Two Initiatives Impacting Current Reimbursement and Bundled Payments

Two significant federal government initiatives that impact payment and relate to clinical documentation come into affect in either October 2012 or October 2013. These two items are: value based purchasing (including quality-of-care measures) and hospital acquired conditions.

In May 2011, the federal government issued final regulations for its value based purchasing (VBP) program, which includes a quality of care model for reimbursement. Beginning in FY 2013, an incentive pool will be established and those hospitals that meet or exceed the standards will gain the benefits. Unfortunately, it is funded through a 1% reduction of participating hospitals’ base operating DRG payments. The quality of care domain component, which includes a patient score that measures care quality, patient safety and patient satisfaction, and comes into effect FY 2013, includes two domains. The clinical process of care domain is weighted 70% and patient satisfaction is weighted 30%. In 2014, an outcomes domain is added. And, those hospitals that do not meet the standards, do not receive any payment. (76 Fed. Reg. 26490 (May 6, 2011)). ‣ Read more...

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Released: The Dartmouth Institute’s Report for Opportunities Related to Hospital Acquired Conditions and Readmission Rates

Unless hospitals curtail the trend of  “excessive numbers of patients returning shortly after they are discharged,” hospitals could face the Medicare penalties for high readmission rates that take effect in October 2012. (U.S. Hospitals, Facing New Medicare Penalties, Show Wide Room for Improvement at Reducing Readmission Rates, p. 1 (Sept. 28, 2011)). The Dartmouth Report analyzed all 10.7 million Medicare patient hospital discharges between July 2003 and June 2009, and found little variation.

While surgery patients were the least likely to be readmitted (12.7% re-hospitalized in 30-days), congestive heart failure, pneumonia, hip fractures and other conditions showed significant room for improvement. (Kevin O’Reilly, Hospitals Make Almost No Headway in Cutting Readmissions, amednews.com (Oct. 10, 2011)). Variations in re-admission rates were noted between regions. Following-up with a primary care physician, inadequate discharge planning and lack of care coordination were just a few of the causes sited.

Faced with the prospect of Medicare pay being cut up to 1% in 2012 for readmission rates for heart attack, heart failure or pneumonia that are higher-than-expected for the 30-day period, providers need to assess their clinical documentation and care plans now. Otherwise, the penalty will only increase in October 2014 to 3%. (Ibid.)

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Problems With Reducing Physician Medicare Payments

There has been a great deal of attention given to The Medicare Payment Advisory Commission’s (MedPAC) recommendation to be given to Congress at the end of October 2011 to repeal the sustainable growth rate formula (SGR). SGR establishes Medicare payments to physicians and if Congress does not adopt another payment plan or come up with an alternative before January 1, 2012, physicians face a 30% pay cut. (Healthcare Financial Management Association, MedPAC Votes to Repeal SGR Formula (Oct. 13, 2011)).

The congressional “super committee” challenged with reducing U.S. budget deficits, is considering a “doc fix” in its recommendations, which is due November 23^rd. A major item is that the 10-year cost of fixing the SGR is in excess of $300 billion. The short-term band-aid solutions that prevented the pay cut in recent years is also adding to the federal deficit. (Donna Smith, U.S. Deficit Panel Weighs Medicare Doctor Payments, Reuters (Oct. 12, 2011)).

In addition to determining how to solve the payment conundrum, the Health and Human Services Office of the Inspector General is reviewing the impact of physicians opting out of Medicare. Physician acceptance of Medicare patients decreased 2.6% between 2005 and 2008, but 61% indicated they would consider leaving Medicare if payments were significantly reduced from current levels. (Charles Fiegl, OIG to Study Physicians Who Leave Medicare, www.ama-assn.org (Oct. 13, 2011) citing the June 27, 2011 Archives of Internal Medicine, archinte.ama-assn.org/cgi/content/extract/171/12/1117).

Considering the financial impact on providers, accurate clinical documentation should be at the top of their list of concerns.

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HHS Secretary Submits Recovery Auditor Contractor Report to Congress

Per Section 6411(c) of the Affordable Care Act, “The Secretary of Health and Human Services, acting through the Administrator of the Centers for Medicare & Medicaid Services, shall submit an annual report to Congress concerning the effectiveness of the Recovery Audit Contractor program under Medicaid and Medicare and shall include such reports recommendations for expanding or improving the program.”

The Report, Implementation of Recovery Auditing at the Centers for Medicare & Medicaid Service, FY 2010, highlighted that a majority of the year was spent on refining processes and that $92.3 million in overpayments and underpayments were identified. The auditors who participated in the Recovery Project (HDI (Region D) and Connolly, Inc. (Region C)) identified a greater number of improper payments. “To ensure claims are accurately reviewed, each Recovery Auditor is required to employ certified coders, nurses, and/or therapists. On a case-by-case basis, Recovery Auditors often consult with physician specialists for complex matters involving medical necessity determinations.” (CMS Report at p. 11).

A highly effective way to mitigate adverse medical necessity determinations is to utilize a peer-to-peer approach to clinical documentation compliance improvement.

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Compliance and the Role of Clinical Documentation

Generally, “compliance is a state of being in accordance with established guidelines, specifications, or legislation or the process of becoming so.” (PPMpractitioner, Regulatory Compliance Programmes (Dec. 19, 2010)).  One area that falls under the umbrella of compliance is clinical documentation. The importance of clinical documentation has been set forth in the 1997 Documentation Guidelines for Evaluation and Management Services and indicate, “The CPT and ICD-9-CM codes reported on the health insurance claim form or billing statement should be supported by the documentation in the medical record.” (page 3).

So, what is clinical documentation and why is it important?

“Medical record documentation is required to record pertinent facts, findings and observations about an individual’s health history including past and present illnesses, examinations, tests, treatments and outcomes. The medical record chronologically documents the care of the patient and is an important element contributing to high quality care. The medical record facilitates: (1) the ability of the physician and other health care professionals to evaluate and plan the patient’s immediate treatment, and to monitor his/her health care over time; (2) communication and continuity of care among physicians and other health care professionals involved in the patient’s care; (3) accurate and timely claims review and payment; (4) appropriate utilization review and quality of care evaluations; and (5) collection of data that may be useful for research and education.” (University of North Texas Regulatory Compliance Office, Clinical Documentation & Compliance Manual: A Guide to Documentation, Coding and Billing of Medical Services for Compliance (Apr. 27, 2004) citing the 1997 Documentation Guidelines for Evaluation and Management Services).

With ICD-10 implementation, increases in government audits from Recovery Audit Contracts (RAC) and other auditors, and Centers for Medicare and Medicaid (CMS) initiatives such as Hospital Acquired Conditions and Value-based Purchasing that rely on medical record content, it is imperative that providers are as accurate as possible. Furthermore, it may end up serving as a legal document to verify the care provided in a number of circumstances.

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