20,000 Inpatient Reviews Reveal Coding Opportunities Beyond DRGs

A review of 20,805 inpatient encounters found that coding opportunities frequently exist even when the DRG is correct. Reviewers identified more than 21,700 diagnosis and procedure coding recommendations, with over half involving missing codes that should have been reported. The largest financial opportunities were tied to Principal Diagnosis selection and ICD-10-PCS procedure coding, generating approximately $1.71 million and $1.20 million in impact, respectively. The findings demonstrate that hospitals should look beyond DRG accuracy and routinely evaluate diagnosis coding, procedure coding, and clinical documentation to improve revenue integrity, Case Mix Index (CMI), Severity of Illness (SOI), Risk of Mortality (ROM), and quality reporting.

Many hospitals measure coding quality by asking one question:

Was the DRG correct?

While DRG accuracy is important, our review of more than 20,000 inpatient records demonstrates that it tells only part of the story.

After reviewing 20,805 inpatient encounters and more than 236,000 diagnosis and procedure codes, we discovered thousands of clinically significant coding opportunities—even when reimbursement appeared appropriate.

The data revealed an important lesson for hospital leaders: some of the largest opportunities were not tied to CC/MCC capture alone. Principal Diagnosis selection and ICD-10-PCS procedure coding generated substantial financial impact, reinforcing the need to look beyond traditional coding accuracy metrics.

The Numbers Tell the Story

Our review included:

• 20,805 inpatient encounters
• 220,000+ diagnosis codes reviewed
• 16,000+ ICD-10-PCS procedure codes reviewed
• 18,734 DRGs evaluated
• 2,779 DRGs requiring recommendations

Reviewers identified:

• 21,742 diagnosis and procedure coding recommendations
• 11,392 missing codes that should have been reported (52.4%)
• 4,180 codes that should have been removed (19.2%)
• More than 6,100 codes requiring revision for greater specificity or accuracy (28.4%)

Overall ICD-10 coding accuracy was approximately 91%.

At first glance, a 91% accuracy rate sounds excellent.

But in a high-volume hospital, that remaining 9% represents thousands of opportunities to improve reimbursement integrity, strengthen quality reporting, and more accurately reflect patient complexity.

One additional finding is particularly noteworthy. More than half of all coding recommendations involved adding clinically supported codes that were not originally captured. This suggests the predominant issue was not incorrect coding—it was incomplete coding.

In other words, the greatest opportunity was ensuring that diagnoses and procedures documented in the medical record were fully captured in the coded data.

This finding reinforces the importance of both comprehensive diagnosis coding and accurate ICD-10-PCS procedure coding, particularly in surgical service lines where coding decisions can significantly influence reimbursement, case mix, and quality reporting.

Looking Beyond DRG Accuracy

DRG accuracy remains an important quality measure, but it does not tell the entire story.

A medical record can group to the correct DRG while still containing missed diagnoses, incomplete procedure coding, inaccurate principal diagnosis selection, or coding that fails to fully capture the patient's clinical complexity.

When organizations focus solely on DRG outcomes, they may overlook coding opportunities that affect:

• Case Mix Index (CMI)
• Severity of Illness (SOI)
• Risk of Mortality (ROM)
• Quality reporting metrics
• Benchmarking performance
• Revenue integrity
• Clinical data accuracy

The true value of coding quality extends far beyond a DRG assignment.

The Hidden Opportunity: Principal Diagnosis and ICD-10-PCS Coding

One of the most significant findings from this review was where the financial opportunities originated.

When many organizations think about inpatient coding improvement, the conversation often centers around CC/MCC capture and secondary diagnoses.

While those areas remain important, our data revealed that Principal Diagnosis selection generated approximately $1.71 million in financial impact, while ICD-10-PCS procedure coding accounted for another $1.20 million.

Together, these categories represented some of the most significant opportunities identified during the review.

This finding is particularly important because procedure coding often receives less attention than diagnosis coding.

Yet ICD-10-PCS drives many of the highest-weighted surgical DRGs, where even small coding inaccuracies can significantly affect reimbursement, case mix, and quality reporting.

Accurate PCS coding requires precise assignment of:

• Root operations
• Body part values
• Device values
• Approaches
• Qualifiers

A missed device, incorrect root operation, or inaccurate procedure assignment can alter DRG assignment and affect how the care provided is represented in the coded record.

For hospitals with high surgical volumes, these opportunities become even more significant.

Organizations that focus primarily on diagnosis coding may be overlooking substantial reimbursement, compliance, and reporting opportunities tied directly to procedure coding.

The data reinforces the value of including ICD-10-PCS reviews as a routine component of any inpatient coding quality program.

Small Changes Create Meaningful Results

One of the most interesting findings was not simply the number of recommendations—it was the measurable impact those recommendations produced.

Following coding recommendations:

These may appear to be modest changes.

However, across thousands of inpatient encounters, incremental improvements in these metrics can significantly influence reimbursement, benchmarking, quality reporting, and organizational performance.

Accurate coding is ultimately about ensuring the patient's true clinical complexity is represented in the data used for decision-making across the organization.

Revenue Integrity Works Both Ways

Coding reviews are often viewed through the lens of revenue recovery.

However, the data demonstrates that coding quality programs also play a critical compliance role.

Reviewers identified:

• Approximately $9.1 million in underpayments
• Approximately $4.47 million in overpayments

The net financial impact exceeded $4.6 million.

This balanced outcome highlights an important principle of revenue integrity: the goal is not revenue maximization.

The goal is accurate reimbursement based on accurate coding.

Strong coding review programs help organizations identify both missed reimbursement opportunities and potential compliance risks before they become larger issues.

Strong Performance Where It Matters

The review also highlighted several areas of exceptional coding performance.

Patient status accuracy exceeded 98%.

Present on Admission (POA) indicator accuracy approached 100%.

These results demonstrate that many organizations have strong coding foundations in place.

The greatest opportunities often exist not in basic coding processes, but in the more complex areas of principal diagnosis selection, procedure coding, and complete capture of clinically supported conditions.

What Hospital Leaders Should Take Away From This Data

The most important finding from more than 20,000 inpatient record reviews is that coding opportunities often exist even when the DRG appears correct.

While overall coding accuracy exceeded 90%, reviewers identified millions of dollars in reimbursement impact tied to Principal Diagnosis selection, ICD-10-PCS procedure coding, CC/MCC capture, and documentation clarification opportunities.

Perhaps most notably, Principal Diagnosis and PCS coding generated some of the largest financial impacts observed during the review. This reinforces the need for organizations to look beyond traditional accuracy metrics and evaluate the areas that most directly influence reimbursement, case mix, and quality outcomes.

Hospitals that focus only on DRG accuracy may miss important opportunities to improve financial performance, strengthen data integrity, and ensure the medical record fully reflects the care delivered.

The goal isn't simply to code correctly.

It's to ensure every patient's complexity, every procedure performed, and every resource utilized is accurately represented in the coded record.

FAQ

For more than 30 years, HIA has been the leading provider of compliance audits, coding support services and clinical documentation audit services for hospitals, ambulatory surgery centers, physician groups and other healthcare entities. HIA offers PRN support as well as total outsource support.

The information contained in this coding advice is valid at the time of posting. Viewers are encouraged to research subsequent official guidance in the areas associated with the topic as they can change rapidly.