RAC DRG validation audits begin

CMS has approved Connolly Healthcare, the recovery audit contractor (RAC) for Region C, to begin DRG validation audits. The states of Alabama, Colorado, Florida, Georgia, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas will soon see requests for medical records for these complex reviews.

According to Connolly, DRG validation requires 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 description and the information contained in the beneficiary’s medical record. The supporting documentation and the coding of such must follow the ICD-9-CM Official Coding Guidelines and the related Coding Clinic. Connolly has posted an extensive list of twenty four MS-DRGs that are up for review.

Based on the RAC demonstration project findings, these MS-DRGs should not be a surprise to providers.  As your facility prepares for the validation audits by reviewing its own data, keep in mind that some of the MS-DRGs that are being audited were previously DRGs; there is a crosswalk of DRGs to MS-DRGs, created by CMS.  The clock begins ticking now, so make sure that the correct people within your facility are prepared to receive the requests and process in a timely manner.

Last week, CMS also announced that it has modified the medical record request limits for DRG validation audits beginning on December 1, 2009.  The limits will be based on Tax Identification Number (TIN) and the first three digits of the ZIP code instead of the current National Provider Identifier (NPI). The limits will be set by each RAC on an annual basis based on the TIN for all of the facilities and practices under a single organization umbrella or “unit.”  The limit will be based on the prior fiscal year Medicare claims volume submitted for that “unit”, regardless if those claims were paid or denied. However, the 45 days between record requests will remain in place. This change indicates that a RAC may request inpatient records up to the full limit for that “unit,” regardless of the volume of inpatients for their entire claims volume.

The medical request limits for DRG validation audits will be phased in through September 2010.  From December 2009 through March 2010, the cap will remain at the current 200 requests per 45 days for the “unit.” From April through September 2010, the cap will be 300 requests per 45 days for providers and suppliers using the same TIN who bill in excess of 100,000 claims across all Medicare contractors.

In the next few months, it will be important for facilities to be able to calculate their own medical record request limits based on their TIN and submitted claims data. Also, those facilities under RAC Regions A, B and D should also review the Connolly list in preparation for similar DRG validation audits.

You can find an up-to-date list of all the RAC issues at the Revenue Cycle Institute.