Deja vu: when it comes to prospective payment, home health agencies can learn from the experiences of acute care hospitals with DRGs - Home Healthcare - Diagnostic Related Groups

Health Management Technology, Oct, 2002 by Patricia B. Dray

ICD-9-CM Coding Accuracy

Since DRGs are assigned solely on the basis of ICD-9-CM diagnostic and procedure codes, hospitals soon realized the importance of accurate coding for proper reimbursement.

The accuracy of the ICD-9-CM code also affects HHRG reimbursement. Incorrectly coding arthopathy (716.90) as osteoarthritis (715.89) decreases the case mix weight for an episode from 0.7169 to 0.6213, resulting in the loss of hundreds of reimbursement dollars. How many home health agencies can afford that degree of revenue loss?

With nearly 13,000 ICD-9 codes in existence, the use of automated encoding tools can significantly improve the accuracy of code assignment. In fact, the amount of data involved with home care, plus the complexity of prospective payment rules and regular CMS code updates, makes it difficult to succeed without computer systems and software specifically designed for prospective payment.

Agencies should ask these questions when evaluating encoding software:

Does the product allow the end user to enter common medical terminology, or must coders use exact coding language? Products that allow the coder to enter healthcare terms in common use will be easier for the novice to use.

Is the software updated as codes change? Since CMS issues code changes on an annual basis, the product must be regularly updated to ensure correct reimbursement.

Does the product incorporate coding rules and information about the mechanisms of disease, or is it a "pick list?" Products that merely replicate the ICD-9 manuals online do not offer logic tools and decision support features that help increase coding accuracy and coder productivity.

Agencies also must consider implementing educational programs to train staff on coding guidelines and acceptable coding practices. Many training options are available, ranging from online learning classes with CEU certification to coursework offered by the American Health Information Management Association (www.ahima.org).

Use of Comparative Analysis

Challenged by reduced revenues under DRGs, hospitals began to compare their length of stay (LOS) and costs of similar patients to those of similar hospitals. They also profiled clinicians to understand the impact of practice patterns on the cost and quality of care.

Home health agencies also can implement comparative analyses to understand key clinical events that impact LOS and resource consumption. As agencies accumulate data on their patient population, they can pinpoint whether variations in cost and LOS are due to specific clinical practice patterns, particular diagnoses or other factors, and can initiate process changes to improve quality and better contain costs.

Undertaking comparative analysis requires decision support tools that evaluate claims data and clinical data to track costs in relation to outcomes. In evaluating decision support tools, agencies should consider the following:

What comparative data is available? Software that includes comparative data will allow the home health agency to understand not only internal variances, but how the agency differs from industry norms. This data can then be used for performance improvement and in marketing of services.