Diagnostic Coding Intensity among a Pneumonia Inpatient Cohort Using a Risk-Adjustment Model and Claims Data: A U.S. Population-Based Study

Hospital payments depend on the Medicare Severity Diagnosis-Related Group’s estimated cost and the set of diagnoses identified during inpatient stays. However, over-coding and under-coding diagnoses can occur for different reasons, leading to financial and clinical consequences. We provide a novel approach to measure diagnostic coding intensity, built on commonly available administrative claims data, and demonstrated through a 2019 pneumonia acute inpatient cohort (N = 182,666). A Poisson additive model (PAM) is proposed to model risk-adjusted additional coded diagnoses. Excess coding intensity per patient visit was estimated as the difference between the observed and PAM-based expected counts of secondary diagnoses upon risk adjustment by patient-level characteristics. Incidence rate ratios were extracted for patient-level characteristics and further adjustments were explored by facility-level characteristics to account for facility and geographical differences. Facility-level factors contribute substantially to explain the remaining variability in excess diagnostic coding, even upon adjusting for patient-level risk factors. This approach can provide hospitals and stakeholders with a tool to identify outlying facilities that may experience substantial differences in processes and procedures compared to peers or general industry standards. The approach does not rely on the availability of clinical information or disease-specific markers, is generalizable to other patient cohorts, and can be expanded to use other sources of information, when available.