The Record header image

Forward to a friend  |  Subscribe  |  The Record Archive  |  Contacts  |  bcbsm.com  |  Print this article
July 2023

What you need to know about the new prepayment DRG review process and how to provide input

Blue Cross Blue Shield of Michigan is proposing the implementation of a new prepayment DRG review process that will reduce the number of retrospective audit reviews. Program implementation is scheduled for Jan. 1, 2024, for Blue Cross commercial and will include in-state and host claims.  

Both DRG coding and clinical validation will be included in this process. To ensure claims are being billed correctly and are supported by medical documentation, we’ll be looking for the following items:

  • Reported discharge status
  • Diagnosis
  • Present on admission indicators
  • Surgical procedure codes
  • Clinically valid and properly documented diagnoses
  • Coding guideline compliant

This isn’t a medical necessity review. To support payment accuracy and encourage correct coding, Blue Cross is working with Optum to identify claims that may require additional review. Optum is an independent company that contracts with Blue Cross to assist with claims processing.

What this means to facilities

Performance will be monitored and adjusted either up or down based on each facility’s results. For example, fewer claims will be reviewed for facilities with minimal findings. 

This process is expected to lead to:

  • More accurate initial payments; elimination of claim adjustments and reduction in refund requests
  • Educational opportunities for billing and claims staff
  • Elimination of the need to find old medical records documentation
  • Ability to review the case more quickly

Current DRG review process

Proposed pre-payment DRG review process

  • Retrospective audit takes place after a claim has been paid.
  • Medical records are requested by mail, allowing a total of 90 days to submit.
  • If there are findings, Blue Cross adjusts the claim.
  • If there are no findings, the claim will remain as reimbursed.
  • Two-step appeal process:
    • Level 1: Appeal within 50 days with Change HealthCare EquiClaim
    • Level 2: Appeal within 20 days with the Physicians Review Organization
  • Pre-payment complex analytic review prior to claim payment.
  • Claim would pend for review.
  • Medical records would be requested by mail, allowing a total of 60 days to submit
    • If not received within 60 days, the claim will deny.
    • Records can be submitted within 180 days from the initial request for review.
  • If there are no findings, the claim will be released for payment.
  • If there are findings, the claim will be denied.
    • Facility would rebill the claim with adjustments or appeal if they disagree with findings.
  • Two-step appeal process:
    • Level 1: Reconsideration within 180 days from the initial closure date with Optum
    • Level 2: Appeal within 60 days from the reconsideration closure date with Optum

Input requested

As per the Contract Administration Process — part of the Participating Hospital Agreement that went into effect July 1, 2021 — we allow non-binding input from participating facilities about such proposals.

Input from facilities is requested by July 31, 2023. Send any input you may have to Erin Redman at ERedman@bcbsm.com.

After input is received, Blue Cross has 30 calendar days to respond to input. 

No portion of this publication may be copied without the express written permission of Blue Cross Blue Shield of Michigan, except that BCBSM participating health care providers may make copies for their personal use. In no event may any portion of this publication be copied or reprinted and used for commercial purposes by any party other than BCBSM.

*CPT codes, descriptions and two-digit numeric modifiers only are copyright 2022 American Medical Association. All rights reserved.
Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and
independent licensees of the Blue Cross and Blue Shield Association.