, that President Lyndon Johnson signed the four-inch-thick Medicare bill into law after it had undergone more than 500 amendments during its passage through the House and Senate. The bill was signed in the presence of former President Harry Truman in President Truman’s hometown of Independence, Miss.

I can only imagine how complex the bill was at its original signing. Add 52 years of legislative actions to that, and understanding how Medicare operates becomes an almost full-time endeavor. But it is extremely important to understand how Medicare or any payor operates when it comes to performing audits for improper payments so that an appeal of audit findings can be successful.

Let’s take diagnosis-related group (DRG) validation audits as an example. One thing that providers must understand is that there is a difference between DRG validation reviews and clinical validation reviews.

Medicare defines DRG validation in its Program Integrity Manual, Chapter 6.5.3, and in the Centers for Medicare & Medicaid Services (CMS) Quality Improvement Organization Manual, Chapter 4, Section 4130, as:

  • A review process that ensures that diagnostic and procedural information and the discharge status of the beneficiary, as coded and reported by the hospital on its claim, matches both the attending physician's description and the information contained in the beneficiary's medical record.

However, it’s in the 2011 Recovery Audit Contractor (RAC) Statement of Work that we are introduced to the concept of clinical validation. Quoting from the Statement of Work, “clinical validation is defined as a process separate from DRG validation. Clinical validation involves a clinical review of the case to see whether or not the patient truly possesses the conditions that were documented. Clinical validation is beyond the scope of DRG validation, and the skills of a certified coder. This type of review can only be performed by a clinician.”

The new RAC Statement of Work does not refer to clinical validation reviews per se, and none of today’s RAC agencies are currently performing clinical validation reviews for Medicare. That doesn’t mean, however, that the RAC agencies are completely out of the clinical validation review business. Today, commercial payors are flooding providers with DRG validation audits that include clinical validation reviews, and many are employing RAC agencies as third-party reviewers to assist them. Coventry, for example, uses HDI, part of HMS Federal Services and Blue Cross Blue Shield. Aetna employs Cotiviti, the latest iteration of Connolly.

So, how do providers successfully fight back against these very experienced auditors? Appeal strategies for these types of denials depend first on utilizing appeal writers with the appropriate knowledge base to craft a solid argument.

In general, using coders for DRG validation appeals and clinicians for clinical validation appeals is an established practice, although some appeal arguments may require utilizing both skill sets. Secondly, understand which set of clinical indicators the auditor is using to review certain diagnoses. Realize that not all patients will present with every clinical indicator, as outlined in the auditor’s denial letter, although some payers seem to expect that or else they will deny. Finally, know that many of the diagnoses in question may not have a universally accepted and agreed-upon set of criteria that must be present for a valid diagnosis. The sepsis-2/sepsis-3 definitions are a perfect example. Payors should be tolerant of some variation in physician judgment.

And now, your trivia question for today is this: who was the first beneficiary signed under the newly created Medicare program? President Truman, of course. His wife Bess was second.
Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Denise Wilson MS, RN, RRT

Denise Wilson is the vice president at Denial Research Group and AppealMasters. Denise is a registered respiratory therapist and a registered nurse, and holds a master’s degree in management information systems. Denise has over 30 years of experience in healthcare and is a nationally known speaker and educator on the RAC program and the Medicare appeals system.

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