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Clinical Validation

December 9, 2021

What is clinical validation? Why is it important? What’s the big deal? Is it not enough to just query the provider?

Clinical validation is the process of validating each diagnosis or procedure documented within the health record, ensuring it is supported by clinical evidence in the medical record. Based on the False Claims Act of 1863, CMS does not permit providers to submit claims with codes for conditions that cannot be clinically validated based on authoritative and/or widely accepted diagnostic standards if it results in an “overpayment.”

Penalties can be severe. Please be reassured that the organization is “at risk”, not its employees so long as they follow the hospital’s policy.

Claim submission and reimbursement are governed by CMS regulations and policy manuals including the RAC Statement of Work which require clinical validation of diagnoses submitted on claims. Everyone is aware that clinical validity is a primary focus of Medicare Advantage and commercial payers, and clinical validation is the most frequent reason for DRG payment reductions.

CMS RAC Statement of WorkCMS Medicare Program Integrity ManualFalse Claims Act of 1863
“Clinical validation involves a clinical review of the case to see whether or not the patient truly possesses the conditions that were documented in the medical record.”

“The purpose of DRG validation is to ensure that diagnostic and procedural information…coded and reported by the hospital on its claims matches the attending physician’s description and the information contained in the medical record.”
Imposes civil liability on any person (or organizations) who knowingly submits, or causes the submission of, a false or fraudulent claim to the Federal government. “Knowingly” is actual knowledge, deliberate ignorance, or reckless disregard. Includes submitting a claim with a higher weighted DRG than supported by the medical record.

The consequences of submitting clinically invalid diagnoses are numerous: improper DRG reimbursement, excessive denials, unnecessary appeals, risk of regulatory audits and penalties. Over-coding leads to MCC/CC classification downgrades, as have occurred with AKI and encephalopathy. To add insult to injury, denials and appeals mostly serve to enrich audit contractors at the expense of the Medicare trust fund.

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How we ensure compliance with these statutory and regulatory imperatives has become controversial, if not contentious. Some argue that the provider’s diagnostic statement is enough for code assignment relying on the Official Coding Guidelines (OCG) Section I.A.19 statement since 2016 that:

“The assignment of a diagnosis code is based on the provider’s diagnostic statement that the condition exists. The provider’s statement that the patient has a particular condition is sufficient. Code assignment is not based on clinical criteria used by the provider to establish the diagnosis.”

We are caught between an irreconcilable CMS requirement for compliant submission of claims and reimbursement and the Official Guidelines for Coding and Reporting.

What is to be done?  Many argue that a clinical validation query to the provider is enough, relying on his response to decide whether to assign a code for the condition. A request for additional clinical information substantiating the diagnosis is recommended.

What if the provider doesn’t respond or additional clinical information is not provided? We still haven’t escaped the CMS claims submission requirement for which both the clinician and hospital are responsible, and we therefore cannot include the code on the claim. What would you prefer, non-compliant billing and reimbursement with potentially severe consequences or deciding to omit the code as directed by CMS for which there are no consequences?

Each organization must have its own policy for dealing with these clinical validation issues taking into consideration the relative consequences. When diagnoses are obviously invalid, the CDI team – coding, clinical documentation specialists, physician advisor – is certainly qualified to make a decision to omit a code. After all, there are no consequences for removing a clinically invalid diagnosis code but more serious problems if you don't.

It’s a challenging assignment for us all!

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This topic is sourced directly from the original 
CDI Pocket Guide®. 

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