clinical the documentation improvement specialist’sthe clinical documentation improvement...

ClinicalDocumentationImprovementSpecialist’sHandbook

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MarionKruse,MBA,RN|HeatherTaillon,RHIA

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TheClinicalDocumentationImprovementSpecialist’s

MarionKruse,MBA,RN|HeatherTaillon,RHIA

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The Clinical Documentation Improvement Specialist’s Handbook, Second Edition is published by HCPro, Inc.

Copyright © 2011 HCPro, Inc.

All rights reserved. Printed in the United States of America. 5 4 3 2 1

Download the additional materials of this book with the purchase of this book.

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American Medical Association.

Marion Kruse, MBA, RN, Author

Heather Taillon, RHIA, Author

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iii© 2011 HCPro, Inc.The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

About the Authors ............................................................................................ vii

Introduction ...................................................................................................... viii

Chapter 1: CDI and the Healthcare System ..................................................... 1

The IPPS ..........................................................................................................................................................................................................2

Regulatory environment ...................................................................................................................................................................... 12

Improved documentation for improved data ..........................................................................................................................20

Chapter 2: Application of Coding Guidelines ................................................. 23

The transition to ICD-10 .....................................................................................................................................................................24

ICD-9 guidelines .......................................................................................................................................................................................32

Multiple reasons for admission .........................................................................................................................................................36

Sequencing opportunities ...................................................................................................................................................................37

Present on admission ...........................................................................................................................................................................40

Chapter 3: Building the CDI Program ............................................................ 45

The case for CDI .....................................................................................................................................................................................45

Expectations for ancillary staff .........................................................................................................................................................46

The program mission .............................................................................................................................................................................52

Taskforce creation ...................................................................................................................................................................................56

Contents

iv © 2011 HCPro, Inc. The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

CONTENTS

Chapter 4: The Multidisciplinary Team .......................................................... 59

Organizational structure......................................................................................................................................................................59

The role of the CDI manager ........................................................................................................................................................... 61

The role of the CDI specialist ...........................................................................................................................................................65

Interview techniques ..............................................................................................................................................................................69

Candidate credentials ............................................................................................................................................................................70

Candidate training ................................................................................................................................................................................... 71

Chapter 5: Providing Physician Education ...................................................... 75

Support from the start .........................................................................................................................................................................75

Documentation pocket cards ...........................................................................................................................................................79

Ongoing opportunities ......................................................................................................................................................................... 81

Establishing appropriate rapport ....................................................................................................................................................85

Initial interactions .....................................................................................................................................................................................86

Communication scenarios ..................................................................................................................................................................88

Chapter 6: Compliant Physician Queries ........................................................ 93

Query guidance ........................................................................................................................................................................................93

AHIMA instructions ...............................................................................................................................................................................94

Query forms and process ...................................................................................................................................................................97

Leading vs. nonleading queries ...................................................................................................................................................... 101

Clinical indicators .................................................................................................................................................................................. 104

Query retention .................................................................................................................................................................................... 106

Verbal vs. written queries ................................................................................................................................................................ 108

The electronic query process .........................................................................................................................................................110

Chapter 7: Monitoring the CDI Program .......................................................113

Management measurement tasks .................................................................................................................................................115

Coder/CDI specialist productivity ................................................................................................................................................ 116

Physician response rates ................................................................................................................................................................... 120

v© 2011 HCPro, Inc.The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

CONTENTS

CDI specialist/coder concurrence ............................................................................................................................................... 122

Overall program effectiveness ...................................................................................................................................................... 123

Appendix .......................................................................................................... 129

Sample CDI specialist job description ....................................................................................................................................... 130

Sample CDI specialist job responsibilities ................................................................................................................................131

Sample CDI manager job description ........................................................................................................................................132

Sample CDI manager job responsibilities ................................................................................................................................ 134

Sample CDI specialist orientation checklist ............................................................................................................................135

Sample CDI specialist performance evaluation ....................................................................................................................137

Sample physician documentation improvement card ....................................................................................................... 140

Query guidelines ....................................................................................................................................................................................141

Sample CDI compliance procedures ..........................................................................................................................................147

Sample query process ........................................................................................................................................................................ 149

Sample query audit tracking form ................................................................................................................................................152

Sample documentation clarification request ..........................................................................................................................153

Sample documentation query form ........................................................................................................................................... 154

List of CDI-related websites........................................................................................................................................................... 155

vii© 2011 HCPro, Inc.The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

About the Authors

Marion Kruse, MBA, RN

Marion Kruse, MBA, RN, is a director in the FTI Healthcare group of FTI’s Corporate

Finance practice based in Atlanta. Kruse is a recognized expert in Medicare regulations and

provides education, project management, and process improvement. Her expertise is in the

various severity-adjusted DRG systems, and she has implemented CDI programs for small and

large hospital systems.

Kruse has a diverse healthcare background with experience in a wide range of clinical and

revenue cycle areas. In addition to her experience as a bedside, recovery room nurse and utiliza-

tion case manager, she has knowledge of medical records, coding, charge analysis, patient

accounts, and billing compliance.

Heather Taillon, RHIA

Heather Taillon, RHIA, is manager of coding compliance at St. Francis Hospital in Beech

Grove, IN, and has been for the past five years. Prior to that, she held various coding and

supervisory roles in health information management and volunteered to serve as a founding

member of the Association of Clinical Documentation Improvement Specialists’ Advisory

Board. She has also served on the Indiana Health Information Management Association.

viii © 2011 HCPro, Inc. The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

Introduction

A lot has happened since the first edition of The Clinical Documentation Improvement Specialist’s

Handbook published in April 2008. At the time, there were no recovery audit contractors

(RACs). The RAC demonstration project did not begin until 2009. Now, there have been four

RAC conduct audits—from automated reviews to medical necessity—in all 50 states. As of the

printing of The Clinical Documentation Improvement Specialist’s Handbook, Second Edition, the

Centers for Medicare & Medicaid Services (CMS) set a target date for Medicaid RAC imple-

mentation for April 2011.

When The Clinical Documentation Improvement Specialist’s Handbook first published, the Asso-

ciation of Clinical Documentation Improvement Specialists (ACDIS) itself was a mere toddler.

In the intervening years, ACDIS has brought together nearly 2,000 clinical documentation

improvement (CDI) professionals under its banner. ACDIS has grown as the industry has

grown. Estimates put the number of practicing CDI specialists at 3,000 to 4,000 nationwide.

Through these professionals’ collaborative efforts a host of industry best practices have been

revealed, including new measurements for CDI program success and the advancement of CDI

programs into quality and core measure data collection and RAC defense and preparation.

At the time, the American Health Information Management Association (AHIMA) had just

started revamping its 2001 practice brief “Developing a Physician Query Process.” Comments

from ACDIS on AHIMA’s efforts appear in the appendix of that early edition. After receiving

a torrent of additional comments AHIMA published “Managing an Effective Query Process,”

in October 2008. In 2010, AHIMA published two additional documents: “The Clinical

ix© 2011 HCPro, Inc.The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

INTRODUCTION

Documenta tion Improvement Toolkit” and the “Guidance for Clinical Documentation Improve-

ment Programs.”

In 2008, the implementation of the International Classification of Diseases, 10th Revision (ICD-10)

in the United States seemed like a pipe dream. But in January 2009, the Department of Health

and Human Services fixed the implementation date at October 1, 2013. ICD-10-CM contains

roughly 70,000 diagnosis codes compared to approximately 14,000 in ICD-9-CM, and approxi-

mately 72,000 ICD-10-PCS (procedure) codes, compared to the 4,000 codes in ICD-9-CM,

which will require ever greater documentation specificity.

The Clinical Documentation Improvement Specialist’s Handbook, Second Edition, incorporates all

these recent developments with the same quality information contained in the first edition. It

reviews the elements needed to implement a CDI program as well as what it takes to maintain a

successful program well after implementation. This book is designed to serve as a blueprint for

the leadership team developing the CDI program and as a handbook guiding those CDI special-

ists just embarking on their documentation improvement careers.

As authors and documentation specialists working in the field, it is our hope The Clinical

Documentation Improvement Specialist’s Handbook, Second Edition, will help guide decisions at

your facility regarding how to structure the team, serve as a reference regarding best practice,

and impart insight as to understanding CDI team dynamics. We believe this volume will help

you clarify key coding guidelines and reimbursement concepts, identify b enchmarking tools, and

review how to ensure program compliance.

As facilities begin to feel the effects of initiatives such as pay for performance and value-based

purchasing, the need for concise, complete, and accurate documentation becomes ever more vital.

The unique and very powerful role of the CDI team is to ensure that coded data accurately reflects

the clinical resources used and the severity of illness of the patient population being served.

All of the items included in the appendix of this book, as well as any charts or graphics located

in the text of the book are available online at: www.hcpro.com/downloads/8876.

DownloaD your MaTErIals now

Thank you for purchasing The Clinical Documentation Improvement Specialist’s Handbook, Second Edition. In addition

to the content included in this printed copy, your purchase includes a number of additional download able materials

available at the website listed below. All the materials in the Appendix are also available on this special Web page to

enable you to download and customize them for your own facility’s use. If you do so, we kindly ask that you source your

adapted version to the Association of Clinical Documentation Improvement Specialists (ACDIS).

This Web page also includes three special benchmarking reports typically available only to ACDIS members. They are:

• The 2010 CDI Preparation for ICD-10 Implementation Survey

• The 2010 CDI Program Benchmarking Survey

• The 2009 ACDIS Salary Survey

We have also included the raw data from the 2010 Physician Query Benchmarking Report in an Excel® file complete with

individual text responses to help you evaluate your program’s query practices against those of other programs

throughout the industry. Additionally, we have included a .pdf of the 2010 version of the ICD-10-CM Official Guidelines

for Coding and Reporting.

We hope you find these bonus materials useful, and again, thank you for you purchase of The Clinical Documentation

Improvement Specialist’s Handbook, Second Edition.

Thank you for purchasing this product!

Website available with the purchase of this product.

1© 2011 HCPro, Inc.The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

There are a number of reasons to implement a comprehensive clinical documentation improve

ment (CDI) program—appropriate assessment of healthcare costs, government initiatives such

as electronic medical records and alternative reimbursement methods, accountability for quality

of care, as well as improvement in healthcare data tracking and assessment—just to name a few.

When integrating a CDI team into the facility’s clinical and revenue cycle departments, start by

ensuring all team members have a basic awareness of the impetus behind this industry trend.

Increased costs

In healthcare, the battle over budgets is waged between two main factions: the government, which

wants to save as much taxpayer money as possible to preserve the Medicare trust fund and health

care facilities, which hope to earn enough to cover the increasing costs of the care they provide.

In 2007, healthcare expenditures in the United States were 16.2% of the U.S. domestic gross

national product (GNP)—a percentage that rises every year as the population grows older.1

Although 46 million Americans reportedly received Medicare in 2010, that number is expected to

rise to 78 million by 2030 according to a Kaiser Family Foundation report.2 Actuaries at the

Centers for Medicare & Medicaid Services (CMS) project that in 2017, government healthcare

funding programs will be bankrupt. With unsustainable costs, the search for ways to maintain

CHAPTER 1

CDI and the Healthcare System

CHAPTER 1

2 © 2011 HCPro, Inc. The Clinical Documentation Improvement Specialist’s Handbook, Second Edition

quality and accessibility while constraining expenses continues.3 Figure 1.1 illustrates healthcare

expenses compared to national income or GNP.

The IPPS

To understand how CDI affects hospital reimbursement, one must first understand how the

federal government, among the largest payers for healthcare services, compensates hospitals for

services. In 1965, Medicare reimbursed healthcare based on actual charges. In October 1983,

the federal government created the inpatient prospective payment system (IPPS), which changed

the payment method to one based on fixed rates. The change, policy makers hoped, would

influence hospital behavior and encourage more costefficient management of medical care.

FIGURE

1.1 HEAlTHCARE CoSTS ComPARED To nATIonAl InComE

Source: Centers for Medicare & Medicaid Services, Office of the Actuary.

CDI AnD THE HEAlTHCARE SySTEm


DRGs

Under IPPS, CMS categorized each patient’s care into a diagnosisrelated group (DRG). The

original DRG system, developed by Robert Barclay Fetter and John Devereaux Thompson at

Yale University with the support of CMS, aimed to categorize “like” patients with theoretically

“like” treatment/charges based on the patient’s principal diagnosis and up to eight secondary

diagnoses. Age and discharge status also influenced categorization of the approximately 538

DRGs. Each DRG was designed to contain International Classification of Diseases, 9th Revision,

Clinical Modification (ICD9CM) codes that are clinically coherent and have similar hospital

resource consumption and length of stay (LOS) patterns.

Certain conditions thought to increase the complexity of the stay were classified as complication

and comorbidities (CCs). Yale University determined that to qualify as a CC, the diagnosis had

to increase the patient’s length of stay by one day in 75% of the cases reviewed. CMS adopted

Yale University’s original CC list, which remains fairly unchanged since 1984.

DRGs were further delineated into one of 27 major diagnostic categories (MDCs), 25 of which are

grouped by body system and two contain diagnoses and procedures associated with all DRGs.

Basically, a hospital receives one DRG payment (based on a principal diagnosis such as congestive

heart failure [CHF] exacerbation or a procedure such as a total knee replacement for a patient’s

stay whether the patient was in the hospital for two days or 50, and whether a few simple tests were

performed or multiple complex tests were performed). At the time, CMS believed hospitals and

physicians would have an incentive under this system to better control LOS and cost per case.

APR-DRGs

Since the early 1980s, providers requested an expansion of the payment system to more accu

rately capture resource consumption, costs, and payments. This is why some providers have used

the AllPatientRefined DRGs (APRDRGs) developed by 3M. APRDRGs adjust for severity of

illness (SOI) and risk of mortality (ROM). It expands CMS’ original DRGs by classifying acuity

according to the following scale:

1. Minor

2. Moderate

CHAPTER 1


3. Major

4. Extreme

The SOI/ROM relate to distinct patient attributes. The SOI relates to the extent of physiologic

decompensation or organ system loss of function that the patient experiences. The ROM relates

to the patient’s likelihood of dying. Both the SOI and ROM are separately assigned a numeric

qualifier determined independently by the software program after all diagnosis codes have been

assigned. The grouping of the codes determines the SOI/ROM scores.

The APRDRG system classifies patients with secondary diagnoses and CCs that involve

multiple body systems. This classification allows hospitals and medical communities to qualify

and quantify the clinical acuity of different patient populations. Two hospitals may have the

same volume of a patient type that falls into a particular DRG, but those hospitals may also have

vastly different SOI, ROM, and APRDRGs.

How documentation affects APR-DRG assignment

Example 1

A patient undergoes a coronary artery bypass graft at a physician-owned surgical center. The 52-year-old patient

has a history of coronary artery disease and hyperlipidemia. He plays tennis three times per week and has a

normal body mass index (BMI). This scenario would map to APR-DRG 236, Coronary artery bypass graft

with out catheterization without MCC, with a SOI score of 1 (minor) and a ROM score of 1 (minor).

Example 2

A 77-year-old patient undergoes a coronary artery bypass graft at an academic medical center. The patient

has coronary artery disease, hyperlipidemia, as well as uncontrolled diabetes type I (absence of beta cells). The

patient is also morbidly obese with a BMI of 46.9. In addition, he has chronic renal insufficiency (stage three)

and is on maintenance medications for his atrial fibrillation. He also has chronic obstructive pulmonary disease

(COPD). This scenario would also map to APR-DRG 236, Coronary artery bypass graft without catheterization

without MCC, but it would have a SOI score of 3 (major) and a ROM score of 2 (moderate).

Although each scenario shares the same DRG, the second patient has a much higher acuity.



Medicare Severity DRGs

The DRG system of the 1980s did not provide varying reimbursement levels for more severe

conditions beyond the consideration for CC cases. So, in 2007, CMS developed a new method to

capture the resources required to treat more severely ill patients and better capture SOI—the

Medicare Severity DRG (MSDRG) model.

The MSDRG system is founded on two key points:

1. Complexity:Hospitalresourceconsumptionthatisnotrelatedtosecondarydiagnoses

(e.g.,thecostofthedevice)

2. Monotonicity:Atrendthatshouldoccurbetweenseveritylevelandaveragecostsforcertain

DRGs(i.e.,asseveritylevelrises,thecostofcarealsorises)

CMS identified several reasons for making the transition to MSDRGs. The agency said the new

system would help it to:

• Compare facilities across a wide range of resources and outcome measures

• Evaluate differences in inpatient mortality rates

• Implement and support critical pathways

• Identify continuous quality improvement

• Internally manage data

MSDRGs also helped to eliminate a perceived bias contained in the original DRG program.

Critics claimed the original structure slighted the sickest and most resourceintensive medical

patients while rewarding facilities that performed only highcost and, therefore, wellreimbursed

surgical procedures. “Under the old DRG system (with payments based on broad averages),

incentives could lead hospitals to cherrypick—the practice of treating only the healthiest and

CHAPTER 1


most profitable patients,” said CMS Acting Deputy Administrator Herb Kuhn in a press release

issued in 2007. Under the latest structure, payments “will be more accurate and [will] better

reflect the severity of the patient’s condition.” 4

The new system increased the number of DRGs to nearly 750. It also identified three levels of

SOI for specific diagnostic categories:

1. MS-DRGwithMCC:Majorcomplicationorcomorbidity,thehighestSOIindicator

2. MS-DRGwithCC:Complicationorcomorbidity,alesserlevelofSOI

3. MS-DRGwithoutCC/MCC:Nocomplicationorcomorbidity,thelowestlevelofSOIand

resourceconsumption

While some DRGs are triads (as shown previously) others are bifurcated (MSDRG with

MCC or without MCC and MSDRG with CC/MCC or without CC/MCC). Using statistical

methodology, CMS annually reviews the MSDRGs to ensure they accurately reflect similar

resource consumption and length of stay patterns.

For example, in the 2011 IPPS update, CMS noted one DRG encompassed the payment for a

bone marrow transplant procedure but there was approximately a $27,000 difference in the cost

of an autologous versus allogenic bone marrow transplant. Therefore, they separated these

procedures into two MSDRGs to provide more accurate reimbursement for each procedure.

CMS calls for the MSDRG system to be budget neutral. The agency uses cost data submitted

two years prior to make budget predictions for the next fiscal year.

In most years, the government adds a little more money to the pot, officially known as increasing

the standardized amount. CMS then adjusts the payment rate for each MSDRG—officially

known as scaling—to ensure budget neutrality and appropriate reimbursement when each

MSDRG is weighted against the overall system. CMS publishes annual updates and changes in

the Federal Register around August 1st each year. The changes take effect with discharges on



October 1st or after. CMS publishes the list of fiscal year (FY) MSDRGs as Table 5 in its

annual IPPS final rule (www.cms.hhs.gov/AcuteInpatientPPS/10FR/list.asp).

When CMS implemented MSDRGs, it anticipated facilities would rush to improve clinical

documentation in order to capture SOI and thereby improve reimbursement. Consequently, it

also incorporated a documentation and coding adjustment (DCA), which reduced the FY 2008

reimbursement rate by 0.6% and the FY 2009 base rate by 0.9%.

Despite strong opposition from the hospital community in 2010, CMS finalized its FY 2011

DCA by decreasing the rate by 2.9%. Based on statistical analysis, CMS determined that

increased reimbursement during the first years of MSDRGs was due to better documentation

and coding, not due to patients being sicker and requiring more resources. CMS determined that

to recoup the reimbursement it spent due solely to facilities’ improved documentation efforts a

negative 5.8% adjustment is necessary by 2012. The negative 2.9% adjustment for FY 2011 is

onehalf of the total amount.5

Let us take a closer look at how reimbursement actually works in the MSDRG system.

Essen tially, each MSDRG is assigned a relative weight based on the scaling process discussed

previously. Then each hospital facility is assigned a blended rate. The blended rate is determined

by the following factors:

• The standardized amount for the fiscal year

• The geographic location of the hospital

• The hospital status (urban/rural)

• Local labor costs

• Disproportionate share and indirect medical education adjustments

The relative weight is multiplied by the hospital’s blended rate to determine the amount of

reimbursement a hospital would receive for that particular admission (Blended Rate x Relative

CHAPTER 1


Weight = Reimbursement). So, if Hospital A had a blended rate of $6,000 and a case with a

MSDRG with a relative weight of 01.0000, the reimbursement of the case would be $6,000.

Given that hospitals were faced with a new DRG methodology and CMS’ acrosstheboard

imposition of its DCA, facilities were motivated (and in fact encouraged by the American

Health Information Management Association [AHIMA] and other professional organizations)

to partner with physicians to improve the definition and documentation of conditions using

official ICD9CM language (because DRGs are assigned based on ICD9CM diagnoses,

procedures, age, sex, discharge status, and the presence of CCs/MCCs).

ICD-9-CM

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires that pro

viders who transfer healthcare information for specific purposes use the same healthcare trans

actions, code sets, and identifiers. The Healthcare Common Procedure Coding System (HCPCS),

the current procedural terminology (CPT), the International Classification of Diseases (ICD)

(Vol. 1–3), and the National Drug Code are required when reporting clinical information. The

ICD9CM is used to code and classify morbidity data from hospital inpatient and outpatient

records, physician offices, and most National Center for Health Statistics (NCHS) surveys. The

ICD-9-CM Official Guidelines for Coding and Reporting are the official rules for ICD9CM and

are approved by the four cooperating parties: the American Hospital Association, the AHIMA,

the CMS (formerly known as the Health Care Financing Administra tion), and the National

Center for Health Statistics (authorized by U.S. government).



Six steps to hospital reimbursement calculations

Determining a hospital’s individual base rate or reimbursement is a complicated process best left for the hospital

chief financial officer (CFO). However, a quick description may better illustrate how the IPPS works. CMS

describes the following steps on its website, www.cms.hhs.gov/AcuteInpatientPPS.

Step 1

Hospitals submit a bill to their Medicare fiscal intermediary (FI) for each Medicare patient they treat. The FI is a

private insurance company that contracts with Medicare to carry out the operational functions of the Medicare

program. Based on the information provided on the hospital’s bill, the FI categorizes each case into an MS-DRG,

which determines how much payment the hospital receives.

Step 2

The base payment rate is a standardized amount that is divided into a labor-related and nonlabor-related share.

CMS adjusts the labor-related share by the wage index applicable to the area where the hospital is located. The

nonlabor share is adjusted by a cost-of-living factor. This base payment rate is multiplied by the MS-DRG’s RW.

Step 3

If CMS recognizes the hospital as serving a disproportionate share of low-income patients, the facility would

receive a percentage add-on adjustment for each case paid through the IPPS. This percentage varies depending

on several factors, including the percentage of low-income patients served. CMS applies the adjustment to the

MS-DRG base payment rate, plus any outlier payments received.

Step 4

CMS pays an add-on amount to approved teaching hospitals for indirect medical education. This additional

payment varies depending on the ratio of residents to beds under the IPPS for operating costs, and according

to the ratio of residents to average daily census under the IPPS for capital costs.

Step 5

CMS also provides an additional payment for cases that include technologies that meet the new technology

add-on payment criteria.

Step 6

On occasion, CMS may consider a specific patient’s stay as an abnormal situation. Such patients consume a con-

siderable amount of facility resources. CMS identifies these as outliers and increases payments for such situations

to protect the hospital from large financial losses due to unusually expensive cases. CMS adds all outlier payments

to the base payment rate to determine the final reimbursement payment for the hospitalization.

CHAPTER 1


On January 16, 2009, CMS announced its intent to replace the ICD9CM code sets with the

10th revision, ICD10CM, for diagnosis coding and the ICD10 Procedural Coding System

(PCS) for inpatient hospital procedures. The implementation date for these new codes is set for

October 1, 2013, for all covered entities. (Read more about the importance of coding guidelines

and the ICD10 implementation preparation and impact on CDI in Chapter 2.)

Case-mix index

The casemix index (CMI) is the average (mean) relative weight (RW) and is defined as the sum

of all Medicare discharged patients’ RWs of their final DRG, divided by the number of dis

charged Medicare cases. A low CMI may denote MSDRG assignments that do not adequately

reflect the resources used to treat Medicare patients. This can be interpreted as low quality care

if you have resources, LOS patterns, and outcomes not supported by the CMI. The CMI also

provides a quick reference with which to gauge the hospital’s financial health.

To calculate CMI, choose a time period (e.g., one month) to examine. Within that period, take

all the MSDRGs the hospital billed and add up their RW. Then divide that number by the

total number of MSDRGs. The result is the hospital’s CMI for that month. MSDRGs were

expected to positively affect hospitals with a severe CMI by requiring more complete and specific

information regarding the care physicians provide.

Generally speaking, the financial department monitors CMI, and most CFOs expect the hos

pital’s CMI to be consistent from year to year. The HIM manager or director usually analyzes

CMI data on a regular basis for inconsistencies or trends to identify opportunities for improve

ment of documentation and/or coding accuracy.

A facility’s fortunes may rise and fall based on the CMI. A high CMI means the hospital per

formed bigticket services during a given time period and therefore received more money per

patient. If the hospital’s actual CMI is less than what the finance department predicted, the

hospital may experience a loss in revenue. Even seemingly small changes in CMI can have a large

effect on the hospital’s bottom line.6 For example, if a hospital’s blended rate is $6,000 and

the hospital had 300 Medicare patients for a given month, the case mix was 1.6524. The next

month, the number of cases and the blended rate remain the same but the case mix fell to 1.5277.



The difference in case mix would be 0.1247. For this example, that equates to $224,460 less

reimbursement for the second month.

CDI departments can use CMI like a barometer of change within an organization. If the CMI

drops, it could be a sign of change in surgical or medical volumes, for example. Similarly, if your

hospital’s CMI is lower than other hospitals in your area, it could be a sign that the hospital is

not capturing the CC/MCCs needed to shift the accounting of greater SOI care into higher

weighted DRGs. This may represent an opportunity for CDI staff to either further investigate

cases or provide additional physician education.

The best way to analyze the CMI is to review trends over time. Many factors influence the CMI,

several of which the CDI specialist or coder cannot control. When analyzing the CMI, consider

the following questions:

• Have you noticed any changes in the DRGs that drive the CMI? For example, how have the

percentages of medical versus surgical DRGs changed? Remember a higher percentage of

surgical DRGs translate to a higher CMI. Similarly, changes in the number of tracheostomy

procedures can cause major changes in CMI.

• Have there been adjustments (additions or deletions) to any of the service lines?

• Has your physician or surgeon staff changed recently?

• Is your hospital less likely to perform a certain procedure now that medical technology

has improved?

• Has there been a major shift in the type of cases admitted as inpatients or observation

status patients?

• Has your CC or MCC capture rate dropped below your normal baseline?

• Has your hospital recently employed a new coder?

• Have your CDI staffing levels been consistent?

CHAPTER 1


Regulatory environment

With unsustainable costs, the government continues to search for ways to maintain quality and

accessibility while constraining expenditures. Fraud reduction is a major component of the

government’s attempt to rein in costs.

In 1995, a twoyear demonstration project dubbed Operation Restore Trust joined the U.S.

Department of Health and Human Services, the Office of the Inspector General, CMS, CMS

contractors, and the Department of Justice to address issues of healthcare reimbursement fraud.

The project resulted in 74 criminal convictions and nearly $200 million in fines, recoveries, and

other settlements.7

In 2009, President Barack Obama signed into law the Fraud Enforcement and Recovery Act,

which strengthened preexisting antifraud laws such as the False Claims Act and the Civil

Monetary Penalties Act. The National Healthcare AntiFraud Association estimates that 3%

of total healthcare spending, or $60 billion per year, is lost to fraud.8

Not surprisingly, such results prompted a host of additional healthcare reporting and

reimbursement recovery initiatives including the following:

• PEPP (Payment Error Prevention Program)

• HPMP (Hospital Payment Monitoring Program)

• PEPPER (Program for Evaluating Payment Patterns Electronic Report)

• MAC (Medicare Administrative Carrier)

Recovery Audit Contractors (RACs)

In the Tax Relief and Health Care Act of 2006, Congress required a permanent and national

RAC program to be in place by January 1, 2010, and four contractors (see Figure 1.2 for a map

of RAC regions) were identified.



• Region A: Diversified Collection Services (DCS), www.dcsrac.com (Provider Portal/Issues

Under Review)

• Region B: CGI Federal, http://racb.cgi.com (Issues)

• Region C: Connolly Healthcare, www.connollyhealthcare.com/RAC (Approved Issues)

• Region D: HealthDataInsights (HDI), https://racinfo.healthdatainsights.com (New Issues)

FIGURE

1.2 mAP of RAC ConTRACToRS by REgIon

CHAPTER 1


The goal of the RAC is to identify improper payments made on claims of healthcare services

provided to Medicare beneficiaries. Improper payments may be overpayments or underpay

ments. Overpayments can occur when healthcare providers submit claims that do not meet

Medicare’s coding or medical necessity policies. Underpayments can occur when healthcare

providers submit claims for a simple procedure, but the medical record reveals that a more

complicated procedure was completed.9

The national RAC program is the outgrowth of a successful demonstration program in California,

Florida, New York, Massachusetts, South Carolina, and Arizona. The demonstration resulted

in more than $900 million in overpayments being returned to the Medicare Trust Fund between

2005 and 2008 and nearly $38 million in underpayments being returned to healthcare providers.

CMS reported that during FY 2007 alone, the RAC demonstration collected $357.2 million

in overpayments and repaid $14.3 million in underpayments. Hospitals accounted for approxi

mately 94% of overpayments the RAC collected. These improper payments fell into the follow

ing categories:

• Incorrect coding (42%)

• Medically unnecessary, or insufficient documentation (41%)

• Other (17%)10

For most of 2009, while still in its demonstration phase, the RAC conducted automated reviews,

which included an analysis of clear errors in payment, such as billing twice for a procedure that

could be completed only once (e.g., removing a gallbladder). But beginning in fall 2009, RAC

began complex reviews. These examined medical records potentially improperly paid due to lack

of documentation or improper coding. The RAC must get prior approval from CMS to begin

widespread review of issues. Connolly Healthcare, the RAC for Region C, announced its first

targets—a list of 24 MSDRGs—for complex review in December 2009. And throughout 2010,

the remaining contractors followed suit. In September 2010, CMS released a special edition

MedLearn Matters article reminding hospitals of frequent RAC findings.11



RACs are required to employ staff consisting of nurses, therapists, certified coders, and have

physician oversight by way of a medical director. More details regarding the RAC program are

available on the CMS website (www.cms.gov/RAC/), including the final RAC statement of work

document, which outlines in detail what services the RAC provides for CMS.

RAC medical necessity review concerns

In August 2010, CGI, the RAC for Region B, was the first to post its CMS-approved medical necessity review

targets. Its list included:

• Atherosclerosis w/ MCC MS-DRG 302

• Cardiac Arrhythmia & Conduction Disorders w/ MCC or w/ CC MS-DRG 308 only

• Chest Pain MS-DRG 313

• Chronic Obstructive Pulmonary Disease DRG 88 MS-DRG 190, 191

• Esophagitis, Gastroenteritis & Misc Digestive Disorders w/ MCC DRG 182 M-SDRG 391

• GI Disorders 393 only

• Heart Failure & Shock w/ MCC, w/ CC and w/o CC/MCC DRG 127 MS-DRG 291, 292, 293

• Kidney & Urinary Tract Infections w/ MCC DRG 320 MS-DRG 689

• Musculoskeletal Disorders MS-DRG 551, 552 only

• Nervous System Disorders MS-DRG 056, 057, 069 only

• Nutritional and Metabolic Disorders DRG 296 MS-DRG 640

• Other Circulatory System Diagnoses w/ MCC MS-DRG 314, 315, 316

• Other Vascular Procedures w/ CC, w/o CC/MCC MS-DRG 253

• Percutaneous Cardiovascular Procedures MS-DRG 249 only

• Red Blood Cell Disorders w/ MCC MS-DRG 811

• Renal Failure DRG 316 MS-DRG 682, 683, 684

• Respiratory MS-DRG 192 only

• Syncope & Collapse MS-DRG 312

CHAPTER 1


Complex reviews have a greater impact on the roles and responsibilities of the CDI team. These

reviews target analysis of actual medical records. Since the CDI specialist’s primary role is to

improve the physician documentation in the medical record and thereby improve the accuracy of

the codes assigned to represent that care, CDI staff provide a preemptive measure of protection

against outside auditors. CDI specialists make certain what physicians write in the medical

record is supported by credible literature and definition of terms. They help standardize the

language physicians’ use and ensure physicians document the appropriate language in the

patient’s medical record in order for coders to assign codes appropriately.12

CDI teams proactively help prevent RAC scrutiny by working with the physician to develop

a fuller clinical picture of patient care in the medical record from the outset. However, CDI

specialists may also be used to augment the facility’s RAC committee. Such participation helps

CDI staff generate target areas based on announced RAC reviews. CDI staff can also help

defend medical record documentation in the case of potential RAC appeals. As primary liaisons

between the clinical and coding aspects of medical record documentation, CDI staff may offer

valuable insight to the team when RAC audits turn into RAC takebacks.

In November 2010, CMS released its proposed rule for Medicaid RAC, setting the stage for a

targeted April 2011 implementation date. The use of Medicaid RAC is another initiative put

forth by CMS as part of the Affordable Care Act, implemented in 2010. According to the rule,

states must establish Medicaid RAC programs by submitting state plan amendments to CMS by

December 31, 2010 and fully implement their programs by April 1, 2011. So, hospitals may

begin to see record requests from these organizations as early as the spring of 2011.

MAC, MIC, and ZPIC

Medicare administrative contractors (MAC), Medicaid integrity contractors (MIC), and zone

program integrity contractors (ZPIC) all have governmental authority to audit facilities in

search of overpayments or potential fraud, as well.

MACs are FIs for inpatient (Part A), outpatient, and physician (Part B) services and claims.

MACs serve an appellant venue when facilities or physicians do not agree with rulings made by



RAC. There are 23 MACs that serve as the providers’ primary point of contact for the receipt,

processing, and payment of claims. Of these 23 groups, 15 process both Part A and Part B

claims (A/B MACs), four process DME claims (DME MACs), and four to process Home

Health and Hospice (HH) claims (HH MACs).

What makes the MACs interesting is the fact that they can request documentation from a third

party (e.g., a physician office) while simultaneously requesting information from a billing pro

vider or supplier. If neither party responds within 45 days, a MAC may deny the claim in part or

in full. Therefore, the payment of the claim depends on both parties responding. MACs can

conduct postpayment reviews up to four years after payment, in contrast to the threeyear limit

for the RAC, impose severe administrative actions, suspend payment for a claim, or use statisti

cal sampling to estimate overpayment recoupment where a pattern is deemed to exist.13

ZPIC, formerly known as Program Safeguard Contractors (PSC), serves the same jurisdictions

as MACs. ZPICs are authorized to conduct investigations, provide support to law enforcement,

and conduct audits of Medicare advantage plans. The difference is that ZPICs concentrate on

various Medicare billing “hot” targets, and has the potential to target fraud activities and

transmit its findings on to the other agencies. The primary goal of the ZPICs is to identify cases

of suspected fraud, develop them thoroughly, and take immediate action.14

The Deficit Reduction Act (DRA) of 2005 increased resources for Medicaid program integrity

efforts.15 It requires CMS to enter into contracts to perform four activities:

• Review provider actions

• Audit claims

• Identify overpayments

• Provide education to providers, beneficiaries, and “others” with respect to payment integrity

and quality of care

CHAPTER 1


Nearly 500 MIC audits were under way in 17 states as of July 2010, with CMS representatives

estimating audits would begin throughout the country by the start of 2011.16 MICs use a

datadriven approach to focus efforts on coding and billing errors and erroneous claims over

payment, including fraud. Examples of errors or overpayment include:

• Services provided after the death of a beneficiary

• Duplicate claims

• Unbundling of services

• Services billed improperly using incorrect diagnosis and/or procedure codes

• Services paid that were not in accordance with covered services

• Payment for services not deemed medically necessary

There is no limit to the number of review requests a MIC can submit to a given facility, and

regulations vary from state to state. This makes preparing for such investigations a challenge for

healthcare systems, particularly those which cross state boundaries.

Put government f indings to use

The old adage “the best defense is a good offense” might be one to employ when determining how to best

target CDI efforts toward government audit preparation. CDI managers should review the following and

examine areas of service that overlap with government targets:

• RAC Demonstration findings: www.cms.hhs.gov/rac

• OIG reports: www.oig.hhs.gov/reports.asp

• CERT reports: www.cms.hhs.gov/cert



PEPPER

PEPPER provides electronic hospitalspecific data statistics for MSDRG and discharges at

high risk for payment errors. Compiled by TMF Health Quality Institute for CMS, PEPPER

is a free, facilityspecific resource that identifies outliers in areas considered at risk for payment

errors due to improper coding or billing, including certain conditions or types of hospital stay.

Shortterm and longterm acute care IPPS hospitals receive reports via a MyQualityNet

secure file exchange. To ensure receipt of these reports, hospitals are required to designate a

QualityNet Administrator, complete a registration process, verify access, and set certain

notification preferences.

Examples of PEPPER outliers frequently match areas that are targets for CDI too such as:

• Respiratory infections

• Simple pneumonia

• Septicemia

• Medical MSDRGs with CC or MCC

• Oneday stays for medical MSDRGs

And these, inturn, often find their way onto the audit lists of MIC, RAC, and other auditors.17

Many facility compliance or HIM departments currently cull through this report for applicable

data, so CDI managers should seek out those who have worked with PEPPER reports to deter

mine how they can use them to enhance their daily chart review activities. Moreover, they can

incorporate the benchmark measures contained in the PEPPER report into their CDI data

measurement and monitoring.

CHAPTER 1


Improved documentation for improved data

CDI programs can help alleviate the burden of these various initiatives if they remember to

focus on appropriate documentation in the medical record. Correct coding and appropriate

reimbursement represent a direct reflection of accurate and complete documentation. In striving

for accurate documentation, the CDI program secondarily helps to improve patient care. As the

CDI staff review the record, looking at it from a clinical perspective, they not only see gaps in

documentation, but also gaps in communication between the patient’s clinical team, missing test

results, or physician orders.

CDI programs act as translation and analysis assistants who work between the datadriven

world of coding specialists and the clinical/analytical world of bedside patient care. Each and

every aspect of care provided to a patient in the hospital must be transcribed into a code. Some

physicians still do not realize that the words they write in the context of the medical record

never actually leave the facility—only numbers do.

As CMS states, accurate coding and accurate reimbursement will follow if the documentation

is complete.

“We do not believe there is anything inappropriate, unethical or otherwise wrong with

hospitals taking full advantage of coding opportunities to maximize Medicare payment that

is supported by documentation in the medical record. . . We encourage hospitals to engage in

complete and accurate coding.”18



REfEREnCES

1. National Center for Health Statistics. “FastStats. Health Expenditures for the U.S.“ Centers for Disease Control and Prevention: Health Expenditures. www.cdc.gov/nchs/fastats/hexpense.htm

2. Medicare Policy Project. “Medicare Now and in The Future.” The Henry J. Kaiser Family Foundation. www.kff.org/medicare/h08_7821.cfm

3. Caldis, Todd G. “The LongTerm Projection Assumptions for Medicare and Aggregate National Health Expenditures.” Office of the Actuary/National Health Statistics Group memo to Centers for Medicare & Medicaid Services. www.cms.hhs.gov/ReportsTrustFunds/downloads/projectionmethodology.pdf

4. HealthLeaders Media. “CMS forges ahead with new DRG system in IPPS final rule.” August 3, 2007. www.healthleadersmedia.com/content/HOM-91367/CMS-forges-ahead-with-new-DRG-system-in-IPPS-final-rule.html##

5. Centers for Medicare & Medicaid Services. “CMS Finalizes Policy and Payment Rate Changes for Inpatient Stays in Acute Care Long Term Care and Certain Excluded Hospitals.” U.S. Department of Health and Human Services, July 30, 2010. www.cms.gov/apps/media/press/release.asp?Counter=3804&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date

6. Association of Clinical Documentation Improvement Specialists (ACDIS). “What does casemix index mean to you?” May 6, 2010. www.hcpro.com/acdis/details.cfm?content_id=250674

7. Office of Inspector General. “Fact Sheet: Operation Restore Trust Accomplishments.” U.S. Department of Health and Human Services.

8. Silberner, Joanne. “Medical Fraud Carries A Staggering Price Tag.” National Public Radio: August 18, 2009. www.npr.org/templates/story/story.php?storyId=111967435

9. Medicare Prescription Drug, Improvement and Modernization Act of 2003, Section 306 [Pub. L. 108173].

10. CMS Office of Public Affairs. “CMS enhances program integrity efforts to fight fraud, waste and abuse in Medicare.” 2008. http://summacare.stage.bennettadelson.com/media/3066/15256.pdf

11. Centers for Medicare & Medicaid Services. “Recovery Audit Contractor (RAC) Demonstration HighRisk Diagnosis Related Group (DRG) Coding Vulnerabilities for Inpatient Hospitals.” MedLearn Matters. September 23, 2010. www.cms.gov/MLNMattersArticles/downloads/SE1028.pdf

12. ACDIS. “RACs request queries as complex reviews roll out.” CDI Journal, July 2010. www.hcpro.com/acdis/details.cfm?topic=WS_ACD_JNL&content_id=253285

13. O’Leary, Cari. “CDI in 2010: Spotlight on Compliance.” ACDIS Annual Conference. June 2010. www.hcpro.com/acdis/forms_tools_library.cfm

14. Fotheringill, Linda. “ZPICs: Bite Worse Than RAC Bark.” Healthcare Finance News, September 3, 2009.

15. Deficit Reduction Act, Section 6034, 1936.

16. Kraynak, Andrea. “Medicaid Integrity Contractors: Coming to a hospital near you.” Revenue Cycle Institute. July 23, 2010. http://blogs.hcpro.com/revenuecycleinstitute/2009/07/medicaid-integrity-contractors-coming-to-a-hospital-near-you/ Accessed October 2010.

17. Miani, Mark. Robert M. Tippens. “PEPPER 2010: Analyze the New Report to Improve Coding and Quality.” HCPro Inc., June 15, 2010. Audio conference.

18. Federal Register, vol. 72, no. 162 (Wednesday, August 22, 2007): 47180–47181.

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