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OIG Audit Finds $5.4 Million in Overpayments Due to Diagnosis Errors

16 Jul, 2023 F.J. Thomas

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Sarasota, FL ( – Healthcare diagnosis codes in the U.S. are known as ICD-10. In 2015, diagnosis codes transitioned from ICD-9 to ICD-10, adding additional information built within the codes themselves. The change represented going from 13,000 diagnosis codes with ICD-9 to over 72,000 for ICD-10, according to the American Academy of Professional Coders (AAPC). Every fall, the codes are updated with new information. Early last year, the World Health Organization implemented ICD-11 diagnosis codes, which includes new diagnoses, refinement of diagnostic criteria, and more.

Some statistics have shown that diagnostics errors are a leading cause of liability claims, with around 33 percent related to information missed in the patient’s medical or family history.

According to a data from the U.S. Government Accountability Office, over 250,000 patients experience a diagnostic error each year. One in 10 patients with symptoms caused by a major vascular event, infection, or cancer are misdiagnosed. One in three malpractice claims with serious patient harm is due to a misdiagnosis, of which the bulk of those cases stem from cancer at 37.8 percent, vascular events at 22.8 percent, and infection at 13.5 percent. The estimated resulting malpractice payouts is around $1.8 billion over the last 10 years.

Previous audits from the OIG have clearly indicated that providers struggle with coding in general. While a provider may consider a patient’s diagnosis in creating a plan of care, many providers have steered clear of including diagnoses that they aren’t treating the patient directly for. This is largely due in part to a fear of liability and malpractice.

With new alternative payment models that are commonly risk-driven, a diagnosis drives those payment models. Not including a diagnosis on the claim that is a definite factor in the decision-making process can understate risk, and lower payment. In trying to re-align their thinking, providers have found that navigating billing a diagnosis is not always clear-cut.

In a recent Medicare Advantage compliance audit by the OIG, auditors found that the medical dictation and records provided did not support the risk followed diagnosis codes to the tune of $5.4 million in overpayments.

Auditors focused on 7 high risk groups which included acute stroke, acute heart attack, blood clot or embolism, lung cancer, breast cancer, colon cancer, and prostrate cancer. Auditors reviewed provider diagnosis data for payment years 2017 and 2018.

For 8 of the 210 audit sample enrollee-years, the medical records justified the diagnoses billed. The remaining 202 enrollee-years the auditors found that the diagnosis codes were not supported by the medical records, or the plan could not provide the medical records. Extrapolated out, the auditors estimated that the plan had received $5,373,270 in overpayments for 2017 and 2018.

For 22 enrollee-years, auditors found that the patient had previously had a stroke, but the medical records did not support the use of an acute stroke diagnosis at the time of the physician’s visit. The same results were found for 16 enrollee-years for the acute heart attack group. Auditors also found that in 6 enrollee-years the medical records did not support a diagnosis of acute heart attack.

For the embolism group, auditors concluded that for 18 enrollee-years, the medical records did not indicate an embolism diagnosis. The auditors had similar findings for lung cancer with 18 enrollee-years that indicated the patient had previously had lung cancer but the dictation did not justify a lung cancer diagnosis at the time of the patient’s visit. The overpayments were estimated at $184,220 for lung and other severe cancers.

Due to time limits, the OIG recommended that the health plan refund $3.1 million of the overpayments. Additionally they recommended that the plan work to identify other related overpayments for high-risk diagnoses identified in the report, and to review their internal procedures for improvement.

The plan did not agree with the auditor’s recommendations, and disagreed with their finding on 2 sampled enrollee-years. The plan stated that they felt the medical records did justify the diagnosis for those years. The plan did not agree or disagree with the remaining 200 enrollee-years.

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    About The Author

    • F.J. Thomas

      F.J. Thomas has worked in healthcare business for more than fifteen years in Tennessee. Her experience as a contract appeals analyst has given her an intimate grasp of the inner workings of both the provider and insurance world. Knowing first hand that the industry is constantly changing, she strives to find resources and information you can use.

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