Medicare Code Editor (MCE)

A. - General

The MCE edits claims to detect incorrect billing data. In determining the appropriate MSDRG for a Medicare patient, the age, sex, discharge status, principal diagnosis, secondary diagnosis, and procedures performed must be reported accurately to the Grouper program. The logic of the Grouper software assumes that this information is accurate and the Grouper does not make any attempt to edit the data for accuracy. Only where extreme inconsistencies occur in the patient information will a patient not be assigned to a MSDRG. Therefore, the MCE is used to improve the quality of information given to Grouper.

The MCE addresses three basic types of edits which will support the MS-DRG assignment: 

• Code Edits - Examines a record for the correct use of diagnosis and procedure codes. They include basic consistency checks on the interrelationship among a patient's age, sex, and diagnoses and procedures. 

• Coverage Edits - Examines the type of patient and procedures performed to determine if the services where covered. 

• Clinical Edits - Examines the clinical consistency of the diagnostic and procedural information on the medical claim to determine if they are clinically reasonable and, therefore, should be paid.

B. - Implementation Requirements

The A/B MAC (A) processes all inpatient Part A discharge/transfer bills for both PPS and non-PPS facilities (including waiver States, long-term care hospitals, and excluded units) through the MCE. It processes claims that have been reviewed by the QIO prior to billing through the MCE only for edit types 1, 2, 3, 4, 7, and 12. It does not process the following kinds of bills through the MCE:

• Where no Medicare payment is due (amounts reported by value codes 12, 13, 14, 15, or 16 equal or exceed charges). 

• Where no Medicare payment is being made. Where partial payment is made, editing is required. 

• Where QIO reviewed prior to billing (condition code C1 or C3). It may process these exceptions through the program and ignore development codes or bypass the program.

The MCE software contains multiple versions. The version of the MCE accessed by the program depends upon the patient discharge date entered on the claim.

C. - Bill System/MCE Interface

The A/B MAC (A) installs the MCE online, if possible, so that prepayment edit requirements identified in subsection C can be directed to hospitals without clerical handling.

The MCE needs the following data elements to analyze the bill: 

• Age; 

• Sex; 

• Discharge status;

• Diagnosis (25 maximum - principal diagnosis and up to 24 additional diagnoses); 

• Procedures (25 maximum); and 

• Discharge date. The MCE provides the A/B MAC (A) an analysis of "errors" on the bill as described in subsection D. The A/B MAC (A) develops its own interface program to provide data to MCE and receive data from it. 

The MCE Installation Manual describes the installation and operation of the program, including data base formats and locations.