Case Study Summary: Following a vendor no-findings chart view, Penstock conducted a second-look chart review of the medical record and identified three unsupported ICD-10 diagnosis codes that were not supported by clinical documentation. Removing these diagnoses corrected the coding assumptions driving the claim payment and demonstrates how deeper chart review can help health plans identify errors missed in earlier audits and ensure accurate DRG severity and reimbursement.

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Background:

A health plan identified a hospital claim that had already undergone a chart review by a payment integrity vendor. Because the diagnoses reported on the claim significantly increased the payment for the member’s care, the plan engaged Penstock to conduct a second-look chart review of the medical record to independently validate whether those diagnoses were supported by the clinical documentation.

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Challenge:

The challenge was determining whether the diagnoses increasing the health plan’s payment were supported by the patient’s medical record. Because the claim had already undergone an initial chart review by another vendor without findings, Penstock was tasked to reassess the record and confirm whether the diagnoses listed on the claim were supported by the clinical documentation.

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The Discovery:

Penstock reviewed the full medical record, including physician notes, lab results, and supporting documentation. The review found that three ICD-10-CM diagnoses listed on the claim were not supported by the patient’s medical record, even though they increased the severity of the case.

Penstock identified the following issues:

• Device-Related Infection (Principal Diagnosis)
  The claim listed an infection related to a prosthetic device as the main diagnosis. However, the medical record contained no lab results, imaging, or physician documentation confirming an infected device.  

• Gram-Negative Sepsis (Major Complication or Comorbidity)
  The claim included gram-negative sepsis. While an early lab note referenced gram-negative rods, the final blood cultures showed no bacterial growth, and the record did not document the type of organ dysfunction typically required to support a diagnosis of sepsis.

• End-Stage Renal Disease (Major Complication or Comorbidity)
  The claim also listed end-stage renal disease (ESRD). The medical record referenced a past period of dialysis related to a severe episode of acute kidney injury, but there was no documentation indicating the patient currently had ESRD. Because ESRD is a permanent condition that is always reportable when documented, confirming its presence requires clear clinical documentation. In this case, the diagnosis was not supported by the medical record and should not have been coded for the encounter.

Based on Penstock’s chart review, all three diagnoses were determined to be unsupported for the episode of care.

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Results

Based on Penstock’s second-look chart review, all three unsupported diagnoses were removed from the claim. Removing these diagnoses reduced the clinical severity assigned to the case and corrected the DRG classification, ensuring that reimbursement accurately reflected the patient’s documented condition and episode of care.

This case highlights the value of second-look chart review (no prior findings), particularly when an initial review has already taken place. By examining the full medical record with a deep clinical lens, Penstock was able to identify documentation gaps that were not identified in the earlier review.

Across Penstock’s post-pay chart review programs, this level of detailed clinical validation consistently drives meaningful results for health plans, including:

• 28–34% savings rates across post-pay chart review programs

• $1,420–$2,260 average savings per chart review

• More than $2.5M–$6.3M in annual savings identified across active client programs

These outcomes demonstrate how deeper medical record review and DRG validation can uncover payment inaccuracies that standard audit processes may miss.

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