Insights

Under traditional fee-for-service reimbursement, a patient’s diagnosis (i.e., medical necessity) determines whether his or her health insurance will cover a specific service. However, assuming coverage is available, the amount a provider receives in payment does not depend on the patient’s overall health status. Thus, there is limited incentive for a provider to document a patient’s condition with a high degree of specificity, beyond what is needed to demonstrate medical necessity.

Under emerging alternative payment models (APMs) – such as shared savings programs and bundled payments – the benchmark amount that determines the provider network’s payments is based on the health status of the population served. Thus, there is strong need for a provider participating in an APM to document each patient’s condition as accurately and specifically as possible.

Additionally, under value-based reimbursement programs which adjust fee schedule payments based on a physician’s score on specified performance metrics, the overall health status (acuity) of the physician’s patient panel directly impacts those scores. Therefore, when the provider’s documentation is both accurate and specific, the carrier has a better determination as to the health status of the physician’s population and can then reimburse appropriately.

And finally, the documented condition is used to assign hierarchical condition categories (HCC) which are used to determine payments under capitated models such as Medicare Advantage.

To navigate the transition to value-based reimbursement and to prepare for population health management, providers must focus on accurately “capturing” the risk in the populations they serve. This means overcoming the most common coding and documentation errors:

• Lack of specificity in physician documentation resulting in an unspecified code.
• Medical record documentation supports a more specific code than the reported ICD-10 code .
• Discrepancies between the diagnosis codes billed and the written diagnosis description in the medical record. (The billed diagnosis code and the diagnosis written in the medical record should mirror each other.)
• Lack of documentation indicating that the diagnoses billed on the claim are being monitored, evaluated, assessed/addressed, and/or treated .
• Chronic conditions (e.g., hepatitis, renal insufficiency) not documented as chronic, resulting in the billing of an unspecified or acute condition instead.
• Missing link or causal relationship for diabetic complications, and/or failure to report a manifestation code.
• Missing signature and/or valid credentials from an appropriate physician or other provider.

In the place of these poor documentation and coding habits, providers should develop new habits that include the following:

• Assess and report all chronic conditions annually (e.g., chronic renal failure, diabetes).
• Indicate co-existing acute conditions.
• Indicate all conditions that are being treated when prescribing medications.
• Document the level of specificity needed for the appropriate code selection. Avoid using unspecified codes as these may lead to unnecessary denials (e.g., diabetes w/renal manifestation).
• Always indicate:

-Status (stable/unstable/improving).
-Signs/symptoms.
-Recent test results.
-Medication changes.

• Document all existing chronic and acute illnesses in the medical record; have an assessment and plan of care for each.
• Watch for documentation errors regarding the use of “history of” (e.g., coding a past condition as active, or coding history of when the condition is still active. History of means the patient no longer has the condition (e.g., a patient with no evidence of cancer, who previously had an active cancer diagnosis).

Like most others, physicians often fall into habitual coding patterns, particularly related to diagnosis coding. While ICD-10 implementation challenged those habits, physicians still have the option to choose non-specific diagnosis codes. As the value-based reimbursement models roll out, there will be financial implications tied to appropriate diagnosis coding.   Providers who choose non-specific codes may receive lower reimbursement due to lower perceived patient acuity. Conversely there is risk that providers may inappropriately embellish a patient’s diagnosis codes to achieve higher scores and reimbursement.

To prepare for these risks, physicians (and organizations employing physicians) should evaluate the accuracy and the specificity of documentation and coding now to address any deficiencies and leverage best practices. This is best accomplished through coding, documentation, and medical necessity reviews followed by targeted physician education, and, of course, ongoing monitoring.

PYA’s compliance team can support your organization in developing, maintaining, and monitoring processes related to appropriate coding, documentation, and medical necessity while accurately identifying patient risk. For help building your foundation for population health management, please contact a related author below at PYA, (800) 270-9629.

 

Under traditional fee-for-service reimbursement, a patient’s diagnosis (i.e., medical necessity) determines whether his or her health insurance will cover a specific service. However, assuming coverage is available, the amount a provider receives in payment does not depend on the patient’s overall health status. Thus, there is limited incentive for a provider to document a patient’s condition with a high degree of specificity, beyond what is needed to demonstrate medical necessity.

Under emerging alternative payment models (APMs) – such as shared savings programs and bundled payments – the benchmark amount that determines the provider network’s payments is based on the health status of the population served. Thus, there is strong need for a provider participating in an APM to document each patient’s condition as accurately and specifically as possible.

Additionally, under value-based reimbursement programs which adjust fee schedule payments based on a physician’s score on specified performance metrics, the overall health status (acuity) of the physician’s patient panel directly impacts those scores. Therefore, when the provider’s documentation is both accurate and specific, the carrier has a better determination as to the health status of the physician’s population and can then reimburse appropriately.

And finally, the documented condition is used to assign hierarchical condition categories (HCC) which are used to determine payments under capitated models such as Medicare Advantage.

To navigate the transition to value-based reimbursement and to prepare for population health management, providers must focus on accurately “capturing” the risk in the populations they serve. This means overcoming the most common coding and documentation errors:

• Lack of specificity in physician documentation resulting in an unspecified code.
• Medical record documentation supports a more specific code than the reported ICD-10 code .
• Discrepancies between the diagnosis codes billed and the written diagnosis description in the medical record. (The billed diagnosis code and the diagnosis written in the medical record should mirror each other.)
• Lack of documentation indicating that the diagnoses billed on the claim are being monitored, evaluated, assessed/addressed, and/or treated .
• Chronic conditions (e.g., hepatitis, renal insufficiency) not documented as chronic, resulting in the billing of an unspecified or acute condition instead.
• Missing link or causal relationship for diabetic complications, and/or failure to report a manifestation code.
• Missing signature and/or valid credentials from an appropriate physician or other provider.

In the place of these poor documentation and coding habits, providers should develop new habits that include the following:

• Assess and report all chronic conditions annually (e.g., chronic renal failure, diabetes).
• Indicate co-existing acute conditions.
• Indicate all conditions that are being treated when prescribing medications.
• Document the level of specificity needed for the appropriate code selection. Avoid using unspecified codes as these may lead to unnecessary denials (e.g., diabetes w/renal manifestation).
• Always indicate:

-Status (stable/unstable/improving).
-Signs/symptoms.
-Recent test results.
-Medication changes.

• Document all existing chronic and acute illnesses in the medical record; have an assessment and plan of care for each.
• Watch for documentation errors regarding the use of “history of” (e.g., coding a past condition as active, or coding history of when the condition is still active. History of means the patient no longer has the condition (e.g., a patient with no evidence of cancer, who previously had an active cancer diagnosis).

 

Like most others, physicians often fall into habitual coding patterns, particularly related to diagnosis coding. While ICD-10 implementation challenged those habits, physicians still have the option to choose non-specific diagnosis codes. As the value-based reimbursement models roll out, there will be financial implications tied to appropriate diagnosis coding.   Providers who choose non-specific codes may receive lower reimbursement due to lower perceived patient acuity. Conversely there is risk that providers may inappropriately embellish a patient’s diagnosis codes to achieve higher scores and reimbursement.

To prepare for these risks, physicians (and organizations employing physicians) should evaluate the accuracy and the specificity of documentation and coding now to address any deficiencies and leverage best practices. This is best accomplished through coding, documentation, and medical necessity reviews followed by targeted physician education, and, of course, ongoing monitoring.

PYA’s compliance team can support your organization in developing, maintaining, and monitoring processes related to appropriate coding, documentation, and medical necessity while accurately identifying patient risk. For help building your foundation for population health management, please contact one of our executives listed below, (800) 270-9629.