Health Information Management

Coding for clinical accuracy requires keen eye for detail

JustCoding News: Inpatient, June 20, 2012

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by Glenn Krauss, RHIA, CCS, CCS-P, CPUR, C-CDI, CCDS

Medical records coders must constantly nurture and update their skills to maintain core competencies and proficiencies in accurate clinical code assignment. Core competencies and skill sets become more paramount as code selection will soon begin to play a role in the Hospital Value Based Purchasing Program (VBP). The program, established by the Affordable Care Act (ACA), will implement a pay-for-performance approach to the inpatient prospective payment system (IPPS). IPPS accounts for the largest share of Medicare spending, affecting payment for inpatient stays in over 3,500 hospitals across the country.

Medicare created the VPB program to promote better clinical outcomes for hospital patients and improve their experience of care during hospital stays. For the first time, hospitals will be reimbursed for inpatient acute care services based on quality of care instead of quantity of care. The magnitude and details of the VBP program are beyond the scope of this article, but those interested in obtaining additional information should visit the CMS website at

Key provisions of the ACA

Two key provisions of ACA include the Medicare Readmission Reduction Program and the Medicare Spending per Beneficiary Program. The former is scheduled to begin fiscal year (FY) 2013 (i.e., October 1, 2012). The latter program is in its proposal stage, and is slated to begin in FY 2015 (i.e., October 1, 2014), as part of the Inpatient Quality Reporting program measure “Cost Efficiency.”

The Readmission Reduction Program, established under section 3025 of ACA, requires CMS to reduce payments to IPPS hospitals effective October 1, 2012, for the following measures:

  • Acute myocardial infarction
  • Heart failure
  • Pneumonia

Readmission is defined as a readmission within 30 days of discharge from the same or another hospital.

CMS will use the calculation of the excess readmission ratio to determine the readmission payment adjustment under this Readmission Reduction Program. Interestingly, the National Quality Forum (NQF) endorses the risk adjustment methodology of measuring a hospital’s readmission performance compared to the national average for the hospital’s set of patients for an applicable condition. The excess readmission ratio includes adjustments for factors that are clinically relevant including patient demographics, comorbidities, and patient fraility. In other words, each patient hospital discharge for these three clinical conditions is risk adjusted based upon patient’s severity of illness.

Severity of illness, of course, is reported on claims data through accurate and complete assignment of patient clinical diagnoses in the form of ICD-9-CM diagnosis codes.

The second program, Medicare Spending per Beneficiary, compares how much Medicare spends on each Medicare patient who is admitted to a hospital to the amount Medicare spends per hospital patient nationally. This measure includes any Medicare Part A or Part B payments made for services provided to a patient during the three days prior to the hospital stay, during the stay, and during the 30 days after discharge from the hospital.

This result is a ratio calculated by dividing the amount Medicare spends per patient for an episode of care initiated at this hospital by the median (or middle) amount Medicare spent per patient nationally.

Considering the following:

  • A result of 1 means that Medicare spends approximately the same amount per patient for an episode of care initiated at this hospital as it does per hospital patient nationally.
  • A result of more than 1 means that Medicare spends more per patient for an episode of care initiated at this hospital than it does per hospital patient nationally.
  • A result of less than 1 means that Medicare spends less per patient for an episode of care initiated at this hospital than it does per hospital patient nationally.

Obviously, lower numbers are better. CMS assumes that hospitals with a ratio greater than 1 deliver healthcare less efficiently, so the hospitals will be penalized accordingly from a reimbursement methodology as part of the Inpatient Quality Reporting and VBP provisions.

The Medicare Spending per Beneficiary adjustment methodology accounts for:

  • Variation in case mix across hospitals
  • Case mix measured by factors such as age and severity of illness
  • Risk adjustment variables:
    • Age
    • Hierarchical Condition Categories (HCC)
    • Disability and end stage renal disease (ESRD) enrollment status
    • Long-term care
    • Interactions between HCCs and/or enrollment status variables
    • MS-DRG of index admissions (i.e., admissions with a principal diagnosis of a specified condition that meets the inclusion and exclusion criteria for the measure)

A word on HCCs

Medicare established HCCs in 2004 to adjust capitation payments to private healthcare plans for the health expenditure risk of their enrollees. Under HCCs, Medicare health plans, as part Medicare Advantage Plans (i.e., Medicare Part C), are reimbursed a monthly capitation payment based on the reported clinical acuity of the patient, which centers on accurate clinical documentation that reflects the patient’s chronic conditions, as they can be translated into one of 70 HCC categories. Examples of HCC categories include:

  • Diabetes without complications—HCC 19
  • Chronic obstructive pulmonary disease—HCC 108
  • Congestive heart failure—HCC 80
  • Breast cancer—HCC 10
  • Ischemic heart disease—HCC 92
  • Angina—HCC 83
  • Bipolar disorder not otherwise specified (NOS)—HCC 55
  • Diabetes with renal manifestations not stated as uncontrolled—HCC 15
  • Renal dialysis status—HCC 130
  • Long-term use of insulin—HCC 19
  • Ilesotomy status—HCC 176
  • Injury not elsewhere classified (NEC)—HCC 55

Role of the coder in risk adjustment methodology

Coders review the clinical documentation in the medical record, adhering to official coding guidelines, policies, directives, Coding Clinic updates, Uniform Hospital Discharge Data Set (UHDDS) definitions of principal and secondary diagnoses selection. They then assign all clinically relevant diagnoses as documented by the physician and other nonphysician practitioner involved in the care of the patient.
The ICD-9 Official Guidelines for Coding and Reporting, effective October 1, 2011, state:


A joint effort between the healthcare provider and the coder is essential to achieve complete and accurate documentation, code assignment and reporting of diagnoses and procedures. The importance of consistent, complete documentation, in the medical record cannot be overemphasized. Without such documentation accurate coding cannot be achieved. The entire record should be reviewed to determine the specific reason for the encounter and the conditions treated.

The coder assumes an increasingly important role in ensuring the record speaks for itself as it relates to measures of risk adjustment by reporting all clinically relevant documented conditions, regardless of their impact upon reimbursement.

Emphasis upon reimbursement is evident with the growing focus on case mix and capturing CCs and MCCs with the rapid growth of clinical documentation improvement (CDI) programs. But the accurate and complete reporting of all clinical conditions impacting patient processes of care and outcomes is equally important. These conditions include dialysis status, amputation status, and overall general historic conditions of the patient that meet and ascribe to the UHDDS definition of reportable secondary conditions.

Coders play a pivotal role in assuring the accuracy of patient clinical acuity is reported through complete documentation and reporting of clinically relevant conditions. They can collaborate with CDI specialists to affect positive change in physician documentation patterns of chronic patient conditions to complement acute patient conditions.

The time is right for coders to step to the plate, acknowledge their expanded role in proper reporting of patient acuity and risk adjustment, expand their horizons in risk adjustment code assignment, and actively work with CDI professionals to ensure providers document all clinically relevant conditions so they can be reported through effective ICD-9-CM code assignment.

Editor’s note: Krauss is an independent consultant based in Madison, WI. Contact him at

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