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Shifting Focus from Inpatient to Outpatient: Clinical Documentation Improvement Impact

By Berkeley Research Group  
   April 03, 2017

Hospitals are creating strategic programs to improve physician documentation practices

As patient care continues to move from inpatient to outpatient settings, hospitals are mobilizing for change. The March 2016 Medicare Payment Advisory Commission Report to the Congress: Medicare Payment Policy shows hospital inpatient discharges declined nearly 20% between 2006 and 2014, while outpatient services experienced a cumulative increase of approximately 44%. Hospitals are employing higher numbers of physicians and unveiling new strategies focused on outpatient growth. The number of hospital-employed physicians jumped 50% from 2010 to 2015, says Bonnie Peters, a managing director at Berkeley Research Group. “Coupled with the fact that value-based reimbursement continues to grow, this is incentivizing hospitals to launch outpatient clinical documentation improvement (CDI) programs,” says Peters.

Inpatient vs. outpatient CDI

While hospital leaders may be familiar with inpatient CDI, there are key differences with outpatient CDI, notes Peters. For example, an inpatient CDI program’s focus revolves around chart reviews during the patient’s stay. Hospitals also concentrate on an accurate case-mix index and identifying comorbid and major comorbid conditions. “Outpatient CDI reviews occur at a much faster pace, and there are different billing forms and coding rules/regulations,” explains Peters; also, physicians do not have the same resources to dedicate to outpatient CDI. However, it is becoming more critical to accurately capture ICD-10-CM diagnosis codes in the outpatient environment, as physicians’ reimbursement is predicated on quality over volume.

Inpatient and outpatient settings also differ in how they approach revenue, says Peters. “In the inpatient arena, a strong CDI program ensures providers are accurately capturing the severity of illness (SOI) and acuity of the patient to include any comorbid conditions. This drives appropriate reimbursement, which impacts the return on investment. Whereas in the outpatient arena, the organization may focus more on revenue protection and preventing denials.”

Why outpatient CDI is critical today

Outpatient CDI is also receiving buzz due to Medicare payment changes impacting physician practices, including the MACRA Quality Payment Program and its two tracks: the Merit-based Incentive Payment system (MIPS) and the advanced Alternative Payment Models. For the first year of MACRA, more than 70% of physicians will participate in the MIPS track, says Peters. “Under MIPS, physicians’ documentation this year will affect their 2019 reimbursement.”

Having a strong outpatient CDI program is important. “The resources that physician practices need are growing at an exponential pace,” says Peters. “They need to provide quality care and manage costs simultaneously in the outpatient setting, just as they do in the inpatient setting. The only way they can achieve this is if their documentation is accurate and complete.” Also, with Medicare Advantage growth, providers are under even more pressure to document accurately. By the 2020s, it is projected that as many as 40% of Medicare beneficiaries will be in a Medicare Advantage plan that uses Hierarchical Condition Categories for payment, says Peters. Documentation is especially critical with Medicare Advantage because the diagnoses that physicians document also predict future expenditures, she explains.

“It is important to capture additional specificity, accurately document the SOI, and link those conditions as appropriate, like we do with the inpatient CDI. If physicians do not capture the true SOI and risk of mortality for patients, they will not be reimbursed appropriately for the level of care they are providing under a risk-adjusted model,” Peters notes. This is where an outpatient CDI program is essential. For example, an outpatient CDI specialist can help Medicare Advantage–participating physicians document all conditions to the greatest specificity each year so the physicians receive the appropriate reimbursement for the care provided.

Getting started

When creating an outpatient CDI program, key areas to consider include Medicare risk adjustment in hospital-owned practices and the emergency department, especially if the facility has a high volume of medical necessity denials, says Peters. “Sometimes we see gaps or conflicting provider documentation in the ED.” It is important to have the correct documentation when a patient is placed into observation or is admitted to inpatient status.

Start with data analysis and review outpatient charges and denials related to coding for the previous 12 months, suggests Peters. Also, perform documentation and operational assessments, reviewing workflow and charge capture entry on encounter forms. It is also important to interview the coding and accounts receivable staff to learn about denial activity. Finally, perform a charge capture audit to determine which charges are being billed inappropriately; provide physician training, including a corrective action plan; and establish best practices. Ultimately, says Peters, “developing a detailed outpatient CDI strategy isn’t just about improving the bottom line, but also about capturing accurate documentation that supports the high quality of care provided.”

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