How Incorrect Coding Can Cost You

Missed or incorrect codes and OASIS items can reduce home health reimbursement by 10–30% per 30-day period, and it usually comes from how the episode is grouped.

Below is a practical breakdown of where that 10–30% loss actually comes from, with concrete examples.

1. Wrong Primary Diagnosis can mean Wrong Clinical Grouping (10–20% impact)

Under PDGM, the primary diagnosis determines the clinical grouping, which is a major payment driver.

2. Missed Comorbidities = Lost Comorbidity Adjustment (5–20%)

PDGM allows low or high comorbidity adjustments, but only if secondary diagnoses are:

• Clinically relevant

• Properly sequenced

• Reflected in OASIS

3. Incorrect Functional Scoring Alignment (5–15%)

Functional impairment level is calculated from OASIS responses, but:

• Diagnosis selection and clinical documentation (especially therapy evals) should support those scores. The OASIS should reflect significant mobility deficits.

• Diagnosis list lacks diagnosis to support Functional Impairment.

4. Improper Sequencing (5–10%)

CMS sequencing rules are strict in home health. Common errors include:

• Aftercare code sequenced before active condition

• Chronic condition sequenced ahead of acute/post-op reason for care

• Etiology/manifestation sequencing errors

• Sequencing outside of the top 6: Same diagnoses, different order = different payment (due to risk adjustment).

5. Admission Source & Timing Misclassification (5–15%)

Coding affects whether a case is grouped as:

• Institutional vs Community and Early vs Late

• The highest reimbursement, with all other factors being the same, is Early Institutional.

6. Conservative or “Safe” Coding (10–30%)

Agencies often under code to “avoid audits”. This does not prevent audits—but it can result in underpayment. Some issues include:

• Using unspecified codes

• Omitting relevant conditions – get these physician-verified and use them!

• Avoiding complication codes that are applicable to the patient.

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Why These Losses Often Go Unnoticed

• No denial or rejection

• Claims still pay, just at a lower rate

• Payment variance not reviewed at episode level

How High-Performing Agencies Prevent This

• Use highly qualified, certified Coding and OASIS Reviewers

• Encourage your staff to verify any diagnosis that would have an impact

• Comorbidity capture checklists

• Diagnosis sequencing audits

• PDGM case-mix validation reports

• Staff education tied to coding and OASIS impact.