Getting and Keeping Cash Prospering in the Setting of MS DRG’s and Recovery Audit Contractors Jim Hull –Hull Resource Management Group Raul Velazquez –Health Records Systems Management Health Systems Records Management

Getting and Keeping Cash 1.Getting Cash –MS DRG’s, documentation and medical records coding 2.Keeping Cash –Recovery Audit Contractors 3.Spending Wisely –Comparative cost reporting Health Records Systems Management

MS – DRG’s In Which CMS Tries to Balance the Budget Grouper version 25, implemented 10/2007 –CMS cost containment strategy –From 538 to 745 DRG’s –DRG weights depend on physicians’ documentation of co-conditions and major co- conditions Health Records Systems Management

Documentation and the MS-DRG Assignment If it is not documented, did it happen? What does the record say? –Principal diagnosis –Co-conditions –Complications CC’s and MCC’s are based on physician documentation and generally result in higher reimbursement, reflecting resource utilization What was really done for the patient? –Principal procedure Health Records Systems Management

Definitions That Matter Principal Diagnosis : –The condition responsible for the patient admission Complication : –Any condition that arises during the hospital stay. Co-morbidity : –Any pre-existing or chronic condition. Principal Procedure : –Procedure performed for definitive treatment rather than for exploratory or diagnostic purposes, or that is necessary to treat a complication. The principal procedure is usually related to the principal diagnosis. Health Records Systems Management

MS-DRG Impact: Heart Failure & Shock DRG (Ver. 25)Weight $5000 Base Rate $6000 Base Rate $7000 Base Rate 293 Without CC or MCC $4383$5259$ With CC $5067$6084$ Old Version $5245$6294$ With MCC $6293$7551$8810 Health Records Systems Management

Heart Failure & Shock Documentation Makes All the Difference Specific type of Heart Failure –Systolic, diastolic, acute, chronic, etc Minor CC examples –COPD exacerbation, UTI, Hyponatremia Major CC examples –Decubitus ulcer, Pulmonary Embolus, Acute Renal / Respiratory Failure Health Records Systems Management

MS-DRG Impact: Simple Pneumonia DRG (Ver. 25)Weight $5000 Base Rate $6000 Base Rate $7000 Base Rate 195 Without CC or MCC $4199$5038$ With CC $5118$6141$ Old Version $5188$6224$ With MCC $6253$7503$8754 Health Records Systems Management

MS-DRG Impact: Complex Pneumonia DRG (Ver. 25)Weight $5000 Base Rate $6000 Base Rate $7000 Base Rate 179 Without CC or MCC $6377$7652$ With CC $7818$9382$10, Old Version $8134$9761$11, With MCC $9222$11,066$12,911 Health Records Systems Management

MS-DRG Impact: Simple and Complex Pneumonia Documentation makes all the difference Organism –Culture and sensitivity Mechanism –Community acquired, aspiration Co-conditions –Presence of CC’s and MCC’s Health Records Systems Management

MS-DRG Impact: Respiratory Failure with Ventilator DRGWeight $5000 Base Rate $6000 Base Rate $7000 Base Rate 207 ventilator > 96 hrs $25,616$30,739$35, ventilator < 96 hrs $11,232$13,4779$15,724 Health Records Systems Management

MS-DRG Impact: Respiratory Failure with Ventilator Critical Thinking and Finding the Detail Count ventilator hours from intubation –Excludes OR intubation Health Records Systems Management

How’s Your Coding? What’s documented vs. what’s coded? –Internal or external –Auditing the audit Optimizing CMI –Reflect resource utilization –Appropriate reimbursement Opportunities to improve coding accuracy and reimbursement Health Records Systems Management

Simple Strategies to Improve Cash Flow HIM Assessment –Processes –Coding effectiveness –Standardize HIM workflow –Relevant and transparent PI metrics Education –HIM staff –Physician documentation Health Records Systems Management

Less Simple Strategies to Improve Cash Flow Balance DNFB with coding complexity Templates –Physician queries –Physician orders and documentation –Nursing and ancillary documentation Skin integrity Nutritional status Use data to identify opportunities for improvement Health Records Systems Management

Information Technology’s Roles in HIM Performance Improvement Apply technology to minimize process variation Support accurate medical records coding –More predictable inputs Collaborative project teams –Programmers –Clinicians –Documentation specialists –Coding managers Health Records Systems Management

Documentation Templates Leverage existing technology to consistently find the supporting data –CC’s and MCC’s –HIM coding algorithms –Lacking better options … #2 word processing works too Health Records Systems Management

IT Programs Support Clinical Abstracting Procedures –Dates and physicians Consultations –Dates, physicians and clinical service Calculate ventilator hours –Intubation and extubation dates & times Calculate body mass index –Height and weight Flag abnormals –Labs, pathology, radiology, surgical findings, etc Health Records Systems Management

Tangible Benefits Reliable data collection –Appropriate reimbursement –Audit integrity –Support data based decision support Clinical protocols Physician credentials process Organizational budgeting Process efficiencies –DNFB –productivity Health Records Systems Management

Part 2: Keeping Cash Are You Ready for the RAC? Recovery Audit Contractors Target Acute Inpatient Hospitals

RAC Purpose 2003 federal legislative mandate for Medicare cost containment Foci 1.Inpatient hospitals / SNF 2.Outpatient hospitals 3.Physicians 4.Ambulance, Lab, Other 5.DME suppliers 3 year look back period Health Records Systems Management

RAC Methods 3 year demonstration project 3/2005 – 3/2008 Contingency fee agreements Evaluate ability to 1.Detect and correct past improper FFS payments 2.Prevent future payment errors by providing information to CMS, OIG and FI’s Health Records Systems Management

RAC Methods, continued Medicare claims data 1.Identify definite payment errors, e.g. double billing, incorrect setting, inconsistent discharge status Automated, computer review 2.Identify specific cases for complex review by clinical staff for coding accuracy and medical necessity Chart requests and detailed review of coding and medical necessity Patterns open the door to further reviews Health Records Systems Management

Demonstration Project Findings FY 2007 $357 million recovered Acute inpatient hospitals repaid 85% of recovered funds –Received 45% of improper payments 0.2% of claims found to have payment errors despite known 3.9% error rate Health Records Systems Management

Over-Payment Errors by Target IP Hosp & SNF OP HospPhysician Ambulance, Lab, Other DMETotal NY $ 99.2 m$ 8.4 m$ 1.6 m$ 0.0 m$ 3.3 m$ m FL $ m$ 3.4 m$ 5.1 m$ 1.0 m$ 0.0 m$ m CA $ 98.5 m$ 10.8 m$ 5.5 m$ 3.1 m$ 2.2 m$ m Total $312.8 m$22.6 m$ 12.2 m$ 4.1 m$ 5.5 m$ m CMS RAC Status Document FY2007 (2/2008 update) Health Records Systems Management

Payment Errors by Reason Medical records coding errors42% Medical necessity32% Documentation9% Administrative errors / other17% Health Records Systems Management

RAC Impact on Hospital Revenue CMS RAC Status Document FY2007 (2/2008 update) Health Records Systems Management

Survey Says… RAC is effective at identifying improper payments –318% ROI –5% overturned on appeal NY 1.7% –$71.2 m contingency fees ? effectiveness at preventing future payment errors –Is hospital behavior rational? Health Records Systems Management

RAC Inpatient Vulnerabilities Excisional debridement Heart Failure and Shock Surgical procedures in wrong setting Respiratory system diagnoses with ventilator support Extensive OR procedures unrelated to principal diagnosis Health Records Systems Management

RAC Next Steps Vendor selection Coming to New Jersey FY year look back period –10/2007 Health Records Systems Management

HRMG– Utilization Review Methodology Multicenter study –New Jersey facilities –Initial assessment data (pre-intervention) –3 year period InterQual criteria –Strict, consistent application of objective criteria 2 phase review –Nurse reviewers –Physician advisors Health Records Systems Management

HRMG Admission Denial Data All Payer DataMedicare Data % denied Cases20.6%17.7% Days13.1%12.4% ALOS 6.4 all cases 4.1 denied cases 7.1 all Medicare cases 5.0 denied Medicare cases Health Records Systems Management

HRMG Experience – 1, 2 & 3 Day Admission Denials % Admission Denials All Payer DataMedicare Data 1 Day50%71.4% 2 Day18.2%5.9% 3 Day25%40% Total28.1%29.4% Health Records Systems Management

HRMG Admission Denial Analysis Health Records Systems Management

New Jersey 2006 – , 2, & 3 Day Stay Trends All Payer Data Day15.3%16.7% 2 Day22.5%24.1% 3 Day17.4%11.4% Total55.3%52.1% Medicare Data 1 Day11.6%11.7% 2 Day11.8% 3 Day14.5%14.8% Total38%38.2% Data source: 2006 and 2007 NJ UB Data Health Records Systems Management

HRMG Admission Denial Analysis 28.1 to 29.4% of short stays are at risk –Data varies widely between hospitals All payer 18.2 – 50% Medicare 5.9% % Interventions are effective at reducing short stay admission denials –Preliminary short stay follow up data All payer 15.4% (from 28.1%) Medicare 23.1% (from 29.4%) Health Records Systems Management

Simple Strategies to Reduce RAC Exposure PEPPER reports Audit medical records coding –Emphasize known vulnerabilities from OIG and CMS advisories Confirm inpatient medical necessity Payment software –Pre and post payment reviews Health Records Systems Management

Less Simple Strategies to Reduce RAC Exposure Case management / physician advisor program Change medical practice behaviors –Education –Mentoring –Feedback Data analysis and effective feedback –Physicians –Hospital departments and staff Health Records Systems Management

Part 3: Spending Wisely

New Jersey Comparative Cost Reports Share benchmark reports –Public data –Disparity in cost / case Teaching status Community hospitals Uses –Identify financially efficient facilities –Supports operational performance improvement –New Jersey Healthcare Commission support? Health Records Systems Management

2006 Cost / CMI Adjusted Admission – Major Teaching Range: $4288 – $11,841 Data source: NJ Share data Health Records Systems Management

2006 Cost / CMI Adjusted Admission – Minor Teaching Range: $5397 – $8983 Data source: NJ Share data Health Records Systems Management

2006 Cost / CMI Adjusted Admission – Community Hospitals Range: $3458 – $9742 Data source: NJ Share data Health Records Systems Management

Comparing Community Hospital Costs Hosp AHosp BHosp CHosp D Cost / Adj Adm ($/case) $5,923$6,710$10,116$9,773 CMI Cost / CMI Adj Adm ($/case) $4,923$3,955$7,610 Discharges20,40841,98113,23014,142 Adj Discharges29,42259,19015,81618,939 Data source: 2006 Share data Health Records Systems Management

And in Conclusion… 1.Caveat emptor 2.Effective medical records coding Optimized CMI Depends on informed coders working with aligned, supporting systems 3.RAC is on its way Understand and minimize your exposure 4.Spend rationally Align resource utilization with cost outcomes Health Records Systems Management