Deeper Than the Headlines: Medicare Advantage and Diagnosis Coding

Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS) make predetermined monthly payments to MA organizations according to a system of risk adjustments that depend on the health status of each enrollee.  MA organizations are paid more for providing benefits to sicker enrollees than to healthier enrollees. To determine the health status of enrollees, CMS relies on MA organizations to collect diagnosis codes from their providers and submit these codes to CMS. Some diagnoses are at higher risk of being miscoded, which may result in overpayments from CMS.

The OIG recently published the results of an audit they performed on an MA organization and found that diagnosis coding was not always correct. The OIG reviewed Essence Healthcare, Inc. (Essence), and focused on two areas that included high-risk diagnosis codes. Their objective was to determine whether selected diagnosis codes that Essence submitted to CMS for use in CMS’s risk adjustment program complied with Federal requirements.

The review was a focused audit. The OIG selected 218 unique enrollee-years with high-risk diagnosis codes during calendar years 2012 through 2014. The 218 enrollee-years included 52 diagnoses of acute stroke and 166 diagnoses of major depressive disorder. The OIG limited their review to the portions of the payments that were associated with these high-risk diagnosis codes, which totaled $515,325.

Some of the diagnosis codes that Essence submitted to CMS for use in CMS’s risk adjustment program did not comply with Federal requirements. For 75 of the 218 enrollee-years, the diagnosis codes (48 acute strokes and 27 major depressive disorder) that Essence submitted to CMS either were not supported in the medical records (70) or could not be supported because Essence could not locate the medical records (5). These errors occurred because the policies and procedures that Essence followed to detect and correct noncompliance with CMS’s program requirements, as mandated by Federal regulations, were not always effective. As a result, OIG concluded that Essence received $158,904 of overpayments for the 75 enrollee-years.

Acute Stroke

Essence incorrectly submitted diagnosis codes for acute stroke for 48 of the 52 sampled enrollee-years. The medical records did not support these diagnosis codes.

Specifically:

• For 46 of the enrollee-years, the physicians should have documented a history of stroke diagnosis code instead of an acute stroke diagnosis code. In one example, the Essence internal coding review noted that no treatment plan was documented in the patient’s medical history and added that the acute stroke diagnosis code in the medical record was incorrect. In another example, the Essence internal coding review noted that the claim that Essence had originally submitted to CMS used the diagnosis code for “current stroke” (that is, acute stroke) when it should have used “history of stroke.” A diagnosis for the history of stroke does not map to an HCC; therefore, Essence should not have received an increased payment for acute stroke for these enrollee-years.
• For 1 of the enrollee-years, a physician—a non-inpatient provider—incorrectly documented a diagnosis code that had been ruled out. For this enrollee-year, Essence provided two medical records: one for the physician and one for the inpatient facility. According to the ICD Coding Guidelines, non-inpatient providers may not document diagnoses that have been ruled out. The acute stroke diagnosis was ruled out (and not included) on the inpatient facility record; therefore, the acute stroke diagnosis documented on the physician’s medical record was not supported and should not have been submitted to CMS.
• For 1 of the enrollee-years, Essence could not locate the medical record in which the diagnosis code of acute stroke originated. A representative from the physician’s office stated that the office staff was unable to locate any medical record reflecting services provided to this enrollee on the date of service requested. Because the original medical record could not be located and the diagnosis code could not be supported, Essence should not have received an increased payment for acute stroke for this enrollee.

As a result of these errors, the HCCs for Ischemic or Unspecified Stroke was not validated, and Essence received $96,355 of overpayments for these 48 sampled enrollee-years.

Major Depressive Disorder

Essence incorrectly submitted diagnosis codes for major depressive disorder for 27 of the 166 sampled enrollee-years. The medical records did not support these diagnosis codes.

Specifically:

• For 23 of the enrollee-years, the Essence internal coding review classified a major depressive disorder as unsupported when the medical records either lacked statements that the patients had a major depressive disorder or did not indicate any treatment plan for the major depressive disorder. Specifically, the Essence internal coding review noted that the physicians should have documented a diagnosis code for a less severe form of depression, instead of one for a major depressive disorder, on the medical record. For 1 enrollee-year, the Essence internal coding review determined that the medical record supported a “[d]epressive disorder . . . which does not risk adjust.” For another enrollee-year, the Essence internal coding review noted that the medical record “used the incorrect code; no treatment plan.” A diagnosis for a less severe form of depression does not map to an HCC; therefore, Essence should not have received an increased payment for major depressive disorder for these enrollee-years.
• For 4 of the enrollee-years, Essence could not locate the medical records from which the diagnosis code for major depressive disorder originated. Specifically: o for 3 of the enrollee-years, the entity that processed behavioral health claims on behalf of Essence ceased doing business during 2014 and o for the remaining enrollee-year, Essence contacted the provider several times, but the medical record was never produced. Because the original medical records could not be located, the diagnosis codes could not be supported. Therefore, Essence should not have received an increased payment for major depressive disorder for these enrollee-years.

As a result of these errors, the HCCs for Major Depressive, Bipolar, and Paranoid Disorders were not validated, and Essence received $62,549 of overpayments for these 27 sampled enrollee years.

The Importance of Medicare Advantage

These results highlight the importance of diagnosis coding in the context of Medicare Advantage.  There has not been a great deal of these types of OIG audits published so this one is a must read for anyone involved in these programs.