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kbasak100ED. NOTE: This is the second in a three-parts series dealing with the subject of mitigating risks while capturing revenues.


Last month in this series, I reviewed how and why revenue integrity is becoming a crucial part of day-to-day operations for healthcare organizations. As last month’s article suggested, successful organizations must widen their view beyond the RACs to implement a more holistic view that not only focuses on defending critical dollars from auditors, but also addresses the entire spectrum of revenue integrity and compliance (RIC) issues threatening their bottom lines. This means that organizations must ensure that they:


(1) Support every dollar of revenue earned with appropriate documentation;

(2) Record all charges and bill correctly for all services provided; and

(3) Prevent future losses by implementing continuous process improvement and measuring performance on a regular basis.


Best-practice organizations are committed to doing all three of these things well. Today’s article expands on these imperatives to outline the actionable steps that leading organizations are taking to evaluate and improve upon their revenue integrity performance.


Evaluating and Elevating Utilization Review Performance


Case management and utilization review is a logical focus area for any organization attempting to arrive at revenue integrity. Ever since CMS approved medical necessity for RAC review, numerous articles pinpointing target areas and specific guidance have been published. The RAC demonstration project report also generated a wealth of information on medical necessity audits, and the use of PEPPER reports allows hospitals to benchmark their performance.


However, I have yet to see an article that systematically guides healthcare professionals through targeted audits to help identify problem areas and provide concrete steps to improve performance. In response to the requests I have received from eager professionals, I offer below a few steps that best-practice organizations are taking to address the issue of medical necessity documentation:


1) Define, Measure and Analyze Areas for Improvement


  • Utilize your database to pull one- and two-day stay cases discharged within the last six months, excluding cases with patient discharge status codes of 02 (transfer to another short-term general hospital for inpatient care), 07 (left against medical advice) or 20 (expired). Also exclude one-day stays that have prior observation (revenue code 760 or 762) of greater than 24 hours, again excluding discharge status code 02.
  • From this list, select a manageable and statistically significant number of cases for chart reviews (this number depends on discharge volume and audit capacity) representing a majority of physicians, case managers and DRGs. Make sure to pull cases with MS-DRGs 195, 312, 313 and 690.
  • While reviewing these charts, look at patient symptoms at the time the admit/observation decision was made, and assess whether the decision was made based on supporting criteria with information present at the time of the decision. Review to see if the documentation is clear and complete, and that the reason or cause is noted appropriately. Also evaluate whether surgeries were performed in the correct setting and whether admission orders were written, dated and signed in a timely manner by the appropriate physician.
  • As cases with potential issues are identified, note the issue type, service area, physician and case manager associated with each to identify trends and prioritize future efforts.

Implement Best Practices and Improvements


Once target areas are identified, ask yourself the following questions: “What documentation standards need to be developed and implemented to ensure admissions can be validated per our medical staff’s clinical direction? What key tools are incomplete or missing? Who needs what type of training, and how will I make it all stick?” Some steps to consider are:


  • Implement a clinical documentation improvement program, initially deploying documentation specialists in the areas you identified as the ones with the greatest opportunities for improvement;
  • Staff case managers in ED to assist physicians with appropriate status designation;
  • Implement a series of prompt cards and decision trees to enable rapid checks for correct status determination;
  • Implement standard tools for documentation support, such as payer medical necessity criteria, for top denial-generating MS-DRGs;
  • Deploy a trusted physician advisor to champion ongoing initiatives and serve as a liaison to the clinical staff;
  • As appropriate, attend clinical staff meetings and present comparative data on reimbursement lost due to documentation issues and clinical outcomes.

3) Track and Control Results


In order to track performance effectively, report on the following metrics on a regular basis and implement automated prompts or alerts to flag potential issues:


  • IP/OP/Observation rates compared to your monthly census, trended by discharge date
  • Percentage ofpatients admitted after observation vs. percentage of patients discharged to home after observation, trended by discharge date
  • Number of one-day stays by physician, trended by discharge date
  • Number of one-day stays by case manager, trended by discharge date
  • Observation units of more than48 hours, trended by discharge date
  • MS-DRGs 195, 312, 313, 690, trended by discharge date
  • Auditor hit rate (takebacks) for medical necessity, trended by discharge date
  • Mortality rates, readmissions and HACs by physician, trended by discharge date (they will become increasingly key as accountable care takes hold.)

Evaluating and Elevating Coding Performance


Coding has been at the center of heated debates among healthcare executives for years now. If you code a chart within bill hold and give up on waiting on physician queries, you run the risk of over- or under-coding. If you wait until the appropriate response is provided in order to code appropriately, then you increase DNFB and aged AR as a result. It is a very fine balance to manage, and one with which many organizations struggle. With thousands of DRG validation audits already completed, most organizations have a DRG assurance program in place to mitigate some of these concerns. And yet, many continue to overlook key indicators that earned dollars are being left on the table.


Progressive organizations are thinking strategically about correct assignment of MS-DRGs, identifying and capturing missed charges, in part by focusing on the steps listed below:


1) Define, Measure and Analyze Areas for Improvement


  • Benchmark your lengths of stays and charges per MS- DRG using MedPar data. Review cases that have a minimum of a two-day variation from theexpected LOS for the DRG and casescharging more than comparable hospitals (again, exclude patient discharge status codes of 02 (transfer to another short-term general hospital for inpatient care), 07 (left against medical advice) or 20 (expired);
  • Investigate the reason for deviation from the norm. There are often three main reasons: 1) Poor discharge planning, 2) Weak documentation, unresponsiveness to physician queries, or not allowing coders to code to the higher DRG appropriate for a long LOS, and 3) Need for additional coding training.

While performing these exercises, best-practice hospitals find areas where they have the opportunity to bring in additional payments. For example, cases with LOS of more than 10 days often initially are assigned to a low-severity DRG and potentially could be re-billed with a higher DRG, thus bringing in higher payments. Once a case of this type is identified, targeted education and training can help ensure that the appropriate DRG assignment will be made in the first place.


2) Implement Best Practices and Improve


  • Implement or enhance your DRG assurance program utilizing benchmarks and constantly review those areas in which your institution falls outside the benchmarks;
  • Utilize a code scrubber and implement a process to update the rules on a regular basis;
  • Perform peer-to-peer coding reviews and conduct coding clinics to communicate fixes for identified issues and review the latest changes in guidelines;
  • Assign the responsibility of tracking the latest developments, guidelines and transmittals to a staff member-make it a part of his or her job description and performance review.

Track and Control Results


In order to track coding performance effectively, trend the following metrics and implement automated prompts or alerts to flag potential issues:


  • Complex MS-DRGs (with CC & MCC) with LOS of less than three days (excluding discharge statuses 02, 07 and 20) by coder, trended by coded date or discharge date
  • Simple MS-DRGs (without CC or MCC) with LOS of more than 10 days (or two days off the benchmark) by coder, trended by coded date or discharge date
  • Average charges per MS-DRG compared to benchmarks, trended by coded date or discharge date
  • Denied dollars per MS-DRG and per coder by denial reason, trended by coded date or discharge date

Looking Ahead


The process through which healthcare organizations define and implement a Revenue Integrity and Compliance (RIC) strategy often is rooted in these same simple steps: define and analyze areas needing improvement, implement best practices and then measure and track results. Next month, I’ll be sharing a case study of an organization that successfully implemented a clinical documentation improvement program as part of its RIC strategy.


About the Author


Basak Kaya is an Associate Director at The Advisory Board Company, assisting member institutions in improving their revenue capture through business intelligence and best practices in coding, documentation and charge capture. Over the years, Basak supported over 60 hospitals, ranging from 100 bed community hospitals to multi-hospital systems, as a Revenue Cycle consultant. Prior to joining forces with providers, Basak worked as a strategy analyst for pharmaceutical companies such as Pfizer and GlaxoSmithKline. Basak received her MBA in Health Services Administration from The George Washington University and holds a Bachelor of Science degree in Economics from University of Virginia.


Contact the Author




To read article entitled, “RAC Stats: What to Look for After the Audit,” please click here


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