Tiny Babies- Huge Cost: The NICU Impact on Overpayments and Fraud

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Tiny Babies, Huge Cost

NICU Impact on Overpayments and Fraud

June 14, 2016


Industry Data

Neonatal Care is disproportionately expensive, and much more common with Medicaid.

One study found that, at Children’s Hospitals, although representing only 8% of patients, neonatal babies

consumed 21% of patient days, and 25% of cost. (Neonatal Intensive Care for Low Birthweight Babies,

Costs and effectiveness, Diane Publishing, 1981)

An Optum study found that Medicaid covers almost 50% of births in the US (2 million out of 4.3 million), and

Medicaid members were almost twice as likely (22% v. 12%) to have adverse birth outcomes,

and those births were almost 7 times more expensive ($57k v. $8k) (The High Cost of Adverse

Birth Outcomes in Medicaid Programs, OptumInsight)

In 2014, the rate of pre-term births in the US was 9.6% (CDC, CDC Features, National Pre-Maturity

Awareness Month), which meant about 380,000 babies were born pre-maturely (March of Dimes website)

75% of all patients in NICUs are premature babies. (The Cost of Saving the Tiniest Lives: NICUs versus

Prevention Jonathan Muraskas, MD, and Kayhan Parsi, JD, PhD, AMA Journal of Ethics, October 2008)

Neonatal Care typically costs more than $3,500 per day, and the total cost for an infant can exceed $1

million for the length of their stay. Caring for Pre-term babies during their 1st year of life cost

15x on average what care for other babies cost. (Bloomberg, Million Dollar Babies, June 12, 2008)


Overall

A baby is placed in a Neonatal ICU (NICU) when it needs certain special treatment (for Respiratory Distress,

Jaundice, low body temperature, etc.) and specifically trained staff (RN, LPN, PT, OT, ST, Audiologist) with

skills to manage, observe and evaluate their care in a specialized setting beyond what a traditional ICU,

which is designed to handle larger adults patients, can do.

• Apnea. A pause in breathing for 20 seconds or more

• Respiratory distress syndrome (RDS). A breathing problem most common in babies born before 34 weeks of pregnancy.

Babies with RDS don’t have a protein called surfactant that keeps small air sacs in the lungs from collapsing

• Intraventricular hemorrhage (IVH). Bleeding in the brain. It usually happens near the ventricles in the center of the brain

• Patent ductus arteriosis (PDA). This happens in the connection (called the ductus ateriosus) between two major blood

vessels near the heart. If the ductus doesn’t close properly after birth, a baby can have breathing problems or heart failure

• Necrotizing enterocolitis (NEC). A problem with a baby’s intestines. It can cause feeding problems, a swollen belly and

diarrhea. It sometimes happens 2 to 3 weeks after a premature birth

• Retinopathy of prematurity (ROP). An abnormal growth of blood vessels in the eye and can lead to vision loss

• Jaundice. Eyes and skin look yellow. It happens when the baby’s liver isn't fully developed or isn't working well

• Anemia. A baby doesn’t have enough healthy red blood cells to carry oxygen to the rest of the body

• Bronchopulmonary dysplasia (BPD). A lung condition that can develop in premature babies as well as babies who have

treatment with a breathing machine. Babies with BPD sometimes develop fluid in the lungs, scarring and lung damage

• Infections. Premature babies often have trouble fighting off germs because their immune systems are not fully formed.

Infections that may affect a premature baby include pneumonia; sepsis; and meningitis

http://www.marchofdimes.org/complications/premature-babies.aspx

http://www.marchofdimes.org/complications/premature-babies.aspx


Definitions – Level of Care

Level I (Well Newborn Nursery) are required to have the capability to:

– Provide neonatal resuscitation at delivery;

– Care for infants born at 35 to 37 weeks’ gestation who remain physiologically stable;

– Stabilize newborns who are ill and born less than 35 weeks’ gestation until transfer

Level II (Special Care Nursery) meet level I nursery requirements, plus are able to care for:

– Infants born ≥ 32-week gestation and weighing ≥1500 grams who have physiologic immaturity or are moderately ill with

problems that are expected to resolve rapidly and are not anticipated to need subspecialty services on an urgent basis

– Infants who are feeding and growing stronger or convalescing after intensive care

– Infants needing mechanical ventilation for a brief duration (<24 h) or continuous positive airway pressure

– Infants born before 32-week gestation and weighing less than 1500 g until transfer

– Level II nurseries are required to have pediatric hospitalists, neonatologists, and neonatal nurse practitioners in

addition to Level I health care providers

Level I

Well Newborn Nursery

Level II

Special Care

Nursery

Level II

Neonatal

Intensive-care

Unit (NICU)

Level IV

Regional Neonatal

Intensive-care Unit

(Regional NICU)


Definitions – Level of Care

Level III (Neonatal Intensive-care Unit) in addition to capabilities of level I and II, are able to provide

• Pediatric surgeons, pediatric medical subspecialists, pediatric anesthesiologists, and pediatric ophthalmologists either on site

or at a closely related institution

– Sustained life support

– Comprehensive care for infants born <32 weeks gestation and weighing <1500 g

– Comprehensive care for infants born at all gestational ages and birth weights with critical illness

– A full range of respiratory support (conventional and / or high-frequency ventilation and inhaled nitric oxide)

– Advanced imaging, with interpretation on an urgent basis, including computed tomography, MRI, and echocardiography

Level IV (Regional NICU), in addition to capabilities of Level I, II, and III units:

• Have Pediatric surgical subspecialists

• Are located within an institution with the capability to provide surgical repair of complex congenital or acquired conditions

• Facilitate transport and provide outreach education

It is important to ensure there is a match between the level of care the infant needs, and the level that

the specific facility can and actually does render

Level I

Well newborn nursery

Level II

Special care

nursery

Level II

Neonatal

intensive-care

unit (NICU)

Level IV

Regional neonatal

intensive-care

unit (Regional

NICU)


Level of Care - Interqual Standards

• Newborn Level I – For physiologically stable neonates who are at least 35 weeks gestational or postmenstrual age,

weigh at least 2000 grams, and require evaluation and observation for conditions with low risk for complications or

normal newborn care. Level I care also includes neonates who have transferred from a higher level of care or who have

been readmitted with conditions such as failure to thrive

• Special Care Level II – For moderately ill neonates who also may be recovering from an acute illness and no

longer require intensive support. These newborns require moderately complex interventions, or have conditions such as

apnea of prematurity, the inability to maintain body temperature, or the inability to take oral feedings. Some hospitals

may not have a designated Special Care Nursery (SCN). In these cases, SCN Level II criteria may be applied to all

patients in the nursery unit

• Neonatal Intensive Care Unit Level III – For seriously ill, hemodynamically stable neonates who require

intensive observation and frequent interventions. Level III care includes mechanical ventilation and other

comprehensive services to care for stable newborns, including this who may have complex medical conditions

• Neonatal Intensive Care Level IV – For the most critically ill neonates who are hemodynamically unstable or

have a high probability of life threatening deterioration with conditions such as pulmonary hypertension, coactation of

the aorta, pulmonary atresia, gastroschisis, omphalocele, esophageal atresia, hypoxic ischemic encephalopathy,

meningomyelocele, or hydrocephalus. These critically ill newborns may have organ failure, require complex surgical

interventions or have extremely low birth weight. Level IV offers comprehensive services including advanced respiratory

support such as high frequency ventilation, extracorporeal membrane oxygenation / extracorporeal life support (ECMO

/ ECLS) and surgical repaid of serious congenital malformations requiring cardiopulmonary bypass

Interqual, Pediatrics 2012, 130:587-97


Diagnosis Related Group Classification Systems

Medicare (MS) DRGs - developed by Yale in the 1970s to describe all care in an inpatient hospital

• Designed for the Medicare population

• Adopted in 1983 by CMS

• Refined in 2007 to current system with 745 unique MS-DRG codes

• Higher level DRGs (with CC or MCC) are based on intensity of resources consumed, not severity of patient condition

AP (All Patient) DRGs - developed in 1987 by 3M

• For NY Hospital Reimbursement for non-Medicare discharges

• Adopted by some state Medicaid programs and commercial payers

• Like MS DRGs, All Patient DRGs are not severity adjusted

There are several other DRG systems (RDRG, SDRG, etc.) intended to add risk and / or severity adjustments

APR (All Patient Refined) DRGs - developed in 1990 by 3M

• Provides granularity on patient characteristics (all APR-DRGs have 4 levels)

• Addresses both severity of illness and risk of mortality for all patient populations

• Increased number of DRGs to 1,256 (from MS-DRG with 745)


MS DRGs for NICUs

• There are only 7 MS-DRGs for newborns

– 789 Neonate died or transferred to another acute care hospital

– 790 Extreme immaturity or respiratory distress syndrome, neonate

– 791 Prematurity with major problems

– 792 Prematurity without major problems

– 793 Full term neonate with major problems

– 794 Neonate with other significant problems

– 795 Normal newborn

• Given the limited granularity for newborns (because MS DRG was designed for the Medicare population), it is very difficult to

draw distinctions between newborns that have different risks, conditions, etc.


MS DRG – An Example of Its Limitation

Example - A newborn weighing 2,200 grams and delivered by cesarean section at 33 weeks, diagnosed

with respiratory distress syndrome, and brief periods of apnea

• Reporting signs / symptoms associated with a disease process does not affect DRG in this case

because there is insufficient granularity

Scenario 1

• Z38.01, Single live born infant, delivered by cesarean

• P22.0, Respiratory distress syndrome of newborn

DRG = 790, Extreme Immaturity or RDS, neonate

Scenario 2



• P28.4, Other apnea of newborn

DRG = 790, Extreme Immaturity or RDS, neonate


All Patient Refined - DRGs

• APR-DRGs are an evolution of MS-DRGs subdividing DRG categories by category according to:

– Severity of illness (1 – minor; 2 – moderate; 3 – major; 4 - extreme)

– Risk of mortality (1 – minor; 2- moderate; 3- major; 4- extreme)

– Categories are increased to 1,256

– Every secondary diagnosis and all procedures are evaluated for their impact

• There are 28 newborn APR DRGs driven by

– Birthweight or Gestational Age

– Transfer status

– Infection status

– Anomaly or not

– Procedures performed

• Major Cardiovascular, Other Major

– Respiratory Status – RDS or other Major Respiratory Condition

– Other significant condition


Newborn APR-DRG – Granularity Added

Example - A newborn weighing 2,200 grams and delivered by cesarean section at 33 weeks, diagnosed with respiratory

distress syndrome, and brief periods of apnea

• Reporting signs / symptoms associated with a disease process changed the DRG

• DRG 622-1 has a weight of 1.5080 whereas DRG 622-2 has a weight of 2.1543

• The result is payment is increased by about 43%

Scenario 1



DRG = 622-1, Neonate Birth weight 2000-2499G with RDS / Major Resp

Scenario 2



• P28.4, Other apnea of newborn

DRG = 622-2, Neonate Birth weight 2000-2499G with RDS / Major Resp


Reimbursement Methodologies

Commercial Payers - pay based on

• DRG (most use MS DRG or AP DRG for Commercial and Medicare Adv LOBs)

– Check what version of grouper, weights, etc.

• Per Diems (Flat daily payment), likely different between “ICU / NICU” and “Med / Surg”

• Level of Care I – IV (Ascending with Level IV at least double payment for Level I)

• Case rates (similar to DRGs but for specific services, typically surgical)

• Rented Networks (typically % discount off charges)

• Percentage of charges (has become much rarer)

Medicaid – This varies by state, with several methodologies in use.

• DRGs – 37 states use some type of DRG (APR-DRG, AP-DRG, MS-DRG, Tricare DRG, CMS-DRG).

– Variation mainly exists in how the base rate is set (state wide or hospital specific), and the version of the grouper used

• Per diem – 10 States pay based on a daily payment. It is typically set based on average cost across state or some other

similar calculation

• Per Stay - 3 states pay a fixed amount per stay, based on cost reports


Common Errors - NICUs

Level of Care

• Failure to bill Lower Level of Care Later in Stay – Many babies are in the NICU because they are pre-mature, and very

small. As they grow, their medical issues, and the intensity of the care they receive, decreases. This is particularly a question

when the baby was discharged to home (instead of transfer)

• Listing Diagnoses incorrectly – There are instances where secondary diagnoses are listed in situations where those

conditions are included in another diagnosis (e.g. malnutrition coded, but no evidence in records, even if small for gestational

age; Transitional Tachypnea – start protocol, and then on day 2 do a review and can rule it out - “No distress”, no breathing

treatment, no apnea, but still monitor)

• Carryover Days – There are situations where an infant is maintained in a higher level of care than needed for convenience,

etc. (e.g. baby still on Phototherapy – waiting for home billi-blanket, sleep apnea monitor)

• Regional NICU / Level 1 Trauma Centers - Facilities that do not have separate floor / area for lower level care, so don’t bill

it. “Don’t have observation unit” / “Don’t do observations”. However, even very sick babies do recover, and lower level should

be billed (eating at normal rate, IV discontinued, off anti-biotics, gaining weight, rooming with parents). Such “healthier”

babies are moved to a different area in NICU

DRG Validation

• The top 4 diagnosis areas that lead to changes are:

Newborn SepsisRespiratory Distress

Syndrome

Transitory Tachypnea

of Newborn

Patent Ductus

Arteriosus


Examples – Level of Care

DRG Findings

Level IV

Changed to

Level III

DOS 5/18/14 does not meet criteria for NICU IV, Revenue code 174 as billed. Meets criteria for NICU III,

Revenue code 173 as follows:

• Infant was stable on room air since 5/17/14. In open crib with stable temps. Receiving TPN, Lipids,

advancing nipple feeds of similac and EBM

• Per Milliman’s Care Guidelines LOC-006: Discharge to Level III care for patient in convalescent phase as

indicated by ALL of the following: Condition stable or improved as indicated by 1 or more of the following:

Patient's condition no longer requires urgent pediatric subspecialty services as indicated by ALL of the

following: Apnea or bradycardia episodes absent or less frequent and require only stimulation

intervention, Pharmacologic support (e.g., caffeine) absent or on stable regimen, No large (e.g., 10%)

weight loss, Subspecialty evaluation not needed or reveals no acute intervention expected, No condition

requiring continued intensive support, No other support needed that is not available at specific Level II

care area

Level III

Changed to

Level II

DOS 5/21/15 does not meet criteria for NICU III, Revenue code 173 as billed. Meets criteria for NICU II,

Revenue code 172 as follows:

• Infant was stable on room air in open crib. No further TPN / Lipids. No further NGT feeds. Infant on full

feeds via nipple

• Per Milliman’s Care Guidelines P-355: Level II nursery to discharge ; Respiratory status acceptable,

Hemodynamic stability, Pneumothorax minimal or resolved, Fever absent, Oral hydration, medications,

Adequate nipple feeding, Oxygen absent, Antibiotics absent


DRG - Auditing Results

DRG Findings Overpaid

633-4

Changed to

633-3

• Incorrect diagnosis code 769 (respiratory distress syndrome). Baby was admitted to

NICU due to desaturations at 6hrs of life and suspected congenital heart disease.

Progress note on 3/26/15 reports minimal respiratory distress resolved

• It further states baby kept in HFNC for PPHN. Chest x-ray on 3/25/15 shows clear

lungs, no effusions and concludes a negative chest

• Discharge summary only notes 'respiratory distress'. Documentation does not

support RDS / diagnosis code 769. Thus, replaced 769 with 770.89 (respiratory

distress).

• Documentation also supports inclusion of V29.0 (suspected sepsis, ruled out), which

was not coded

$21,417.32

633-4

Changed to

634-3

• Delete 04HY32Z (insertion of monitoring device into lower artery). This infant had

continuous blood pressure monitoring via umbilical artery catheter

• This should be reported with code 4A133B1 (monitoring of arterial pressure,

peripheral, percutaneous approach). The definition for monitor is determining the

level of a physiological or physical function repetitively over a period of time

• There is no documentation that there was an insertion of a device

$53,979.76


Other Examples - Results

DRG Findings

639-1

Changed to

640-3

• Diagnosis code R34, oliguria and anuria, changed to P96.0, congenital renal failure. Per discharge

summary, patient was status post anuria with no urine output for 24 hours on day of life #2. Baby given

10cc/kg x3 boluses and IVF @80cc/kg/hr x 6 hours

• Patient subsequently voided x 6. Patient chart states patient post anuria with renal failure

622-1

Changed to

626-3

• Diagnosis code 764.08 (“Light for dates” w/o malnutrition) replaced with 765.18 (other problem of

neonate). Physician documentation only states patient is premature, no mention of being small for

gestational age

• Diagnosis code 769 (RDS) replaced with 770.6 (Trans Tachypnea). Per admit note, progress notes and

vitals, baby born 9/13/15 at 09:52am needed respiratory support after birth and for the first 5.5 hrs of life.

Respiratory support was discontinued by 14:19 on day of life and baby remained in no respiratory distress

with oxygen saturations between 96-100% in room air throughout stay. He did have some sporadic

tachypnea on day of life. Clinical picture is more consistent with TTN, transitory tachypnea of newborn

(770.6)

• Added diagnoses 779.31 and 778.4. Baby was in sepsis surveillance up until 9/16/15 when antibiotics

were discontinued following 48hrs of negative blood cultures. Patient's delay in discharge after 9/16/15

(until 9/21) was due to temperature instability and inability to gain weight / feeding problems. These

conditions were not previously captured


Sample of Results Achieved

Plan Payment Type Findings Overpaid

Small Medicaid Plan

(18 Months of Data)DRG

Total count of NICU claims = 1,601

213 Selected for review

65 had findings (31%)

Average finding = $3,740

Total overpaid = $239,400

Small Plan - Medicare /

Medicaid

(7 months of Data)

DRG9 claims selected

7 had findings (78%).



Small Medicaid Plan

(15 months of Data)Level of Care

Total NICU claims paid L of C = 135

31 selected for review

14 had findings (45%)


NOTE: Difference from level IV

to III only $385 (below normal).



Things to Consider

• Clear rules on when Secondary Diagnoses may be added (versus included in others)

• Specific clarification on sepsis and respiratory distress syndrome (baby could have respiratory issues

during birth, but not need artificial support)

• Clarification on standard protocols (readmit for “rule out sepsis”, start antibiotics and do imaging, but stop

before full course, once stabilize)

Policy Changes / Clarifications

• Findings in past - some providers are more prone to error, being incorrect, etc.

• Providers that bill highest level for same patient throughout a stay

• Level of care or DRG does not match Dx, LOS, etc.

• Providers with significant use of high level DRGs, especially if patient severity (based on other medial

services, etc.) does not appear to justify it

• Excessive care based on lack of functional improvement (“Feeders / Growers”)

Things to Consider in Selection

Tiny Babies- Huge Cost: The NICU Impact on Overpayments and Fraud

Healthcare

Transcript of Tiny Babies- Huge Cost: The NICU Impact on Overpayments and Fraud