CDI – Do You Know Your True Return on Investment? Maximizing ROI through Effective Integration with Revenue Cycle Management

April 28, 2016

by Glenn Krauss, Regional Director of Enterprise Solutions, ZirMed

Current CDI Framework

Clinical documentation improvement programs are ingrained in the majority of hospitals’ operations, serving primarily as an operational process to enhance and increase financial reimbursement to the hospital through documentation of clinical specificity. Measures of process outcome successes and return on investment (ROI) are fixated on clinical documentation improvement specialist’s effectiveness in querying physician’s for additional clinical specificity that translates into the capture of comorbid conditions/major comorbid conditions and principal diagnosis selection.

The outcome this effort is improvement in MS-DRG case-mix and subsequent increases in reimbursement for all inpatient services provided, coded, and billed. In large part, ROI for CDI is calculated based upon costs outlays for external CDI consultants to build and guide your CDI initiatives, labor and benefits for CDI staff, ongoing training of CDI staff, and Clinical Documentation Improvement Software that might be licensed to maintain and keep track of CDI outcomes.

Return On Investment – Big-Picture Considerations

Appropriate measures of ROI for any hospital driven initiative must by definition incorporate any and all incremental and as well as marginal costs that are often times overlooked in established calculation measures. In the case of CDI initiatives where ROI is strictly calculated based upon increase in monthly case-mix and financial reimbursement, one critically important aspect is being overlooked that has the real potential to actually costs your hospital monies you may not have anticipated.

Third-party denials.

CDI efforts commonly lead to unnecessary, avoidable third-party denials centered around clinical validation of diagnoses secured by your CDI team. Clinical validation denials executed by third parties, both commercial payers as well as Medicare contractors, are an extension of medical necessity denials rooted in disputing and second guessing physician documentation of secondary diagnoses or principal diagnoses that serve to increase reimbursement.

Case in point: the CDI query for an additional major comorbid condition (MCC) that drives the MS-DRG assignment to an alternate DRG assignment reimbursing at a higher level. In those instances where the claim contains only one MCC, the payer will request a copy and review the medical record, devising a strategic

argument (oftentimes using questionable rationale not rooted in the clinical practice of medicine) to refute the clearly documented diagnosis.

In other instances, the CDI-initiated query generates a “passing diagnosis” with the physician responding to the query by including a diagnosis on one occasion in a progress note—but not backing that up with documentation in subsequent progress notes and the discharge summary. Or the CDI generated query may result in conflicting, ambiguous or inconsistent documentation of a principal or secondary diagnosis that payers use to their advantage in refuting and disallowing code assignment on the claim, resulting in not surprisingly decreased reimbursement for the hospital.

The end result?

You expend additional resources in staff time and other associated expenses in appealing each and every one of these “down-coded” claims in the hopes of overturning the payer decision to reimburse you less than what is earned for the actual care provided. For straight Medicare patients, the costs of appeals can be daunting in terms of time value of money with appeals at the Administrative Law Judge venue backlogged for at least 18 months to 24 months.

What it looks like in the real world

The following case study from a Medicare Advantage payer drives home the point about costly clinical validation denials:

  • We have reviewed the case referenced above and have determined that the DRG assignment for this case is appropriately changed from DRG 73 to 74. This determination is based on the following:
    Secondary diagnosis of Acute Pancreatitis, diagnosis code K85.9, is removed.
  • The physician documented on History and Physical, “Known diabetic gastroparesis …now with intractable nausea and vomiting, and mild acute pancreatitis.”
    • Consultant documented on 09/25/15 “Mildly elevated lipase but I do not think there is any clinical evidence of acute pancreatitis, this could be due to poor renal clearance.”
    • Another consultant documented on 09/25/15, “It appears that she has mild pancreatitis …” After study, on discharge summary, the physician id not provide a diagnosis of acute pancreatitis.
  • With the documentation as listed above, it is not clear that the patient had acute pancreatitis during this admission. As such, the secondary diagnosis of acute pancreatitis is being removed from the claim and the DRG changed from DRG 73 to 74.
  • Since this claim has been paid under DRG 73, you may appeal the claim through our official appeals process or if you agree with the DRG change determination, you may offset the payment due or issue a check.

Costly (and Avoidable) Medical Necessity Denials

Provisions of medical necessity serves as the basis for third-party payer reimbursement or lack thereof. The concept of medical necessity is confusing, subjective and elusive from the practice of medicine perspective. Establishment of medical necessity for inpatient and observation services is predicated on the physician providing complete, accurate and succinct documentation reflective of patient severity of illness and acuity, risk of morbidity and mortality taking into consideration presenting signs/symptoms and existing comorbidities, and substantiation of the reasonable need for a hospital level of care.

CDI specialists can serve as the champion of demonstrating medical necessity, making a compelling argument for and reinforcing best practices of documentation that clearly establishes necessity through capture of the physician’s clinical judgment, medical decision making, thought processes and problem solving ability.

Yet the current framework of CDI primarily focuses upon the strict endpoint of increasing case-mix and reimbursement. While there is nothing noticeably wrong with the current framework of enhancing case mix index and reimbursement….the fact remains that clinical context and content that best summarize the clinical facts of the patient encounter is given less weight and focus.

So what’s missing from the present construct of CDI?

Measurable improvement in actual documentation, documentation necessary for proper communication of patient care, resource consumption, quality of care provided, outcomes achieved and meaningful representation of the fee-for-value proposition that healthcare is transitioning into. This lack of focus and effort upon adequately capturing the clinical context of admission in the History and Physical, progress notes that inadequately display and depict the clinical true clinical picture of the patient including clinical stability and “progress” or lack thereof,  insufficiencies and incongruences in the showing and describing of patient clinical acuity, and failure to tie all the clinical information associated with the patient encounter, contributes to potential inaccuracies in ICD-10 code and MS-DRG assignment as well as unnecessary medical necessity and clinical validation denials.

Commonly Overlooked Results of CDI Initiatives

Just as clinical context of documentation is essential in support of diagnoses in the chart in alleviating unnecessary denials, clinical context and content with physician’s clinical judgment, medical decision making, thought processes and analytical/problem solving skills is essential and fundamental to alleviating unnecessary denials associated with potentially aberrant coding and billing patterns from CDI initiatives. The OIG in all of its hospital compliance reviews being conducted throughout the country cites the following as the basis for all hospital compliance reviews:

  • Using computer matching, data mining, and data analysis techniques, we identified hospital claimsthat were at risk for noncompliance with Medicare billing requirements. For calendar year (CY) 2012, Medicare paid hospitals $148 billion, which represents 43 percent of all fee-for-service payments; therefore, the Office of Inspector General must provide continual and adequate oversight of Medicare payments to hospitals.
  • In an OIG Hospital Compliance Review report of Freeman Hospital, the OIG concluded that Freeman Hospital did not fully comply with Medicare requirements for billing inpatient and outpatient services, resulting in overpayments of approximately $311,000 over 2 years.
  • The Hospital complied with Medicare billing requirements for 180 of the 225 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 45 claims, resulting in overpayments of $311,447.
  • The OIG audited 208 claims to validate the appropriate assignment of DRG coding, claims for appropriate coding of claims with MCCs or CCs, which impacted the determination of DRG coding. Of these 208 claims, the OIG reported 25 had errors. Unsupported codes resulted in an overpayment of $157,096 to which the hospital submitted corrected claims and refunded the overpayment amounts.

The OIG has identified short inpatient stays with highly weighted MS-DRGs to consistently be high risk areas in the majority of hospital compliance reviews it has conducted. Highly weighted MS-DRGs are generally those that contain a “Major CC” thereby being the highest reimbursing DRG in a triplet or pair set.

Often only one MCC is documented and coded, thereby creating a pattern for selection and review using data analysis and data mining with identified trends.

An example of a highly weighted MS-DRG is DRG 871- Sepsis with Major CC which constitutes an area of focus by clinical documentation improvement specialists in querying for sepsis diagnosis in instances of a patient who presents to the hospital with altered mental status and signs of an infection such as pneumonia or urinary tract infection. An additional diagnosis considered to be a Major CC such as pneumonia, acute renal failure with tubular necrosis, acute respiratory failure, shock liver or acute metabolic encephalopathy can be queried for (if clinically relevant) and the diagnoses when coded will support DRG 871—considered a very highly weighted DRG and, therefore, a high-risk area that OIG and all payers (government and commercial) focus on.

Related note: Medicare contractors who are charged with safeguarding the Medicare Trust Fund through use of predictive data analytics, data mining and other series of charging and billing rules used to identify potential claims for coding, billing, medical necessity and other improprieties, there are a host of entities that any provider who bills Medicare and other third party payers can face regulatory scrutiny.

Some of these entities include the Comprehensive Error Rate Testing Program contractor, Medicare Administrative Contractors, Recovery Auditors, Zone Program Integrity Contractor, Program Safeguard Contractor, and Beneficiary and Family Centered Care Quality Improvement Organization. Then there is the PEPPER Program, Program for Evaluating Payment Pattern Electronic Report overseen and managed by TMF Health Quality Institute, under contract with the Centers for Medicare & Medicaid Services to provide

comparative data reports to providers and to Medicare Administrative Contractors in support of efforts to reduce Medicare fee-for-service improper payments. PEPPER provides provider-specific Medicare data statistics for discharges/services vulnerable to improper payments. PEPPER can support a hospital or facility’s compliance efforts by identifying where it is an outlier for these risk areas. This data can help identify both potential overpayments as well as potential underpayments. The TMF Health Quality Institute releases quarterly reports to hospitals containing hospital specific coding and billing data by certain DRGs, one day stays and other parameters, comparing the hospital to national, state specific and region data, thereby allowing the hospital to identify any risk areas and aberrant patterns that need further scrutiny and potential documentation improvement (

Clinical documentation improvement initiatives may unnecessarily cause the hospital to appear to be “out of the norm” in certain measures of coding and billing and thus contributing to unnecessary scrutiny by other outside Medicare third party contractors who utilize this data, particularly the Medicare Administrative Contractors who also use CERT contractor results of provider improper payment and billing to identify providers to conduct focused or widespread probe reviews.

In short, clinical documentation improvement programs, while designed to enhance clinical documentation in support of case mix increases and resulting reimbursement, have the strong tendency to contribute to unnecessary outside payer scrutiny and review generating avoidable denials and down-coding that are very costly to appeal and overturn. Tremendous administrative costs are associated with the denials, appeals and recovery function, particularly with the extended delay in appealing claims at the Administrative Law Judge level, the third level in the five level Medicare Appeals process.

Insuring Optimal ROI of CDI Initiatives

What can be done to set the stage for insuring optimal return on your large investment in your CDI initiatives? There are several worthwhile steps that can be considered and implemented to maintain an up-to-date pulse on your program.

The first step entails recognizing the fact that traditional monthly key performance indicators do not in and of themselves necessarily provide for valid measures of program success. KPIs such as CC/MCC capture rate, surgical and medical case-mix increases, number of queries initiated by staff, physician query rate, physician-query response rate, number of queries answered affirmatively, number of queries answered affirmatively that increase reimbursement, time taken to open and review a case, follow-up chart review rate, etc., are typical measures that supposedly provide for a snapshot of the overall health of your program.

However, these KPIs fail to reflect the state of true clinical documentation improvement achieved at your facility.  Realizing optimal return on your CDI program requires a much broader perspective in defining what constitutes actual clinical documentation improvement.
Ask yourself (and your team): what are your goals, objectives and missions in sponsoring and funding a facility wide CDI program?

An unrelenting focus upon case-mix increase and reimbursement as the process and outcome for CDI will significantly detract from achieving optimal return and be the limiting factor in your program.

Instead, stated goals, objectives and measures of your program that resonate and drive your clinical documentation improvement specialists in their day-to-day duties and responsibilities is promotion of, making a compelling argument and striving for real improvement in the clinical context and content of the record that best communicates the quality of patient care, outcomes achieved, efficiencies of the practice of medicine, optimal reimbursement for both the hospital and physician for actual care rendered, and accurate reporting and reflection of fee-for-value. Case-mix increase and improved reimbursement generation must by definition be a by-product and outcome of clinical documentation of any well designed and executed CDI program as opposed to a predefined endpoint.

Better positioned measures of success of any CDI initiative are the volume of medical necessity denials attributable to insufficient documentation and net patient revenue generation versus gross patient revenue.

Gross patient revenue measures derived strictly from monthly case mix increases fail to take into account clinical validation denials, coding denials, medical necessity denials, and regrouping of DRG assignment by third party payers, all resulting in financial recoupments and decreased net patient revenue.

It is important to note that clinical documentation improvement initiatives to some extent contribute to denial volumes by virtue of the fact actual clinical documentation is not necessarily improved through program focus activities and coding and MS-DRG assignment impacted by achieved capture of CC/MCCs and principal diagnosis selection stands to create an aberrant claims data environment subject to third party payer and Medicare contractor data analysis, data mining and predictive chart review activities generating excessive prepayment and post payment coding and billing scrutiny. It goes without saying that when outside reviewers settle in on focused scrutiny of your coding and billing activities, they don’t go away empty handed. Witness the numerous findings of the OIG in their ongoing Hospital Compliance reviews, they consistently identify coding and billing issues recommending the hospital refund the “overpayments” related to improper coding and billing.

Getting Started – Making the Transition to Optimal ROI

Making the transition to optimal ROI on your CDI initiatives entails embracing a new paradigm of CDI.

  • Clinical Documentation Improvement is defined by the completeness, consistency, organization and accuracy of the medical record, reflecting the physician’s clinical judgment and medical decision making. CDI supports positive outcomes in patient care, quality, cost, resource consumption, fee for value, patient reimbursement and revenue cycle processes.

Realizing the full benefit of this new CDI paradigm requires incorporating heightened expectations for CDI professionals—expanding their chart review to include promoting and achieving best practice standards of clinical documentation that stand the test of time while effectively communicating the quality patient care provided.

In short, physician documentation should be of the caliber and extent that any physician reviewing the documentation will be able to clearly understand the patient’s clinical conditions, how the treating physician arrived at the diagnosis and treatment plan with reasonable congruency between the patient assessment and plan of care. This vision of CDI provides the framework for actually improving the recording of clinical context and content in the record in support of the clinical validation of diagnoses documented by the physician, complemented by the CDI query process. Then and only then will be documentation be able to best serve the test of time, enhancing and optimizing revenue integrity.

On the note of revenue integrity: a key component to optimal CDI return on investment and high-performing revenue cycle processes is leveraging technology that offers the capability of providing an efficient second level automated review of all coded and billed claims prior to actual release of the claim.

This technology uses thousands of machine-learning and predictive-modeling algorithms to identify potential cases that may be undercoded, overcoded, contain coding and DRG anomalies, coding variances, high risk, or have a predisposition and propensity for denial, all once again prior to claim submission. This affords the hospital the opportunity to employ technology similar to Medicare and other third party payers to identify potentially problematic coded accounts seamlessly and efficiently prior to billing, review each identified case for a second look at supporting documentation, code and MS-DRG assignment and sufficient and adequate documentation of medical necessity, and initiate appropriate action prior to bill submission.

Leveraging powerful technology of this magnitude and caliber provides for a continuous quality improvement feedback loop for your CDI program, continuously improving documentation and supporting the coding and MS-DRG assignment process. A valid and reliable measureable outcome of this technology is enhancement of your CDI and coding processes to the extent you are more confident of the documentation in support of the billed claim from a financial perspective with less chance for prepayment and/or post-payment denials, less monies and resources needed to appeal avoidable downcoding and medical necessity denials and even more importantly achievement of true meaningful documentation improvement.

The ultimate advantage of leveraging technology as a complement to your revenue cycle processes is optimizing your CDI return on investment through the continuous quality improvement feedback loop, enhancing documentation that will stand the test of time while minimizing compliance and coding and billing aberrant patterns that catch the attention and scrutiny of outside Medicare contractors and other third party payers. The time to take a hard look at exploring and leveraging technology to optimize your CDI ROI and revenue cycle processes is now—so that you can begin to enjoy the benefits ahead of future changes in healthcare.

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