RSSAll Entries in the "Payment matters" Category

Use PEPPER to identify problematic MS-DRGs and target CDI opportunities

Laura Legg

Laura Legg

By Laura Legg, RHIT, CCS

Some MS-DRGs are more complex and prone to error than others. What can facilities do to identify and manage these MS-DRGs that are prone to error?

One method for identifying error-prone MS-DRGs is through use of the Program for Evaluating Payment Patterns Electronic Report (PEPPER) report. The PEPPER report provides organizations with insight into potential vulnerabilities that may result in denied claims and recoupment. PEPPER short-term acute care hospital targets include:
  • Short stays
  • Three-day stays
  • Error-prone DRG assignments
Recovery Auditors also focus on DRG assignments and often request records for error-prone DRGs.
Facilities can use PEPPER data to identify outliers and act upon them. Data found in the PEPPER report is based on paid Medicare claims and has a ranking system that includes all organizations receiving Medicare payments. With this information, outliers can be identified. Medicare also provides a quarterly analysis of hospital-specific Medicare inpatient claims that are vulnerable to improper payment, including potential overpayments and underpayments.
Want to learn more about how to use PEPPER at your facility, check out these additional resources:
Editor’s Note: Laura Legg is director of health information management for Healthcare Resource Group in Renton, Washington. Email her at She has more than 25 years of experience in HIM and has served as an HIM Manager/Director for several acute care/critical access hospitals and a major hospital system. This article originally published on

Medicare Compliance Review provides new blueprint for CDI efforts

Glenn Krauss

Glenn Krauss

If you haven’t seen the OIG report “Medicare Compliance Review of University of Cincinnati Medical Center [UCMC] for Calendar Years 2010 and 2011,” take a look here at the Office of the Inspector General’s (OIG) website.

What you will see is eye-opening: The OIG reviewed a sample of claims that it deemed were improperly billed by the 695-bed hospital, and, by extrapolating the error rate, determined that UCMC owes more than $9.8 million in improper payments.

The next thing you should consider as a CDI specialist is: How can I prevent my hospital from such a similar (potential) catastrophic review by the OIG? By focusing on affecting positive change in clinical documentation that represents “true” documentation improvement vs. a narrowly defined CDI focus on the capture of CCs/MCCs, says Glenn Krauss, BBA, RHIA, CCS, CCS-P, CPUR, FCS, PCS, CCDS, C-CDI, a manager with Accretive Health in Chicago.

CDI specialists tend to look only at solidifying individual diagnoses in the chart, but often ignore equally important supporting information like clinical indicators to support admission to the facility.

“Do we have good solid documentation of the patient’s DRG, or do we have diagnoses with little clinical support? Are we just sending automatic queries?” he asks. “Often we’re not focused on getting a solid, effective, and encompassing history and physical [H&P] that accurately captures the patient’s history of present illness [HPI] reflective of the patient’s severity of illness, signs and symptoms.”

Physicians tend to elaborate on a patient’s past illnesses vs. a patient’s present illness. A sound HPI consists of a chronological description of the development of the patient’s present illness from the first sign and/or symptom to the present, Krauss notes. “There is often inconsistent or lack of clinical context for the reason for the admission. Doctors need this context for their billing, and [hospitals] need it for quality,” he says.


OPPS developments shift toward MS-DRG-style payments; eliminates physician certification for inpatient stays


OPPS proposed rule released

After last year’s OPPS proposed rule debacle, which included a later-than-usual release, data errors that required corrections and a comment extension, and radical changes to E/M, the 2015 OPPS proposed rule released by CMS last week seems relatively benign.

At less than 700 pages, it’s also shorter than most proposed rules, but does include a new concept to the OPPS in the form of “complexity adjustments” for Comprehensive APCs.
As promised, CMS reintroduced the concept of Comprehensive APCs for device-dependent APCs first seen in last year’s proposed rule. With Comprehensive APCs, a single payment will be made rather than separate, individual APC payments.
CMS has refined the concept to include some lower-cost device-dependent APCs and two new APCs for other procedures and technologies that are either largely device dependent or represent single session services with multiple components. CMS is now proposing 28 Comprehensive APCs for 2015 after consolidating and restructuring the 29 proposed last year.
The most significant change to the policy is a proposed “complexity adjustment.” The adjustment is applied when a primary procedure assigned to a Comprehensive APC is reported with other specified procedures also assigned to Comprehensive APCs or with a specified packaged add-on code. When the facility reports one of these combinations, CMS will increase the payable APC to the next higher APC in the clinical group, similar to DRGs on the inpatient side.
“This is the first time in OPPS history where we have something like severity adjustment,” says Kimberly Anderwood Hoy Baker, JD, director of Medicare and Compliance for HCPro, a division of BLR, in Danvers, Massachusetts.
Editor’s Note: This article originally published in the APCs Insider. ACDIS members received additional information via email in a special news alert last week.

Tip: Readmissions an emerging CDI focus area

Have you begun reviewing records with an eye toward readmission reduction? Let us know!

Have you begun reviewing records with an eye toward readmission reduction? Let us know!

As more facilities face the specter of reimbursement losses related to the Readmission Reduction Program, CDI programs may be asked to take a second look at records to help ensure documentation is adequate to fully support the patient’s diagnoses, says Susan Wallace, MEd, RHIA, CCS, CCDS, CDIP, director of compliance and inpatient consultant at Administrative Consultant Service, LLC, in Shawnee, Okla.

While it may seem like “just one more thing” added to the CDI review plate, Wallace says it needn’t be an onerous project.

First, make sure CDI focuses on more than CC/MCC capture and problem-focused reviews.  The readmission reduction targets currently include acute myocardial infarction, congestive heart failure, pneumonia, COPD (also COPD secondary to respiratory failure), stroke and elective hip / knee replacements.  Beyond the current readmission reduction program, inpatient quality reporting measures also target hospital-wide readmissions, so appropriate risk-adjustment is important for all admissions. p>Second, reach out to other departments such as case management and quality to discuss how they are evaluating readmissions and brainstorm ways CDI can help.

Thirdly, says Wallace, stay informed. Review your facility’s Quality Net data and be familiar with the codes, diagnoses, and documentation requirements for those conditions.

“The Quality Net report to hospitals includes an appendix with factors used for risk adjustment; facilities can look at that data to compare their own facilities to other state and national statistics,” says Wallace. “That’s information that isn’t typically shared or reviewed, so CDI can look for opportunities there. Simply asking for the report can be a way to open the door and begin communications with the quality department.

Editor’s Note: This article originally published in the June 19 edition of CDI Strategies. If your CDI program is reviewing records with readmission reduction in mind, ACDIS would like to hear from and share your lessons learned in an upcoming CDI Journal article. Send your program description to Associate Director Melissa Varnavas at

Q&A: Bringing surgeons on board with CDI efforts

Do you have a CDI-related question? Leave us a comment below.

Do you have a CDI-related question? Leave us a comment below.

Q: I am new to the CDI role and looking for suggestions as to how to work with the surgeons to help them beef up their documentation?

A: I smiled when I read your question, this challenge is not particular with you. Surgeons offer us a number of challenges. One of the reasons is that surgeons are reimbursed differently than other providers. When the primary care physician rounds on inpatient acute care patients they document their notes to assist with their E&M (evaluation and management) charges in mind. Depending on the extent of their assessment, the patient’s condition, and the amount of time the physician spends with their patient, the physician can submit a bill for the visit based on four levels. They will submit charges for every time they round on the patient.

When CDI professionals work with the primary care providers to improve their documentation it often can have a direct impact on their E&M levels as well. When we talk about how their documentation improvement efforts support their own billing as well as the hospital’s they can be more open to CDI efforts.

Surgeons are reimbursed differently. For example a surgeon performs a total hip replacement. He will be reimbursed one global fee which covers the pre-operative, peri-operative and post-operative care. Their documentation within the post-operative period does not directly affect their payment. They don’t have a tangible motivation to write a thorough post-operative note.

Now, I don’t want to put all surgeons in this category, as I have met many that offer excellent documentation starting with the pre-op history and physical. When I find a surgeon who documents well I will hold them up as a top performer and use examples from his documentation for others to see. Sometimes, a little peer pressure works wonders.

Another more tangible motivator, is to discuss severity of illness/risk of mortality (SOI/ROM). These measures are determined based on their documentation. Then discuss quality ratings and how patients, organizations, and even commercial payer contracts with providers are based on quality measures pulled from SOI/ROM data.

No surgeon wants bad ratings for everyone to view on the internet. Explain that your efforts as a CDI not only will improve reimbursement for the organization (which consequently buys new operating room equipment and pays for qualified staff to care for his patients) but also can effectively assist in increasing the SOI/ROM of his patients. So if his patients develop complications or die due to underlying comorbidities their level of SOI will demonstrate a patient who was at risk for such complications. There is much information on physician quality ratings on the internet to assist you in these discussions.


CDI efforts in pre-payment reviews on the rise

Here is a "what if" scenario to help illustrate CDI specialists' return on investment.

Conducting a ‘pre-bill’ record review could prevent auditor take-backs.

Of the nearly 450 respondents to a recent ACDIS website poll, 50% say they conduct pre-payment record reviews, with an additional 7% indicating their facility is considering implementing such reviews in 2014. Of that 50%, 35% of CDI departments conduct such reviews themselves.

“CDI pre-bill reviews are becoming more common,” says Cheryl Ericson, MS, RN, CCDS, CDIP, CDI Education Director at HCPro Inc., in Danvers, Mass. The difference between a concurrent review and a pre-payment review is the availability of the discharge summary, which can contain key documentation.
Pre-payment reviews occur following discharge and possibly following coding, but prior to billing, so the CDI staff presumably has the complete record. This type of review works well for those short-stay admissions where the patient is discharged before a concurrent review can occur as these cases are often vulnerable to medical necessity denials.
On the payer side, pre-payment reviews work as follows: Contractors such Medicare Administrative Contractors (MACs) and Recovery Auditors (RAs) request the medical record to vet the record and ensure the medical necessity for the inpatient admission or possibly to determine if the correct DRG was assigned prior to paying for the care, says James Kennedy, MD, CCS, CDIP, principal at CDIMD Physician Champions in Smyrna, Tenn.

Understand how HCC changes relate to physician quality scores, reimbursement

Tips for ICD-10 queries.

Tips for ICD-10 queries.

By James S. Kennedy, MD, CCS, CDIP

Although most physicians have heard of DRGs with inpatient admissions, only those invested in accountable care organizations and independent practice associations are likely familiar with hierarchical conditions classifications (HCCs). Based on ICD-9-CM codes submitted by physicians or hospitals in a calendar year for documented diagnoses requiring assessment, management, or treatment, HCCs will significantly change in 2014 with additions and deletions as well as relative weight changes.

Physicians documentation will need to improve related to HCCs because one of the goals of the Patient Protection and Affordable Care Act (PPACA) is to encourage provider efficiency, defined by CMS as a ratio of observed to expected costs and outcomes for selected populations. And, to this end, CMS is developing efficiency measurement metrics that will influence reimbursement and may be reported on its Physician Compare website ( mnq89rh). These include:

  • CMS Episode Grouper for Medicare. Part of CMS’ Quality and Resource Use Reports, currently focused on cardiac conditions and pneumonia. Learn more at
  • CMS Physician Value-Based Payment Modifier. Applicable to groups of 100 or more providers in calendar year (CY) 2015, potentially groups of 10 or more providers in CY2016, and all others in CY2017, its calculation involves the total per capita cost measure for Medicare fee-for-service and the Medicare spending per beneficiary models using CMS’ HCCs. Read more in the CY2014 CMS Proposed Physician Fee Schedule, available at 2013-07-19/pdf/2013-16547.pdf

Editor’s note: This article is an excerpt from the Featured Article on the ACDIS homepage and was originally published in the December 2013 edition of Medical Records Briefings. James S. Kennedy, MD, CCS, CDIP, is president of A past ACDIS Advisory Board member, Kennedy is a general internist and certified coder, specializing in clinical effectiveness, medical informatics, and clinical documentation and coding improvement strategies. Contact him at 615-479-7021 or at

Q&A: SNF calculations under ’2-Midnight’ rule

Debbie Mackaman

Debbie Mackaman

Q: Under the new 2-Midnight rule, will the amount of time the physician cared for the patient under observation be included in the calculations for transferring the patient to a skilled nursing facility if needed?

A: The Federal Register discusses this in detail. Unfortunately, CMS will still require three acute care days to be considered for a covered SNF stay. I think what makes it confusing is that time spent as outpatient can be “considered” when considering the 24-hour benchmark from the physician’s perspective verses the 24-hour presumption from a medical review perspective. Time spent as an outpatient (ER, observation, etc.) will not be considered “inpatient time” for the purposes of calculating a three-day qualifying stay because an order to admit the patient has not been written. Many commenters on the fiscal year (FY) 2014 IPPS proposed rule wanted CMS to consider observation time but they did not (see page 1711). I hope this helps to clarify. Here are the relevant passages and their related page number from the Final Rule:

  • P. 708 – Furthermore, inpatient stays that are denied payment under Medicare Part A remain classified as inpatient stays, and can be billed to Medicare Part B as an Medicare Part B inpatient stay. These inpatient stays that are denied payment under Medicare Part A will typically continue to count as a qualifying inpatient stay for other payment purposes such as qualifying for SNF benefits and Medicare DSH patient days.
  • Page 1707 – SNF coverage is affected because a hospital’s observation services are considered outpatient rather than inpatient services, and section 1861(i) of the Act requires a qualifying 3-day inpatient hospital stay for Part A SNF coverage. The importance of a beneficiary’s status as a hospital “inpatient” in terms of qualifying for posthospital SNF coverage has also generated concerns about the need to clarify any potential implications that the inpatient rebilling policy may have in this area. The following discussion presents a summary of the comments that we received on this topic, and our responses.
  • Page 1709 – In addition, the status of the beneficiaries themselves does not change from inpatient to outpatient under the Part B inpatient billing policy. Therefore, even if the admission itself is determined to be not medically necessary under this policy, the beneficiary would still be considered a hospital inpatient for the duration of the stay— which, if it occurs for the appropriate duration, would comprise a “qualifying” hospital stay for SNF benefit purposes so long as the care provided during the stay meets the broad definition of medical necessity described above. This is consistent with the applicable statutory language in section 1861(i) of the Act which, in defining “posthospital” SNF services, requires the beneficiary to be a hospital “inpatient for not less than 3 consecutive days”, and the implementing regulations at 42 CFR 409.30(a)(1), which require “medically necessary inpatient hospital . . . care”.
  • Page 1711 – The commenters suggested other approaches to addressing the effect of extended observation stays on SNF coverage (that is, eliminating the SNF benefit’s qualifying 3-day hospital stay requirement, counting days spent in observation specifically toward meeting that requirement, or adjusting the definition of inpatient itself to include beneficiaries receiving observation services). We have previously discussed similar suggestions in the FY 2006 SNF PPS proposed rule (70 FR 29098-29100) and final rule (70 FR 45050-45051), and we continue to have the same concerns with those approaches as we expressed in the FY 2006 proposed and final rules. Moreover, as discussed above, we believe that the policies finalized in this FY 2014 IPPS final rule regarding Part B inpatient billing and medical review of inpatient hospital admissions appropriately address the issue of extended observation stays.
  • Page 1841 – From the medical review perspective, while the time the beneficiary spent as an outpatient before the admission order is written will not be considered inpatient time, it may be considered during the medical review process for purposes of determining whether the 2-midnight benchmark was met and, therefore, whether payment is generally appropriate under Part A.

Editor’s Note: Debbie Mackaman, RHIA, CHCO, Regulatory Specialist at HCPro Inc., answered this question. Contact her at

CMS limits audits related to new 2-midnight rule

Kimberly Anderwood Hoy Baker, JD, CPC

Kimberly Anderwood Hoy Baker, JD, CPC

by Kimberly Hoy Baker, JD, regulatory specialist for HCPro

On September 28, CMS held a special Open Door Forum on the 2-midnight rule (released in the fiscal year 2014 IPPS Final Rule) and its implementation, starting October 1, 2013. CMS declined to delay implementation of the inpatient status benchmark, but instead put in place a 90-day “implementation period” with a moratorium on audits with the exception of “probe and educate” reviews by  Medicare Administrative Contractors (MACs).
During the call, CMS referenced a written announcement dated September 26, in which the agency stated it will not permit Recovery Auditors to review cases with less than two midnights of inpatient care for the 90 days following the October 1 implementation date. During this time however, CMS has instructed the MACs to audit a probe sample from every hospital of 10-25 cases that had less than two midnights of care.
The probe audits will be done on a pre-payment basis, and if the hospital receives a negative determination on a case, the hospital will be able to rebill the case under the new Part B inpatient billing rules. Following the probe audit, the MAC will identify “issues” with the hospital’s cases and provide further education if necessary.  If no “issues” are identified, the MAC has been instructed not to conduct further reviews of cases with less than two midnights during that 90 day implementation period.
Editor’s Note: This article was originally published on the Revenue Cycle Institute Blog. Hoy is the director of Medicare and compliance for HCPro, Inc., a lead regulatory specialist for HCPro’s Revenue Cycle Institute, and the lead instructor for HCPro’s Medicare Boot Camp®-Hospital Version and Medicare Boot Camp®-Critical Access Hospital Version.

Look to history of present illness documentation to ensure inpatient admission order compliance

In my last blog published on October 8, I outlined the new CMS 2014 IPPS guidelines governing inpatient admission; specifically the “benchmark” and “presumption” requirements related to the 2-midnight rule. The real question is what clinical documentation will be required to support of the physician’s “reasonable expectation” that the patient requires a 2-midnight stay. Furthermore, what happens when the patient is admitted as an inpatient with the expectation of a 2-midnight stay, yet responds quickly to therapy and is safely discharged without a 2-midnight stay. CMS does allow their contractors to consider the documented clinical facts of the case when making their determination of the validity of the physician expectation of a 2-midnight stay.

“A reasonable expectation”

Let’s start with what CMS terms “a reasonable physician expectation” of a 2-midnight stay. This depends on the physician clearly documenting facts that served as a basis for the medical decision to admit the patient as an inpatient versus observation level of care. It is not enough for the physician to state he/she is admitting the patient with chest pain for possible myocardial infarction (MI) with a reasonable expectation of a 2-midnight stay. The clinical rationale needs to provide a clear outline of the facts complemented by the physician’s clinical judgment, medical decision-making and thought processes.

Traditionally, CDI specialists’ focus is on reviewing the record for principal diagnosis selection and/or secondary diagnosis reporting all in the name of improved reimbursement and case mix for the hospital. Granted, there exists components of quality of care, risks of morbidity and mortality, risks of readmission and safety reporting associated with usual CDI initiatives. Nevertheless, many CDI programs are missing components integral to the documentation in support of a reasonable expectation of a 2-midnight stay including clear articulation of the three key components of the physician’s evaluation and management (E/M) services such as a strong history of present illness (HPI), physical exam, and medical decision making. Let’s take a moment to review what is fundamental to the establishment of medical necessity in and of itself, the effectiveness and completeness of the HPI.