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Guest Post: New Law Puts Providers on NOTICE

Debbie Mackaman

Debbie Mackaman

by Debbie Mackaman, RHIA, CPCO, CCDS, regulatory specialist for HCPro

While many providers are still digesting the IPPS Final Rule, muddling through how the OPPS Proposed Rule might impact their bottom line, and kicking rocks because the 2-midnight rule was not chucked, President Obama signed a bill into law on August 6, 2015—and it’s one providers should note. Unanimously approved by both the House and Senate earlier this year, the Notice of Observation Treatment and Implication for Care Eligibility Act, otherwise called the NOTICE Act, will not take effect until August 2016, but will certainly add one more layer to the administrative burden associated with outpatient observation services when it does.

Public Law 114-42 will amend the Social Security Act and require a hospital or critical access hospital (CAH) to provide the beneficiary with a written notice when they receive outpatient observation services for more than 24 hours. The notice must be provided within 36 hours of the start of observation, which would coincide with the order for such service, or prior to discharge or transfer, whichever occurs first after the initial 24 hours has been reached.

Hospitals and CAHs currently provide many “notices” to the patient, including a financial consent, consent to treatment (procedure, anesthesia, blood transfusion, etc.), release of information, Important Message from Medicare (IM), Detailed Notice of Discharge (DND), Advance Beneficiary Notice (ABN), and the Hospital Issued Notice of Noncoverage (HINN)—just to name a few. The regulation clarifies that this notice will not be in “hit and run” form, as it requires hospital staff to provide an oral explanation of the implications of remaining in outpatient status.

As hospitals begin to draft the notice and develop a process for issuing it, they should also consider who will be responsible to eloquently explain the situation to the patient. Key elements of the notice must include a written and oral explanation stating:

  1. The patient is an outpatient and not an inpatient of the hospital and the reasons why;
  2. The implications of remaining in outpatient status, primarily the related financial issues including deductible, coinsurance, and items or services not covered by Medicare, such as self-administered drugs; and,
  3. All time spent as an outpatient, including observation services provided on the inpatient floor, will not count towards the 3-day acute care qualifying stay required for coverage of a subsequent skilled nursing facility (SNF) stay, if appropriate.

The notice must be written in easy-to-understand language and available in “appropriate languages.” This requirement is not further specified in the law, although the IM, DND and ABN notices can only be provided in English or Spanish versions, so more clarification will be needed. At this point in time, it is unclear if CMS will provide standardized language similar to that used to inform the beneficiary and the provider about the financial liability protections under the Fee-for-Service (FFS) Medicare and, in certain cases, the Medicare Advantage (MA) Programs.

The notice must also be signed by the patient or the person acting on behalf of the patient and the hospital staff member who presented the notice. If the patient or his or her authorized representative refuses to sign the notice acknowledging their outpatient status, the hospital must indicate on the refusal on the form and include the name, title, and signature of the staff member issuing the notice, as well as the date and time of the refusal. This procedure is similar to recommendations CMS has provided when a patient refuses to sign an ABN. However, refusing to sign the new notice does not release the beneficiary from any financial obligation.

As hospitals incorporate the new regulation into their current processes, they should also be acutely aware of the 2-midnight benchmark and the implications of keeping patients in outpatient status receiving observation services for more than 24 hours. CMS has stated that they do not expect a Medicare patient receiving medically necessary hospital care to pass a second midnight without an order for inpatient care. Providing the new notice to the patient should not only serve to inform them of their potential financial liability as an outpatient but also to put the hospital and the attending physician on notice regarding the correct application of the 2-midnight rule.

Editor’s Note: This article originally published in HCPro’s Medicare Insider eNewsletter.

What is All This Fuss about Quality?

Reach out to your physician advisors, case managers, chief medical officers, vice president of medical affairs, president of the medical staff, and any other supportive individuals in your facility.

The typical P4P program provides a bonus to health care providers if they meet or exceed agreed-upon quality or performance measures.

By Karen Newhouser, RN, BSN, CCDS, CCS, CCM

Quality. If we had a dollar every time that word is used, we would be wealthy. But money isn’t everything. Just consider the evolution of the CDI profession.

True, the CDI profession was built on a financial platform – it’s how CDI programs got in the door in the early years. Now, the focus in healthcare is quality. Quality is the common theme in many healthcare initiatives. It may seem that quality just surfaced, but it has been on the scene for decades.

Pay-for-performance (P4P) is the umbrella from which all modern-day quality indicators stem since its emergence in the early 2000s—after deficiencies in quality were highlighted on two major reports by the Institute of Medicine, To Err is Human: Building a Safer Health System, in November, 1999, and Crossing the Quality ChasmA New Health System for the 21st Century, in March, 2001. These reports recommended a sweeping redesign of the health care system to improve quality of care.

In this context, P4P emerged as a way for payers to focus on quality, with the expectation that doing so will also reduce costs. The typical P4P program provides a bonus to health care providers if they meet or exceed agreed-upon quality or performance measures. P4P programs can also impose financial penalties on providers that fail to achieve specified goals or cost savings.

P4P programs can be broken down into both private sector and public sector initiatives. The largest and longest running (2001) is the California’s program. Within the public sector, CMS established a Value-Based Purchasing (VBP) program to provide incentives for physicians and providers to improve the quality and efficiency of care. Most of these programs focused on quality with little, if any, cost consideration.

P4P evolved and grew and the Affordable Care Act further encouraged improvements in quality of care while addressing the subject of cost. Due to CMS’ continuous updates in its IPPS proposed and final rules, a few of the P4P programs worth paying attention to include:

  • Hospital Value Based Purchasing Program
  • Hospital Readmission Reduction Program
  • Hospital Acquired Condition (HAC) Reduction Program

As with most quality measures, establishing present on admission (POA) status is crucial. If one looks at POA with a widely general view, if the patient did not come into the hospital with a particular condition, then they acquired it in the hospital. One element to remember is that POA is not limited to a “Y” (Yes) or “N” (No) determination; a provider may also state that he or she is unsure/unable to determine/doesn’t know if the diagnosis was POA. This POA indicator of “W” is considered to be equivalent to an indicator of “Y” and will exempt the condition from being identified as a HAC.

Similarly, a fourth indicator of “U,” or the documentation is insufficient to determine if the condition was present at the time of inpatient admission, is equivalent to an indicator of “N” in a POA determination where a HAC is identified. It is important to note the words “documentation is insufficient…” in the above indicator explanation. These words should be an indication that a query is warranted in an attempt to obtain sufficient documentation to make a POA determination.

The most important point to understand about these initiatives is that they are risk-adjusted. Reporting agencies have their own risk-adjusted methodologies and most are proprietary; it is not necessary to know the methodology. What is relevant is these methodologies use factors such as chronic and co-morbid conditions to determine the degree of risk. The greater the number of, and/or the more significant, the chronic and co-morbid conditions, the higher the risk.

We all realize that the patient entering the hospital today is much sicker than the patient entering the hospital 20 years ago. That is the role of the CDI specialist—to ensure that the record identifies an appropriate principal diagnosis and reflects all significant reportable secondary conditions to match the care delivered and resources consumed.

We are charged with carrying forward the story of the patients’ encounter. We are, in essence, the editors of a non-fiction story. As we move towards a personal health record in our mobile age, it is imperative that we advocate for the patient and appeal for a complete, accurate account of their health status.

Yes, this is the fuss about quality. Our patients are depending on us. We won’t let them down.

And while it isn’t all about money, I would be remiss in not recognizing the role that money plays in all of the above; however, I leave you with this thought…

Quality doesn’t follow money; money follows quality.

Editor’s note: Newhouser is the director of CDI education for MedPartners CDI in Tampa, Florida, and the 2015 winner of the CDI Professional of the Year award. Contact her at This article originally appeared in the CDI Horizons newsletter.


News: Study reveals overspending on U.S. billing and insurance paperwork

CMS says new date for ICD-10-CM/PCS implementation set for 2015.

Billing paperwork costs billions

Healthcare organizations spent approximately $471 billion on paperwork related to billing and insurance in 2012, with 80% of that potentially wasted, according to the study “Billing and insurance-related administrative costs in United States’ health care: synthesis of micro-costing evidence,” published in BMC Health Services Research.

Using a standard definition of “billing and insurance-related costs” (BIR), researchers found that physician practices spent approximately $70 billion, hospitals spent roughly $74 billion, and other institutions (e.g., nursing homes, home health care agencies, prescription drug, and medical supply companies) spent approximately $94 billion. Private insurers spent approximately $198 billion on BIR compared to $35 billion spent by government-sponsored health insurance programs.

Adopting a simplified, single-payer insurance system similar to Medicare could save the U.S. approximately $375 billion annually or more than $1 trillion in three years.

Editor’s Note: This article originally published in the HIM-HIPAA Insider.

Quick Tip: Use CMS regulations to back you up regardling legibility concerns

Physician signature legibility continues to be problematic.

Physician signature legibility continues to be problematic.

The legibility of physician documentation continues to be a concern. Even as facilities implement electronic health record systems, many others continue to struggle with paper records, printed attestation sheets, and other hard copy medical record reports. One of the principal concerns of the printed/paper world comes from famously illegible physician handwriting and perhaps most troublesome illegible physician signatures.

CDI professionals still battling this one out with their physicians, do have some supportive tools from CMS.

So when physicians challenge you, and ask “where does it say that my signature has to be legible?” (Let’s hope you never actually have to hear that said out loud, geez!) you can quickly print out these regulations and show them

The last link brings you to a page of related articles at the website. To find these links I simply accessed, clicked the tab for Medicare and then searched for information related to physician legibility.

This is a hot topic as we do not wish to lose reimbursement because we can’t read the handwriting or identify the signature. That is just lost money for no good reason.

TBT: Get with the (CDI) program, doc!

Editor’s Note: In social media memes Throw-back Thursday generally means sharing an old high school photo, something you wish had been left unpublished–like your 80s bouffant or 70s bell bottoms. We thought we’d pick up on the theme and occasionally go back into our CDI archives to highlight some salient CDI tid-bit. This week’s installment comes from the July 2012 edition of the CDI Journal.

Trey La Charite, MD

Trey La Charite, MD

by Trey La Charité, MD

We all agree: Better medical record documentation helps the patient, the physician, and the hospital. So why do we have so much trouble getting physicians to implement suggestions made by the CDI staff ? If your facility is anything like mine, provider compliance varies greatly. What always amazes me and our CDI specialists here is which physicians participate and which do not. Let’s look at some reasons why physicians choose not to adopt CDI goals and what remedies we might implement to gain wider acceptance of CDI principles.

First, the inescapable elephant in the room that must be effectively and decisively crushed is money. Unfortunately, the gut reaction of most doctors is that CDI is something that benefits only the hospital through an increased profit margin. While CDI professionals know this is not true, this initial reaction is understandable. After all, from where does the impetus for most CDI programs originate? The chief financial officer’s (CFO) office, of course! And, frequently, the CFO has jumped onto the CDI bandwagon because he or she learned how another facility improved their case-mix index (CMI) by implementing CDI  initiatives. Although the CMI is merely a reflection of how sick the patients are in a hospital, to a CFO, a higher CMI simply equals greater revenue.

Unfortunately, this means that your fledgling CDI program may have a public relations problem before it ever gets off the ground.

How do we remedy this problem? Education, education, education! The majority of doctors do not understand the increasing availability of their performance data to the general public, the insurance companies, and our government. Why is this important? Our government (via new Medicare payment rules) has  embarked on a strategy of healthcare reform through forced competition between healthcare providers. The theory is that patients will choose the doctors and facilities that have better outcomes and fewer complications at a lower cost.

Additionally, insurance companies and employers will intentionally steer their beneficiaries and employees toward the providers who display these same qualities. The ultimate question becomes whether new patients will want (after reviewing performance data on the Internet) or be able (through reduced copays to see the better providers) to be treated by your physicians in your hospitals. Yes, the probable short-term goal of any new CDI program is increased revenue at the CFO’s behest. The long term goal of all CDI programs is to ensure the flow of new patients through your doors through better performance data.

Guest Post: CDI benefits? Money, teddy bears, and more

Use teddy bear inspiration to promote your CDI efforts!

Use teddy bear inspiration to promote your CDI efforts!

By Vicki Sullivan Davis, RN

Doesn’t it burn you up when someone says that CDI programs are all about reimbursement? I can feel my face get red when I hear that statement! Of course, I remain composed, smile, and provide politically correct education to the individual. But deep down I have always wanted to say, “You are darn right CDI is about reimbursement! I work hard every day to make sure you and everyone else continue to have a place to work. I make sure our patients have the most updated equipment for imagining, the most advance surgical suites, a bigger emergency department, adequate nurses on the units, food to prepare, patients to see and E/Ms to bill!”

I want to say, “Yes, my job is to help make money for hospital and so is yours!” Every person in this industry needs be concerned with reimbursement; our survival depends on having money to provide resources for our patients! We provide for our futures through cost containment, efficiency monitoring, billing, staffing to volume, charging for supplies, and even decreasing the number of linens stocked in each room. All staff should be concerned with cost containment and revenue growth. CDI specialists are no different! Reimbursement is reimbursement, we just call it different things in different departments. Budgets, staffing, billing levels, supplies, etc.

Without bringing in adequate reimbursement, the hospital would have to close their doors despite anyone’s best efforts to control efficiency and quality. If we are not worried about reimbursement, we would not have the resources to provide services that are important to the community. We would not be able to sit and hold the hand of a dying patient. We would not be able to give out teddy bears to a scared child getting a chemo treatment. We would not be able to provide a warm blanket for a frail, confused, and aging patient. The impact of healthcare reform is so significant that we all must worry about the almighty dollar if we truly care about people.

But just because I say my job has an impact on reimbursement, doesn’t mean that I only focus on reimbursement.

The heart of our program focuses on the patient. As CDI specialists, making sure we capture severity of illness and risk of mortality (SOI/ROM) is essential, and the outcome of capturing SOI/ROM correctly happens to equate to reimbursement. CDI specialists are just charged with finding innovative ways to perpetuate our hospital’s future (for the patient’s sake!) So next time the next someone rants that your CDI program is “all about the money,” be proud he or she took time to notice your program, then smile and hand them a teddy bear.

Editor’s Note: Vicki Sullivan Davis is CDI manager at Cone Health System at Alamance Regional in Burlington, North Carolina, and past-speaker at ACDIS National Conference. Contact her at

TBT: Good E/M documentation is a win-win for physicians and CDI specialists

Glenn Krauss

Glenn Krauss

Editor’s Note: In social media memes Throw-back Thursday generally means sharing an old high school photo, something you wish had been left unpublished–like your 80s bouffant or 70s bell bottoms. We thought we’d pick up on the theme and occasionally go back into our CDI archives to highlight some salient CDI tid-bit. This week’s installment comes from the August 2010 edition of the CDI Journal.

The lifeblood of a physician is not his or her profile, quality scores, or the hospital’s DRG payment. It’s the physician’s own pocketbook—i.e., the E/M codes he or she reports. Good documentation is integral to the business of a physician’s practice. CDI specialists should think of themselves as the physician’s partners in business and be their eyes and ears in the medical record, says By Glenn Krauss, BBA, RHIA, CCS, CCS-P, CPUR, FCS, PCS, CCDS, C-CDI, independent consultant based in Burlington, Vermont.
Although Stark inducement laws prohibit CDI specialists from telling physicians how to bill, they can and should prompt physicians to provide good documentation in the record to support their billing, Krauss says. Many physicians report their own E/M codes simply by circling what they feel is the most appropriate level, often on a pocket card or electronic hand-held device. But this can lead to countless billing errors and take-backs from Comprehensive Error Rate Testing contractors and Medicare administrative contractors. That’s because many physicians don’t understand the three components that go into determining E/M levels and the documentation needed to support them.
Unless he or she has access to a computerized record, a physician typically does not document during patient interactions. Instead, he or she will document the encounter long afterward. A typical encounter between a physician and a patient might include the physician evaluating labs, speaking to a nurse, going to see the patient, assessing the patient, then documenting later on. There is the potential for much to be missed during this process, says Krauss.
“Physicians don’t take shortcuts in their practice of medicine, and they ask the patients these questions [regarding their medical history, etc.], but the fact of the matter is that they don’t always actually document what they’ve asked,” Krauss says.
He recommends that CDI specialists familiarize themselves with physician E/M billing. They should also review records with an eye on ensuring documentation of the three components of an E/M code. “A CDI specialist should be able to talk to the physician about these issues in an intelligent fashion,” he says.

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.