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Lessons Learned ith MS-DRGs: Getting Physicians on Board for Success

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Donna Didier
MaryAnne Pace
William V. Walker


At a Glance

To get physicians on board with a clinical documentation program:

  • Explain what the government is trying to accomplish with changes to the prospective payment system
  • Connect codes and quality report cards
  • Enlist a physician champion
  • Conduct an MS-DRG financial impact study and share the results with physicians
  • Establish a clinical documentation improvement/integrity team
  • Provide solid rationale and data to back up requests


The preparation was long and arduous, but it has paid off. One year
after Medicare’s biggest modification to the inpatient prospective payment system (IPPS) since the 1980s, revenue cycle departments are involved, CFOs understand the financial impact, and coders are up-to-speed with the changes. So what’s the most important lesson learned?

Lesson number one: We’ve learned that success under medical severity diagnosis-related groups (MS-DRGs) depends on high-quality clinical documentation, as discussed below.

Physicians should understand the impact their clinical documentation has on revenue, especially under MS-DRGs. Do they know that words, phrases, and terms used every day in patients’ medical records are cornerstones for fiscal health and national quality health grades? In our experience, the answer is probably “no.” At best, it’s “maybe.”

Following are tips for getting your physicians on board with your clinical documentation program, from three distinctive viewpoints: the physician, the revenue cycle, and health information management (HIM). If you’ve already launched your clinical documentation improvement program in response to MS-DRGs, these are steps can you take to ensure continued success.

From “Insignificant” to “Pivotal”: Changing Physician Perspectives
Most of today’s physicians were never taught that clinical documentation is
important, much less pivotal, to a healthcare organization’s long-term viability. In order to get physicians on board with improving their clinical documentation practices, you need a new, fresh approach. From the physician perspective, the following steps will help engage your medical staff in this initiative.

Explain the history of prospective payment. Physicians are scientists; they need to understand the bigger context from which something evolves. Take a few minutes to show them the big picture. What is the history of the IPPS, and what is the government trying to accomplish with changes to this system? The answer: more accurate reimbursement and better data for quality health grade reporting.

Connect codes and quality report cards. Remind physicians that correct coding is not only about money, but also about quality health grades that are posted on the Internet. Quality scores are a direct reflection of physician and hospital performance—and consumers often rely on these scores when choosing a provider. Since physicians are a competitive group in general, they are keenly aware of how they rank against peers. Some organizations are even considering an incentive program for physicians whereby hospitals and physicians receive incentives for quality score improvements.

Take the time to explain how quality scores are driven straight from the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) codes and their associated DRGs. More specific documentation results in more specific codes, which push patients up the spectrum of disease and result in an accurate reflection of physician performance.

To reinforce the message, present a single case that was coded with and without specification. A common example is congestive heart failure (ICD-9-CM 428.0), which now must be specified as acute systolic or acute diastolic heart failure to be regarded as a complication or comorbidity (CC). Show your physicians the associated clinical documentation in both cases (with and without specification) and how it was used by the coders. From there, explain how these cases would have been selected for quality reporting, and share any health grade results or statistics from your organization’s web site related to this example. This exercise can truly be a “light bulb moment” for your physicians.

Teach your physicians communication skills. With the introduction of MS-DRGs, physicians must become more effective communicators regarding medical records if provider organizations are to survive. Remind physicians that many nonphysician readers of the medical record have an interest in their documentation—not only coders, but billers, case managers, auditors, and attorneys.

A word of caution: Physicians may hear this message as a request for them to perform someone else’s job. But the reality, according to Norman Ward, MD, medical director, case management at Fletcher Allen Health Care, Burlington, Vt., is that “incomplete communication in the medical record only leads to more physician queries, more paperwork, and increased frustration between coder and clinician.” Use a specific case example of incomplete physician documentation alongside the coder’s query log to drive home the point. You may even consider attaching time estimates to each step for the case to demonstrate how much time is wasted when documentation is vague.

Enlist a physician champion. To improve clinical documentation and succeed under MS-DRGs, you need a physician champion—or team of champions—such as your medical director or department chiefs. Choose those with solid physician relationships, an understanding of prospective payment, and good people skills. The goal is to elicit help from the medical staff as part of an organizationwide effort to improve clinical documentation. Physician champions should work side by side with the revenue cycle team, HIM, and clinical documentation improvement (or integrity) peers to educate their peers, improve dialogue between coders and physicians, represent the medical staff on the documentation team, and train coders to write effective physician queries.

Involving Revenue Cycle Leaders
Within the revenue cycle, the education of physicians for improved clinical documentation is the third step in a four-tier approach.

Step one: Set up an MS-DRG financial impact study. It is important to understand how vulnerable your organization is to revenue loss under MS-DRGs—and a simple financial impact study can drive this point home. MS-DRGs were designed to reduce Medicare costs and improve outcomes for specific diseases and populations. In most cases, these same diagnoses are your top DRGs and represent up to 20 percent of your total revenue.

By focusing on your top DRGs, you can easily compare the revenue from one year ago with revenue today under the new system. Revenue at risk can be evaluated retrospectively and projected forward as part of your clinical documentation improvement program. At one large health system, the financial impact study revealed a negative revenue potential of $1 million for just one DRG over a 12-month period. Several reputable consulting firms have emerged that conduct such studies; a financial impact study also may be performed with internal resources.

Step two: Establish a clinical documentation improvement/integrity team. Most organizations have already set up a clinical documentation improvement (CDI), or integrity, program. If you have not done so, the time is now! A solid CDI team should include representation from the medical staff. In addition, revenue cycle representatives should lead the charge, focusing on improving clinical documentation for your top DRGs and, specifically, those that carry significant revenue risk under MS-DRGs.

Since the final rule became effective in October 2007, a best practice work plan has emerged. Key steps include communication at all levels, establishment of a long-term documentation improvement team with a designated leader, and performance monitoring (See Exhibit 1,2).

Finance executives should continually support this team and promote cooperation at all levels. Whether through additional human resources for the project, technology to support the team’s efforts, or simply executive-level communications, a finance executive’s involvement as the CDI evangelist is essential.

Step three: Focus your physician education efforts. The steps above will help you lay the foundation for successfully engaging physicians in your CDI program and ensuring team success. Because these efforts are expensive and time-consuming, it is most prudent to focus your program where you are most at risk: the top DRGs.

Step four: Monitor and trend revenue—act, don’t react. As healthcare executives, we know how to react to “massive hemorrhages,” such as a dramatic decline in accounts receivable or a rapid spike in discharged-not-final-billed days. But we are not so skilled at recognizing slow bleeds. With MS-DRGs, the slow bleeds require careful monitoring. Important actions include establishing monthly reporting of the same DRGs over time and trending revenue as MS-DRGs and clinical documentation improvement initiatives are implemented. This trending can easily be included in a monthly executive dashboard to help you recognize a slow bleed and take action before it is too late. For example, a downward trend in revenue for a specific DRG is actually a form of an early denial and should be treated as such.

Health Information Management’s Heavy Load
Although all revenue cycle stakeholders are involved in ensuring complete and accurate reimbursement, it is often the health information management (HIM) department and clinical coding staff that carry the heaviest load. There are several steps that HIM can take in conjunction with physician champions and your CDI team to help educate physicians and improve chances for success under MS-DRGs.

Demonstrate your encoder. A picture really can speak a thousand words. When trying to explain the coding process to physicians, a brief demonstration of your encoder can open eyes and minds. Norman Ward from Fletcher Allen Health Care demonstrates the organization’s 3M encoder at specialty group staff meetings with amazing results.

“By seeing how the encoder works, physicians realize that coders have to search every page of a chart,” says Ward. The meetings also teach the physician exactly how specific codes impact the MS-DRG and help physicians understand the importance of clinical documentation for present on admission (POA) requirements. “The encoder application won’t complete a case unless POA codes are entered,” he says.

Physicians respond to real case examples, statistical feedback, and clinical data. In demonstrating the encoder, use specific cases to demonstrate the difference additional diagnoses and specificity make. For example, demonstrate the coding of a simple hip fracture versus a hip fracture with congestive heart failure (CHF) and the same fracture with CHF and a decubitus ulcer. Not only does the reimbursement increase up to 50 percent, but the quality index changes, too.

Share the magic words of coding. Like the famous story of Ali Baba and the 40 thieves, healthcare executives and some HIM professionals suggest we need only to teach physicians the specific words and phrases they need to open the magic fortune of MS-DRGs. However, it’s a little more complicated than that. HIM should also provide a solid rationale and data to back up the request or it won’t be taken seriously.

To effectively teach the “magic words of coding,” HIM professionals should educate each specialty on the words and phrases that impact coding within their unique patient mix. From there, HIM (working in conjunction with the physician champion and CDI team) should use case studies and statistics such as those available from the various quality data reporting organizations to get attention and prove the point.

Provide Continuing Education for Coders
Coder education is just as important as physician education. As new diagnoses, procedures, medications, and exams are announced, coders and the CDI team require training. When new patient services or physician specialists come on board, HIM professionals should be informed and trained through lunch-and-learns or other in-service opportunities. Hospitalists or other employed physician groups can hold monthly coding workshops to review new clinical topics and discuss the various codes involved. And organizations should consider assigning an educational liaison with each medical staff department for coder education. Your coder-physician relationships will be enhanced, queries will decrease, and everyone will work more effectively.

Getting Physicians on Board Is a Team Sport
With the introduction of MS-DRGs, the importance of codes has gone well beyond financial reimbursement and has moved to quality and refinement, as reflected in quality scores for provider organizations and the medical staff. By effectively working together, physicians, finance executives, and HIM professionals can redirect their efforts to achieve success under MS-DRGs.


Donna Didier is director of auditing and educational services, HealthPort, Nixa, Mo. (donna.didier@healthport.com).

MaryAnne Pace is a principal, Health Blueprints, Inc., Alpharetta, Ga. (mpace@healthblueprints.com).

William V. Walker, MD, is a board-certified internist and founder, Midwest Healthcare Coding, Chesterfield, Mo. (wvwalker@mwhcmm.com).

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