CDI can drive down adversarial determinations of medical necessity and costly denials.
In my article published last week, titled Moving in the Right Direction in Getting to the Root Cause of Clinical Documentation Improvement (CDI), I outlined that CDI plays a major role indeed in the context of overall healthcare delivery, including supporting the physician and other clinicians in the accurate, effective, and complete communication of patient care.
Today, CDI largely focuses upon processes designed to achieve outcomes of additional reimbursement. There is a myriad of reasons that lend credibility to my longstanding advocacy and support for CDI transforming itself into a profession that is more geared toward facilitating realized improvement in the communication of patient care. Here are two recent developments that should invoke some interest for most in the CDI arena, or those directly or indirectly involved in CDI at their facility,
The first development relates to the recent Sept. 27 U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) report revealing “widespread and persistent problems” related to prior authorization and claim denials in Medicare Advantage.
Using Medicare Advantage data on denials, appeals, and appeal outcomes from 2014 to 2016, the federal watchdog found that Medicare Advantage Organizations (MAOs) overturned 75 percent of their own prior authorization and claim denials from 2014 to 2016.
Most of the overturned denials in the first appeals level (82 percent) were for payment requests for delivered services, and the remaining 18 percent were for prior authorizations of services that the beneficiary had yet to receive.
The second development relates to a recent Fitch Ratings report on nonprofit hospitals, highlighting that despite such hospitals’ healthier balance sheets, they continue to see shrinking operating margins. Fitch’s 2018 medians paint a picture of declining operating margins across the hospitals’ rating spectrum, suggesting ongoing stress in the sector. The median operating margin in 2017 was 1.9 percent, down from 2.8 percent in 2016. For the second straight year, median profitability levels declined, with median operating and operating EBITDA margins of 1.9 percent and 8.5 percent, respectively, versus 2.8 percent and 9.5 percent a year earlier.
So, what do these developments have to do with CDI? My thoughts are with the large number of inappropriate denials being overturned on appeals, as identified in the OIG report, as well as how many of these may have been avoided if all the clinical information, facts, and the physician’s clinical thought processes were better communicated in the medical record to begin with. Was there additional clinical information available after the fact that may have been instrumental in avoiding or alleviating a sizable number of these denials? The appeals process is often lengthy, and that certainly contributes to providers’ costs to collect, subsequently reducing hospital margins. The aforementioned second development indicates that hospitals are receiving less reimbursement for services provided from third-party payers, as well as more reimbursement attained through some type of value-based methodology – and more services are being provided in less costly outpatient sites.
Hospitals can bolster their margins through more effective management of the revenue cycle. One area to strengthen is the volume and cost of medical necessity denials, with the majority attributable to insufficient or poor documentation. I continually see poor documentation negatively impacting medical necessity establishment every day. CDI can play a major role in driving down adversarial determinations of medical necessity and costly denials by migrating away from a strict focus upon reimbursement as its ultimate goal and measure of success. I strongly encourage CDI professionals to partner with utilization review/utilization management (UR/UM) and case management professionals to understand their pain points; grasp the limitations of insufficient and poor documentation and the effects they have on their ability to attain third-party payor authorization for the most clinically appropriate initial level of care for the patient; and work collaboratively to address these issues moving forward. I also encourage CDI professionals to develop an open line of communication with the denials and appeals department as an integral part of the CDI process for the purposes of continuous quality improvement (CQI), and to identify insufficient documentation, which can be addressed by physician collaboration into the overall CDI process.