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Conference Update: Medical necessity reviews

Megan Buyrn

Megan Buyrn

The 2016 ACDIS conference takes place next month on May 23-26, in Atlanta. The ACDIS office is already buzzing with excitement as enter the final weeks of preparation. There is still plenty of time to sign up for the event. Remember, register a team of four and the fifth person attends for free! Call our customer service team for assistance 877-727-1728.

To view the full agenda and details, download the conference brochure. As you start to plan your itinerary, we’re we are interviewing a handful of speakers to give you a feel for the sessions. This week, we spoke with Megan Buyrn, BSN, RN, CCDS; Pence Livingston, BSN, RN; and MaryKate Rentschler, MBA, BSN, RN, who will present, “Medical Necessity Reviews: CDI impact on provider documentation.”

Q: Tell me a little but about the process that your facility took to improve documentation of medical necessity.  

Buyrn: Our emergency room providers decide the level of care at our facility, so we started with their documentation. We first conducted baseline audits, shared the results with the providers, and implemented other interventions, such as form revisions and tip cards. We then conducted continual follow-up audits with regular feedback and results for a two-year period. We expanded this process to include adult medicine, psychiatric, and pediatric inpatient areas.

Q: What are three things attendees can expect from your session?

MaryKate Rentschler

MaryKate Rentschler

Rentschler: First, we’ll help them identify opportunities to improve attending documentation of medical necessity for observation and inpatient hospitalization in order to decrease denial vulnerabilities. We will discuss how to develop a process for retrospective audits of observation, inpatient, and short stay ICU admissions. Finally, we will outline strategies to help improve physician compliance and hospital system processes through educational tools and strategic distribution of audit results.

Q: Who should attend your presentation and why?

Livingston: CDI specialists, physician advisors, utilization review staff, or anyone interested in medical necessity documentation for inpatient stays.

Q: What do you think is the most important quality for a CDI professional to have?

Buyrn: Here at Denver Health, flexibility is so very important. The scope of our skillset is broad and constantly shifting with the changing needs of the hospital and the healthcare rules and regulations. CDI specialists have to be open to learning new skills and finding ways to apply their newfound knowledge and educate others.

Q: What are you most looking forward to about this year’s conference? What is your favorite part of the conference?

Rentschler: We look forward to hearing how other programs are succeeding, including innovative ways that CDI is affecting hospital processes.


Guest Post: Documentation requirements for observation services

Kimberly Anderwood Baker Hoy

Kimberly Anderwood Baker Hoy

by Kimberly Anderwood Hoy Baker, JD

Medicare covers observation care as an outpatient service under Part B payments. (Medicare reimburses different healthcare providers under different systems or parts—Part A for hospital payments, Part B for medical/doctor’s services, Part C which allows private insurers to provide Medicare benefits, and Part D for outpatient prescription drugs.) The Medicare Benefit Policy Manual defines observation as a:

“well-defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.”

Two key parts of this definition are the assessments and decision. Medicare mentions assessments and reassessments, presumably to emphasize the active period of care leading to the decision to discharge the patient or admit him or her as an inpatient. Once a decision has been made regarding the patient’s disposition, the care no longer meets this definition of observation, which becomes especially important if the decision has been made to discharge the patient to an alternate, lower level of care that is not available. In these cases, the continued care at a lower level, in lieu of discharge, does not meet the definition of observation because the decision to discharge the patient has been made.

Documentation requirements

Observation services can be ordered by physicians and other providers authorized by state law and hospital bylaws to admit patients or order outpatient tests. Physicians (e.g., emergency department [ED] physicians) who can order outpatient tests may order observation services even though they may not be authorized under hospital bylaws to admit patients for inpatient status. This allows some flexibility for placement of patients in observation. Note that standing orders for observation after surgery are not accepted. Orders for observation must be specific to the patient’s need for continued monitoring in response to clinical factors.

In addition to the order for observation, documentation must reflect that the patient is in the care of a physician. The Medicare Claims Processing Manual requires notes at the time of registration and discharge as well as other appropriate progress notes to be “timed, written, and signed by the physician.” The manual’s emphasis on the physician writing the progress notes aligns with the requirement for assessment and reassessment in the definition for observation. Assessing and reassessing a patient in observation ensures the patient is receiving active care and not simply a lower, custodial level of care.

Like other services covered by Medicare, observation must be reasonable and necessary or, in other words, medically necessary. The physician must document that he or she assessed patient risk to determine that the patient would benefit from observation services. Documentation should describe:

  • what risks are present that prevent the patient from being safely discharged home or to a lower level of care
  • how the patient would benefit from further observation at the hospital

Documentation of this assessment provides the basis of the medical necessity of the observation services.

Editor’s Note: This article was originally published in Patient Status Training Toolkit for Utilization Review.

TBT: Involve your CDI team in medical necessity reviews

Go team! In coming posts you can learn more about the people who work behind the scenes to make ACDIS a success.

CDI can work together to tackle medical necessity reviews

Editor’s Note: In social media memes, Throw-back Thursday generally means sharing an old high school photo, something you likely wish had been left unpublished. Alternatively, we’ve flipped the theme around, going back into our archives to highlight some salient tid-bit worthy of second look. This week, we looked at “Five Ideas for Maximizing Your CDI Team’s Impact on RAC Preparedness,” a 2011 ACDIS White Paper, written by Lynne Spryszak, RN, CCDS, CPC-A.

If the current focus of your CDI program is DRG optimization, then your CDI specialists probably spend little time analyzing the record for documentation that substantiates the medical necessity of the inpatient stay. During the concurrent review process, many CDI specialists ask themselves why a patient is in the hospital, since the documentation and resources being used often do not appear to support inpatient services. If your utilization reviewers have no understanding of the documentation and coding requirements, you may indeed have records denied for lack of medical necessity.

A typical example is the patient who is admitted with chest pain. Two or three days go by as the physician orders and analyzes the results of the medical workup. On the day of discharge, the provider writes “chest pain due to angina versus GERD” (gastroesophageal reflux disease).

Upon admission, the initial note may have read “chest pain, rule out MI” (myocardial infarction), and based on this diagnosis the patient was admitted as an inpatient. A clinician may look at the test results and treatments and determine that the angina or GERD will be assigned as the final diagnosis. However, based on coding rules, the final principal diagnosis – that which determines the DRG—will be “chest pain,” which has been selected for both DRG validation and medical necessity reviews.

This is a good example of the difference between clinical interpretation and coding interpretation. The record must be analyzed from both perspectives to minimize medical necessity denials.

ICD-10 Tip of the Week: Medical necessity matters

If you are thinking about taking the CCDS exam the first step to take is to review the CCDS Candidate Handbook.

In light of ICD-10 implementation, CDI staff need to work especially hard to make sure documentation is as specific as possible.

Recently, there’s been talk that medical necessity is the “first issue to emerge in ICD-10.” This has sparked both questions and concerns, specifically in regards to whether or not CMS’s ICD-10 guidance about not auditing or counting errors for the specificity of an ICD-10-CM code. CMS is not going to count the code as an error as long as the first three digits are correct. Many have asked if this guidance applies to medical necessity.

Here’s the deal. CMS did issue guidance that stated it will not deny or audit claims based on the specificity of diagnosis codes (fourth through seventh characters), as long as the codes on these claims are from the correct “family of codes.” However, this applies only to physician and practitioner claims that are billed under the Part B physician fee schedule for the first 12 months after implementation only. Further, this guidance does not apply to facility providers.

CDI specialists must note that CMS never said it wouldn’t deny or audit claims for medical necessity.

The need to specify medical necessity, as defined by National Coverage Determinations and Local Coverage Determinations, is not changed by the guidance, says Denise Williams, RN, CPC-H, senior vice president of revenue integrity services at Revant Solutions, in Fort Lauderdale, Florida, in a recent Q&A with APCs Insider. If there is a specific code required to support medical necessity, then all characters of the code must be accurate to meet medical necessity. This overrides the family code guidance, says Williams.

This means that CDI staff need to work especially hard to make sure documentation is as specific as possible, and clearly supports why the patient required the treatment they received. With specific, detailed documentation, coders will be able to report the most specific code. The new code set does not give anyone a free pass when it comes to capturing the most accurate clinical picture possible. Medical necessity matters, period.

For more information, check out CMS’ FAQs related to the guidance.

Editor’s Note: This post was compiled using a variety of ACDIS and HCPro resources. For more information, check out:

TBT: Throwback pricing on the 2015 Medicare Compliance Forum


The Medicare Compliance Forum will be held Oct. 26-28.

The countdown is on! The 2015 Medicare Compliance Forum is right around the corner on October 27–28, in beautiful Charleston, South Carolina. We hope you’ll join us for the latest information and updates on Medicare rules and regulations.

If you’re thinking of registering but haven’t done so, for the next 48 hours only we are offering a special discount—we’re throwing it back to our early bird rates, which will save you $100 on registration! Just use discount code ET325075. For more information, click here.

The Medicare Compliance Forum will offer six session tracks over two days, including one track dedicated to CDI. Sessions for CDI specialists include:

  • Leveraging CDI Specialists to Enhance Utilization Review
  • Document, Document, Document: Enhance Documentation to Drive Meaningful Data
  • Is Your Readmission Problem Really a Documentation Problem?
  • CDI and the Quality Mandate
  • The Role of CDI and the EHR in Supporting Medical Necessity

CDI session speakers include Deborah K. Hale, CCS, CCDS, John Zelem, MD, FACS, and Cheryl Ericson, MS, RN, CCDS, CDIP.

Ericson, the CDI Program Manager for ezDi and ACDIS Advisory Board member, spoke with HCPro about the CDI track, and the issues she hopes to address in her sessions, including medical necessity, the 2-midnight rule, and physician documentation. She also discusses the beautiful city of Charleston and all it has to offer for visitors. Click here to listen.

“I’ve been working in the CDI industry for several years now and we’re seeing that Medicare is making policies that really encourage organizations to be collaborative in their approach through the revenue cycle,” says Ericson. “I’m going to be talking about the ways CDI can be integrated into some of the practices that you already have.”

Ericson is also presenting a CDI-related pre-ference on October 26.

Q&A: Identifying the principal diagnosis beyond DRG capture

You've got questions? We've got answers.

You’ve got questions? We’ve got answers.

Q: I am a relatively new CDI specialist in a relatively new CDI program. We learned that we should be examining the health record with an eye toward “what bought the bed.” When we raise this concept to our coders, however, they disagreed with the premise telling us that such a concept was in line with coding regulations. Can you explain how we may have misunderstood this concept or help us to understand where the difference in perception may lay?

A: In 2010 the Recovery Auditors (then called Recover Audit Contractors or RACs) began to challenge both DRG assignment (coding practices) and medical necessity. Recovery Auditors soon found great returns financially with the medical necessity denials, in fact many organizations see this type of denial as their Recovery Auditor’s main focus.

Traditionally coding teams needed to only focus on assuring proper codes were assigned, following the Official Guidelines for Coding and Reporting for sequencing. As long as the “rules” were followed they had no concerns. They were also in the habit of making sequencing choices allowed within the guideline that would lead to the greatest reimbursement.

This practice is not necessarily wrong but with new initiatives related to indirect reimbursement it may lead to take-backs, denials, or other problems. For example, quality measures, readmission monitors, value based purchasing etc., all provide hospitals with potential for indirect reimbursement or financial loss if the hospital does not meet the goals set. These efforts are based on data derived from DRG and code assignments. Severity of illness and risk of mortality measures are based on the same data.

Those who work in the CDI role and come to the profession from a nursing background may be more familiar with the concept of medical necessity related to inpatient status requirements. Particularly, those CDI professional who may have come from a case management or utilization review experience understand and have struggled with medical necessity for years. This focus area now is even more front and center for those who work within the revenue cycle.

I have often discussed sequencing for a lesser paying DRG based on what the patient was actually treated for or what would have “bought the bed,” rather than assigning a code for a diagnosis that was documented and may have reimbursed at a higher level.

Let me give an example of what I mean:

A patient comes to the hospital with a urinary tract infection (UTI) and renal failure/acute tubular necrosis (ATN). Both conditions were present on admission. The UTI taken as principle diagnosis with renal failure/ATN as MCC provides a relative weight of 1.1 with payment of approximately $4,200. If the renal failure with ATN is the principal diagnosis we have a relative weight of .9655 with approximately $3,500 in reimbursement. As a CDI specialist, with medical necessity in mind, our first question is to determine whether the patient required an admission for the treatment of the UTI? Could the UTI have been treated outpatient with antibiotics? Looking at the creatinine level and renal function and the presence of ATN the next question is could the renal failure have been treated/monitored at home? Or did it require an inpatient stay? The choice of principal diagnosis should be a thoughtful decision reflecting the condition that brought the patient to the facility’s door and what treatment was provided, what needed to be done to lead to stability and discharge.

Coders know well the definition of a principal diagnosis as identified by the Uniform Hospital Discharge Data Set as:

“The condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.”

Your program may want to consider conducting monthly coder-CDI team meetings to review difficult cases where the principal and secondary diagnoses may be confusing. Also reach out to those in denial management to request examples of medical necessity denials to re-examine as a team. Review the diagnoses that are frequently denied and discuss how that denial impacts revenue loss. Look at the possibility of other choices for principal diagnosis that might not have triggered a denial for medical necessity. This may be information that the coding staff has not been exposed to and by working together to regularly review items such as these you can strengthen both your CDI and coding efforts.

The more discussion and exposure everyone involved has in regard to how the choice of principal diagnosis affects quality measures, potential denials and payment incentives will assist in that change.

Editor’s Note: Laurie L. Prescott, MSN, RN, CCDS, CDIP, AHIMA Approved ICD-10-CM/PCS Trainer, is a CDI Education Specialist, at HCPro, in Danvers, Mass. Contact her at

Clinical context matters: Review records for complete picture of patient care

Establishing a CDI program doesn’t guarantee compliant documentation and/or coding. Queries that focus on obtaining ‘buzz’ words that add reimbursement but don’t add anything to clinical care overlook two important factors that relate to overall revenue integrity:

  1. Clinical context
  2. Quality of clinical documentation

Both of these factors are essential for decreasing the financial risks associated with Recovery Auditor, Medicare carrier, Fiscal Intermediary, and Medicare Administrative Contractor (MAC) post-payment and pre-payment reviews and recoupments. As stated in the most recent Recovery Audit Program Final Scope of Work, Recovery Auditors are required to employ registered nurses and clinicians who must review medical records for medical necessity and clinical validation.

Diagnostic conclusion statements previously carried sufficient weight for coders to confidently assign an ICD-9-CM diagnosis code that would withstand the test of time in the event of an outside review. However, these statements are insufficient as a matter of clinical documentation integrity when they don’t incorporate a clinical context for understanding. The clinical context of the documentation plays an integral role in establishing medical necessity for the hospital admission as well as the patient’s continued stay.

The following case study represents best practice for appropriate and proper documentation in support of the clinical context and medical necessity for admission.

Chief complaint: Chest pain, headache, cough, and fever unabating

HPI: The patient is a 35-year-old female who initially came to the ED two days prior with complaints of a severe, bothersome, ongoing cough for one week, productive of thick yellow sputum. She has also had a fever for three days as well as worsening shortness of breath present mainly on exertion. She also had chest pain in the substernal area that has been continuous and worsening for the past four days, but increased with coughing. She has had headaches for approximately three days and primarily when coughing. She has had decreased p.o. intake for two days. In the ED, she was given IV Rocpehin x 1 and sent home with a prescription for Biaxin™. The patient stated that she did fill the prescription but that she was taking Motrin® and Tylenol® for the pain. She stated that neither medication helped her and that her temperature went up to 103°. Thus, she came back to the ED. In the ED, a chest x-ray was repeated today. The x-ray continues to show left lower lobe infiltrate that worsens with increased haziness and more of a white out picture. Her white count was 15,000 with 12 bands, 18 neutrophils. As a result, it was determined that the patient had failed outpatient treatment and required inpatient hospital admission.

Impression and plan: Pneumonia with sepsis. The patient is being admitted because she meets the severe sepsis criteria with temperature of 103°, tachycardia with heart rate of 140, infection of pneumonia, and white blood cell count 15,000 and neutrophils 18. She has also failed reasonable outpatient management. She is being placed on IV Rocpehin and IV Zithromax®. Blood cultures have been sent. She will get Duoneb® and be placed on pneumonia protocol.

Clearly, the clinical documentation in the above case study accurately and effectively captures the patient’s true severity of illness and the physician’s clinical judgment, thought processes, and clinical rationale for admission.

In its FY 2014 IPPS final rule, CMS states that there will be a presumed inpatient status when a patient remains hospitalized for two midnights. Effectiveness of clinical documentation in support of the physician’s decision to admit as an inpatient assumes even more importance in light of this change.

Auditors will be looking for a clear outline of the physician’s clinical rationalization and reasonable expectation of a hospital stay that spans two midnights. Diagnostic conclusion statements will no longer sufficiently capture the clinical context and medical necessity for inpatient admission.

The most effective approach to CDI involves synergy between coders and CDI specialists. The query process can—and must—expand beyond the traditional realms to incorporate clinical context and medical necessity. This will take a collaborative approach involving the CDI and the coding staff.

CDI specialists are on the front line, and they have the opportunity to reach out to physicians and provide one-on-one education about:

  • Perils of the EHR
  • Cutting and pasting documentation
  • Need for succinct documentation of the HPI
  • Need for progress notes that provide an accurate account of a patient’s progress while he or she is hospitalized

Coders review the record at its completion, essentially acting as an outside reviewer.

Quality documentation is an essential part of the revenue cycle process. When considering the quality of your documentation, ask yourself the following question: What purpose do CDI specialists and coders serve if the hospital fails to be reimbursed for the excellent clinical care provided? Your answer will be the impetus to expand the thrust and focus of CDI.

Editor’s note: Krauss is senior manager with Accretive Health in Chicago. Reach him at This article first appeared on

Q&A: Determine the underlying cause of admission

Ask your question by leaving a comment below.

Ask your question by leaving a comment below.

Q: The majority of the admissions I am reviewing this week are for an elderly population. It seems that they all have the same admitting diagnoses: Failure to thrive (FTT), urinary tract infection (UTI), fever, dehydration, altered mental status (AMS). I am confused about how to identify the principle diagnosis in these cases, FTT or the UTI. Should I query for the underlying cause of the AMS?

A: Talk with case management or utilization review team members to better understand why these patients were approved as inpatient. Often these conditions can be treated in the outpatient setting. You don’t want to be adversarial, but sometimes providers don’t document the complete picture so it can be helpful to ask why this patient needs an admission rather than outpatient/observation care. Let’s hope it isn’t just for nursing home placement as that really isn’t a valid reason for an inpatient admission so it will make your job more difficult.

Assuming there is something that distinguishes these inpatient cases from those who only need outpatient services, then you would want to review the record for any clinical indicators to support an undocumented diagnosis. Hopefully, your organization allows you to interact with providers so you could approach a helpful individual to gain insight into his/her thought process. Sometimes it is helpful to have a conversation to understand the physician’s perspective. Often providers have great justification for their admissions; they just don’t realize how important it is for their thought process to be documented in the health record.


News: Latest RACTrac survey shows 53% increase in record requests

Latest report shows RAC denials are being overturned

Latest report shows increase in record requests with more than half not containing any overpayment concerns.

Hospitals continue to report dramatic increases in Recover Auditor (RA) activity, according to results of the latest RACTrac survey released June 4, from the American Hospital Association. The survey found that the number of medical record requests for survey respondents has increased by 53% in comparison to the cumulative total reported in the third quarter 2012.

Not surprisingly, 96% of hospitals indicated that medical necessity denials are the most costly type of denial. However, RAs issued the majority of denials (68%) not because the care was medically unnecessary but because the facility provided care (i.e., one-day stays) in the wrong setting.
The good news is that 58% of medical records did not contain an overpayment. In addition, hospitals reported appealing 44% of all RAC denials, with a 72% success rate in the appeals process. However, the appeals process continues to be a slow one. Three-fourths of all appealed claims are still sitting in the appeals process, according to the survey. Yet, the majority of hospitals indicated that RA responsiveness and overall communication was either ‘fair’ or ‘good.’
Stents and syncope and collapse were the top MS-DRGs denied by RAs in terms of dollar impact.
The RA process continues to burden hospitals financially. The survey found that 63% of all hospitals reported spending more than $10,000 to manage the RA process during the first quarter of 2013. Forty-six percent spent more than $25,000, and 10% spent more than $100,000.
Fifty-nine percent of respondents indicated that they have yet to receive any education from CMS or its contractors related to avoiding payment errors.


Editor’s Note: This article originally appeared on

The new CDI thought process: The vision to see beyond immediate results

No matter what department or role you serve complete and accurate documentation should be one of your goals.

Complete and accurate documentation should be one of your goals.

Too many CDI specialists live for the immediate satisfaction of today. Their primary focus is upon getting a diagnosis documented in the record once and then moving on to the next chart, looking to secure another diagnosis and score a “win,” as measured by number of queries generated and number of queries positively responded to by physicians.

The medical record must clearly articulate the physician’s clinical rationale and judgment in support of conclusive diagnostic statements. These statements alone, however, are no longer sufficient in support of diagnosis code assignment from both the physician and hospital perspective, not to mention establishment of medical necessity for inpatient admission as well as physician evaluation and management (E/M) assignment. The clinical facts of the case explicitly documented in the record, supported by the physician’s thoughts and updated plan of care, serve to best reflect the patient’s true clinical condition, acuity, and ICD-9-CM diagnosis code assignment.

If you get this added documentation in the chart, it deprives third-party reviewers of their widely pervasive stand to refute a once documented diagnosis on the basis of its clinical significance and recouping money from the hospital. This is I what I coin the “vision to see beyond immediate results.”

What do I mean by this statement? Let me demonstrate with an example.

What is stronger documentation: A physician responding to a multiple-choice query and writing the term “neuropathy” once in the record, or documenting as follows?

Neuropathy related to prior oxaliplatin dosing. Symptoms have not dissipated despite using a vitamin B complex. This may be a limiting factor in choosing future chemotherapy agents. If the chemo related neuropathy continues, consider stopping the current chemo regimen altogether and see if a short chemo holiday improves the patient’s severe neuropathic pain and then, perhaps, begin a new regimen. My immediate concern right now is to get the patient over the hurdle of her relentless pain in the legs and arms, then discharge the patient and see how she does, bring her back into the office for evaluation in a week and hopefully start a new chemo regimen.

This example, taken from an actual chart, shows the diagnosis of neuropathy with clinical support beyond the typical diagnostic conclusion statement. While neuropathy, aside from acute infectious polyneuritis, is not considered a “CC,” the level of documentation including discussion of the physician’s clinical judgment, thought processes, and medical decision making goes a long way in supporting the medical necessity for inpatient admission and continued stay in the hospital. Helping physicians incorporate explicit documentation of clinical facts undoubtedly adds value to our roles and responsibilities as CDI specialists. Yet this benefit is not immediately measurable in results the hospital’s chief financial officer can equate to in terms of revenue and return on investment for CDI staff.

Nevertheless, even if a condition is not a CC, we should still be seeking specificity from the physician—especially with ICD-10-CM/PCS implementation on the horizon. If we take the time to work with the doctors today on documentation that impacts their payment—i.e., reflects their medical decision-making and ensures medical necessity for procedures and services—they’ll be willing to help us tomorrow.

Keep in mind that taking the extra time with a doctor today might result in a short term loss of productivity. Maybe you only get to 22 charts instead of 25. But you’ll also be ready for when ICD-10 comes, and your physicians will have bought into your CDI program.

Speaking of ICD-10, here is an excellent link comparing ICD-9 to ICD-10 for several commonly-used codes. Use this to focus your CDI efforts on specific code sets:

In short, get the extra specificity today. Strive for clinical support and documentation of all diagnoses, regardless of whether or not something is a CC with such efforts you will find the “vision to see beyond immediate results.”