4 Areas Where Better Documentation Can Improve Hospital Revenue

Clinical documentation improvement programs at hospitals usually conjure up notions of coding and health information management, but CDI goes much further. A main tenet of a successful CDI program is that it should lead to an increase in the hospital's revenue because most hospitals fail to capture the actual severity of illness of patients due to inadequate physician documentation.

CDI programs help hospitals better interpret coded data for comparisons, benchmarking and quality reporting, and the resulting documentation improvement benefits the bottom line in a plethora of ways, says Paul Weygandt, MD, JD, vice president of physician services for J.A. Thomas & Associates, a healthcare compliance and documentation firm.

Dr. Weygandt, an orthopedic surgeon, used to be vice president of medical affairs at Conemaugh Health System in Johnstown, Pa. He has been with JATA for the past eight years, helping hospitals that may be losing money from inadequate documentation. He says documentation problems do not just affect physicians and coders — the impact runs all the way up to the C-suite.

"Many CFOs historically have thought of CDI as a branch of the HIM department for the sole purpose of improving their coding," Dr. Weygandt says. "It really is a collaborative process. That's the key."

Here, he explains four areas that impact a hospital's revenue that could also be improved through a successful CDI initiative.

1. Case mix index.
CMI is an essential measurement for any hospital CFO and financial department. CMI measures the relative cost needed to treat a hospital's Medicare population, and it explains the types of patients the hospital treats (by co-morbidities, complications, gender, etc.). Basically, it reflects the average severity of illness of all Medicare patients treated at the hospital. The higher the CMI, the more high-revenue services the hospital performs.

Documentation directly impacts CMI. For instance, if physicians are too vague in their descriptions, the result could could be undercoding, which lowers the CMI and leaves revenue on the table. "The starting point [of CDI] is CMI," Dr. Weygandt says. "Every CFO relates CMI to revenue and to any case-based payment methodology."

2. Management of recovery audit contractors. It's no secret that Medicare RACs are aggressively pursuing hospitals and health systems for potential overpayments. In the third quarter of the 2012 federal fiscal year, Medicare RACs collected $657.2 million in overpayments — the highest total of any quarter in the program's history.

A CDI program can refine and clean up a hospital's claims, which could both provide payment justification to RACs and allow a hospital to spend less administrative resources on managing the RAC process. "Hospital CFOs are acutely aware of short-stay admissions and observation stays monitored [by RACs]," Dr. Weygandt says. "Correct coding of medical necessity for admission is a huge revenue cycle focus. And that's all driven by physician documentation and medical necessity for admission."

3. Quality standards and readmissions. Under the Patient Protection and Affordable Care Act, Medicare readmissions penalties are now under way across all hospitals. Hospitals stand to lose portions of their Medicare funds if their readmission rates are too high, and Dr. Weygandt says readmissions and other quality standards — such as hospital-acquired infections — are often defined by documentation.

This is where the finance, HIM and clinical departments must collaborate. This is especially true for the hospital CFO and CMO. Dr. Weygandt says in order for a hospital to maintain high clinical quality scores, thus maintaining appropriate revenue, CFOs and CMOs must incorporate each other's mindsets into their strategic planning. CFOs must be mindful of clinical standards, while CMOs must be aware of the hospital's cash flow — and better documentation connects the two ideas together.

"There is a blurring between the silos of CMOs and CFOs," Dr. Weygandt says. "CFOs have to be more conscious of quality, and CMOs have to be more conscious of maintaining appropriate revenue, limiting readmissions and preparing for accountable care."

4. ICD-10. CDI initiatives are most closely linked to coding projects, and no coding project is bigger right now than ICD-10. CDI programs could directly help a hospital's ICD-10 implementation, which will affect a hospital's bottom line and budget planning in numerous ways — ranging from IT changes to staff training.

"ICD-10 will be a big transition for the revenue cycle," Dr. Weygandt says. "It's a perfect time for CFOs and CMOs to build the appropriate infrastructure for success, if they don't already have it."

Executive and physician leadership
Dr. Weygandt has more than two decades of experience as a physician leader and CDI specialist, and he reiterates that in order for CDI programs to be successful and assure appropriate hospital revenue, there must be physician buy-in. Hospital executives will need to put their physician relationship skills to the test, and selling the idea rather than ordering a mandate will lead to the desired result.

"A documentation program only succeeds with the cooperation of medical staff," Dr. Weygandt says. "I would push to have the program structured under the medical staff's direction to some extent. For example, it's easier to get physician cooperation if documentation initiatives are driven by physician leadership. If this is thrown at a medical staff, it may be accepted, rejected or somewhere in between."

More Articles on Hospital Documentation Improvement:

How Comprehensive Clinical Documentation Improvement Pulls ICD-10 Projects Together

7 Projects Hospital CFOs Should Focus on in the Final Months of 2012

3 Pressing Health IT Issues for Hospital CFOs

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