Incorrect ICD-10 Assignment of Severe Malnutrition Leads to Massive Hospital Overpayments

Last week, the OIG issued a new audit report that estimates $1 Billion in Medicare overpayments to hospitals due to improper ICD-10 assignment for severe malnutrition on inpatient claims.

In the most recent audit, the OIG reviewed 200 hospital inpatient claims containing a severe malnutrition ICD-10 code (E41 or E43).

The OIG found a 87% coding error rate and a 82% overpayment error rate.

Improper DRG payments related to ICD-10 coding of severe malnutrition is a long standing compliance risk.  The OIG, CMS and various other audit contractors have issued similar audit reports dating back many years.  Additionally, hospital billing for severe malnutrition is a current OIG Work Plan item with findings expected later this year.  

In light of the repeatedly high overpayment error rates, we recommend conducting ongoing auditing and monitoring of ICD-10 coding of severe malnutrition.  Claims that include ICD-10 E41 or E43 should be reviewed to determine whether the documentation supports the assigned code and resulting MS-DRG.  Education and training should be provided to both clinical and coding staff regarding appropriate documentation and coding of severe malnutrition. 

New OIG report

OIG Work Plan:

HBE’s team of coding and compliance experts is available to assist you with external reviews of your documentation, coding and reimbursement as well as providing customized education and training for your staff. We are also available to provide assistance with conducting risk assessments, internal investigations and policy and procedure development.

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