Crucial Role of DRG Validation: A Physician Advisor’s Perspective

Learn why DRG validation is essential for accurate reimbursement, reducing denials, ensuring compliance, and improving patient care from a Physician Advisor's perspective.

Doctors in boardroom having meeting about DRG validation

By Hassan Rao, MD, CCS, CPC


As a Physician Advisor, I’ve seen firsthand how critical a robust Diagnosis-Related Group (DRG) validation process is to hospitals’ financial and operational health. In an environment where accurate documentation and coding directly impacts revenue, compliance, and the quality of patient care, establishing a well-defined process for DRG validation is not just an option—it’s essential.

Why DRG Validation Matters to Physicians
  • Accurate Reimbursement: As physicians, we know that the complexity of our patient’s conditions is only sometimes fully captured in the initial coding. Additionally, hospitals can lose substantial revenue when documentation doesn’t reflect the actual severity of illness.
  • Reducing Denials: Denied claims place a significant administrative burden on hospitals and clinicians. Validating DRGs ensures that the documented and coded are clinically valid and aligned with coding guidelines, reducing the risk of costly denials.
  • Compliance and Audit Readiness: Physicians are held to high standards of care and documentation. A robust DRG validation process helps ensure compliance with coding guidelines, reducing the likelihood of audits and penalties related to high-risk DRGs.
  • Quality Measure Performance: Many hospital quality measures such as those within the Center for Medicare and Medicaid Services (CMS) value-based purchasing measures are based entirely on the coded record rather than clinical outcomes. However, this discordance can result in low quality measure performance if the coded record is not an accurate and complete picture of the patient’s conditions and course. 
The Power of Collaboration
  • CDI Specialists: With their clinical expertise, CDI teams help ensure documentation accuracy and clinical validity. They often identify documentation gaps that can be corrected before coding occurs.
  • Coding Experts: Coding professionals ensure the codes applied are accurate and in line with current regulations. They bridge the gap between clinical documentation and the billing process, ensuring that the hospital is reimbursed appropriately. 
  • Physician Advisors: Provide additional clinical insight, and a unique perspective needed to ensure that the DRGs accurately reflect the patient’s clinical condition. Our involvement often helps resolve clinical documentation discrepancies, improve queries, and provide necessary education to achieve more accurate coding and improved compliance.

CDIs and coders review cases concurrently, but an additional second-level review may be valuable for certain DRGs. Analogous to clinical workflows, redundancy through collaborative efforts—such as two nurses verifying a high-risk medication dose—helps reduce clinical errors. Although multiple checks within CDI and coding are not always feasible, applying this concept can reduce revenue leakage and improve compliance by ensuring that the coding and documentation in certain cases are accurately reflected in the claim codes

Our Results at Brundage Group

At Brundage Group, I’ve been proud to be a part of a team of CDI, coding professionals and Physician Advisors that have delivered exceptional results through our DRG Validation Reviews:

Taking Action as a Physician Advisor

For Physician Advisors like me, being actively involved in DRG validation has allowed me to bridge the gap between clinical care and the administrative side of healthcare. Moreover, it’s not just about ensuring the hospital gets paid; it’s about ensuring that the patient’s story is accurately documented and that we, as clinicians, are correctly credited for the complexity of the care we deliver. 

If you’re a Physician Advisor or hospital leader, I strongly urge you to participate actively in DRG validation. The impact goes beyond finances—it ensures compliance, reduces denials, and improves the overall quality of care.

What is Critical Thinking?
Phases of Critical Thinking
Results and Impact of Critical Thinking
The Guidelines
Continues Improvement through Validation
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