Administrative Memos

200704

FROM: Theodore O. Will, Chief Executive Officer
DATE: Jun 07, 2007
SUBJECT: Long Term Payment Error Cause Analysis
IPRO CONTACTS:

Kathy Terry, Ph.D., Sr. Director, Data Analysis & Evaluation, Medicare/Federal Health Care Assessment at 516-209-5364

Each year a random sample of approximately 1400 discharges are selected nationally from long-term acute care hospitals (LTCHs) by the Centers for Medicaid & Medicare Services (CMS) as part of the Hospital Payment Monitoring Program (HPMP). The purpose of HPMP is to measure, monitor, and reduce the incidence of Medicare payment errors for long-term inpatient prospective payment system hospitals.

The selected LTCH discharges are reviewed for one of five different types of payment errors: DRG changes, admission denials, billing errors, technical denials, and Maryland length of stay (LOS) errors. Identified payment errors are aggregated to create a gross and net payment error rate and an annual payment error cause analysis (PECA) is performed. The national PECA data is compiled by the HPMP QIO Support Center (QIOSC), TMF Health Quality Institute, for CMS and was recently released for fiscal year (FY) 2005 for LTCH.

The national net payment error rate, i.e., the difference between underpayments and overpayments, was 6.2% equaling 2.7 million dollars in error. The gross payment error was 7.2%, representing 3.2 million dollars in error. The gross dollars in error equal the absolute value of the net dollars in error. Each of these rates are increased from the national LTCH payment error rates from FY 2004 at 5.4% and 6.6% for the net and gross rates, respectively.

The payment error types found in FY 2005 comprised of only three types of errors: DRG changes, representing 52% of the errors; admission denials with 47% of the errors; and, technical denials with 1% of the errors. Because of the small sample size, there is a low volume of claims for each DRG. This led to an analysis of the Major Diagnostic Categories (MDCs) to give an indication of the services rendered in an LTCH. While diseases and disorders of the respiratory system (MDC 04) represented one-third of all LTCH sampled claims and DRG 475 (respiratory system diagnosis with ventilator support) had the greatest volume of claims in the sample (12.8 percent), no specific DRGs or pattern of DRGs were specifically responsible for the errors found.

One issue identified was that 73% of admission denials occurred in claims with a length of stay (LOS) of 25 days or less. Admission denials among short-stay claims were particularly prevalent for some of the top-volume DRGs. To be qualified as an LTCH, the hospitals overall average length of stay must be greater than 25 days. The average LOS for the universe of LTCH claims and the sample was 28.2 days, DRG/Coding payment error types 29.6 days and, for admission denials 20.7 days.

Another issue examined during the course of the analysis is the accurate coding of excisional debridement (procedure code 86.22). This procedure has become a national issue of concern for the Centers for Medicare & Medicaid Services (CMS), QIOs and the provider community. The DRG change case error rate for sample claims with this procedure code was 13.9%. Please refer to IPRO Medicare Administrative Memo 2007-01: Clarification of Excisional Debridement Coding for clarifiying information.

Currently there are several resources available to assist LTCHs in reducing payment errors. The Program for Evaluating Payment Patterns Electronic Reports (PEPPERs), distributed quarterly, provide hospital comparitive data for CMS target areas (i.e., areas known to have greater payment error cases and/or dollars in error). Your most recent PEPPER data along with the PEPPER User's Guide is included with this mailing in the attached CD-Rom. Trainings on PEPPER were conducted by both IPRO and the HPMP QIOSC. These trainings may be found at www.ipro.org/hpmp and www.hpmpresources.org for IPRO and QIOSC materials, respectively. The QIOSC website includes additional data such as the Top 50 National DRGs and details on the national LTCH CMS target area analyses. Please be sure to utilized the aformentioned resources and, the enclosed CD-Rom, to identify and prevent payment errors in your facility.

Should you have additional questions or concerns regarding this memorandum, or the data discussed, please contact Dr. Kathy Terry at 516-209-5364.