By Cheryl Ericson, RN, MS, CCDS, CDIP

The Evolution of Clinical Documentation Integrity and Its Impact on Hospital Revenue 

Gone are the days when Clinical Documentation Integrity (CDI) was referred to as a “program.” Today, CDI Departments have become mainstream. They are no longer a supplemental business function as hospitals without a robust CDI department cannot keep up with their peers. As an integral part of the revenue cycle, CDI activities must be tied to organizational metrics in meaningful ways that identify success and improvement opportunities.  

CDI and the Case Mix Index (CMI) 

Traditionally, when hospitals faced economic hardships, they would set goals to either grow revenue or cut costs. A favorite metric of hospital leadership when tracking revenue expectations within the inpatient population has been case mix index (CMI). Often leadership would set year-over-year goals of increasing the CMI. In the early days of CDI, there was a lot of opportunity and CDI departments would be credited with “finding” millions of dollars of incremental revenue through an increasing CMI even though there are many factors that impact CMI beyond CDI activities.  

Fast-forward to the COVID pandemic, when CMIs peaked because only the sickest patients could access inpatient care. But there was also an important lesson to be learned during COVID regarding CMI. A high CMI was no guarantee of profitability. MS-DRGs are a classification scheme comprised of clinically similar patients as determined by the principal diagnosis, who are expected to consistently use similar amounts of hospital resources. It was designed to cover routine costs like room and board, nursing care, diagnostics, treatment, and ancillary services. Patients who need additional healthcare resources are identified through secondary diagnoses classified as complications/comorbidities (CC) and major complications/comorbidities (MCC). When a CC or MCC is present on a claim and not designed by the Centers for Medicare and Medicaid (CMS) as a Hospital Acquired Condition (HAC), the hospital gets paid a higher rate because the patient requires more hospital resources.  

MS-DRGs and Their Role in Hospital Reimbursement 

The Medicare Severity Diagnostic Related Group (MS-DRG) reimbursement methodology is a prospective payment system. The significance of this should not be overlooked. Hospitals provide services in good faith under the MS-DRG system expecting future payment that reflects the billed MS-DRG. Astute hospitals have always tracked both the billed CMI as well as the adjusted CMI. The adjusted CMI is based upon payments received rather than what was billed. The importance of monitoring the adjusted CMI cannot be overstated in today’s healthcare environment where payor denials are ever increasing.  

The Importance of Prebill Audits and Vendor Partnerships 

CDI activities affect not only the billed CMI but also the adjusted CMI. As hospitals look to maximize revenue opportunities there may be additional pressure on CDI departments to increase CC and MCC capture rates and CMI, but this only tells half the story. However, a better way to monitor the effectiveness of CDI efforts is to examine how CDI efforts contribute to the adjusted CMI. This is where revenue leakage is occurring. The goal has always been for CDI activities to support accurate billing that reflects the acuity of the patient population. Though all denials are not justifiable even on appeal, the result is still an inaccurate bill. The hospital is “losing” expected revenue. Tracking the adjusted CMI helps an organization create more of a realistic expectation of incremental revenue opportunities, especially when there is no guarantee that CMI will continue to increase.  

Tracking the right metrics allows hospital leadership to better measure the success and shortcomings of CDI efforts. One of the metrics that hospitals should track is the percentage of cases reviewed by CDI staff that results in a denial, especially when a clinical validation denial affects a diagnosis added by a CDI query. Because submitting “accurate” bills can reduce revenue leakage and the administrative costs associated with appeals, it is in every hospital’s financial interest to track the impact of CDI and Coding activities on the billing process. This is not to imply that individual CDI and Coding professionals should be reprimanded when a denial occurs on a claim they worked; however, it is important for CDI and Coding professionals to receive direct feedback about how their work is affecting the overall financial health of the organization so adjustments can be made as needed to minimize lost revenue.  

Because the lifecycle of a claim can be so long, it can be beneficial to use a proxy to audit inpatient claims prior to their submission. Many organizations have a second level review process or internal audit process, but it is often more effective to have an objective third party conduct these second level reviews and provide constructive feedback on problematic trends. When considering a vendor to perform these prebill audits, it is best to consider one who has experience in appealing DRG and clinical validation denials because they are more likely to understand industry trends that contribute to revenue leakage even if it has yet to reach your health system.

Isn’t it time DRG accuracy becomes a metric in the inpatient setting?

Though it is unrealistic to expect 100% accuracy- as some payors may have unreasonable expectations – improvement is always possible. Tracking “clean claims” has always been a metric in the outpatient setting and a measure of success for registration, insurance verification, and other early revenue cycle departments. 

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