Improper Diagnoses Reporting a Costly Mistake for PacifiCare

A May 2012 Office of Inspector General (OIG) report provides coders with an excellent reminder of two golden rules: 1) If it isn’t documented, it wasn’t done; and 2) Never code unconfirmed diagnoses.

The purpose of the OIG investigation was to determine whether the diagnoses that PacifiCare of Texas, a Medicare Advantage (MA) organization owned by UnitedHealth Group, submitted for use in the Centers for Medicare & Medicaid Services’ (CMS’) risk score calculations complied with federal requirements.

CMS uses the Hierarchical Condition Category (HCC) model to calculate monthly risk adjusted payments made to MA organizations.

According to the report, the OIG found the diagnoses PacifiCare submitted for use in CMS’ risk score calculations did not always comply with federal requirements.

Nearly half of the risk scores were invalid, the OIG said, because the diagnoses were not supported for one or both of the following reasons:

  1. The documentation did not support the associated diagnosis.
  2. The diagnosis was unconfirmed.

An example of an unsupported diagnosis: For one beneficiary, PacifiCare submitted the diagnosis code for “Major depressive disorder, recurrent episode, moderate.” However, the documentation PacifiCare provided stated that the patient had complained of leg pain and difficulty walking. The documentation did not indicate that depression had affected the care, treatment, or management provided during the encounter.

An example of an unconfirmed diagnosis: For another beneficiary, PacifiCare submitted a diagnosis code for “Chronic airway obstruction, not elsewhere classified.” The documentation, however, noted a “history of smoking with possible mild chronic obstructive pulmonary disease.”

The 2006 and 2007 participant guides state that physicians and hospital outpatient departments may not code diagnoses documented as “probable,” “suspected,” “questionable,” “rule out,” or “working.”

As a result of misreporting diagnoses, the OIG estimates CMS allegedly overpaid PacifiCare $115,422,084 in 2007.

The OIG also noted that PacifiCare did not have written policies and procedures for obtaining, processing, and submitting diagnoses to CMS.

PacifiCare did not agree with OIG’s findings, stating the OIG’s analysis, methodology, and extrapolation were flawed.


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