Outpatient CDI in a Value-Based Reimbursement Model [Sponsored]

This article is published in sponsorship with Berkeley Research Group (BRG).

By Bonnie Peters, CCDS, CDIP, CCS-P, CPC, CRC, COC, CPC-I, CDEO, and Joni Dion, RHIA, CPHQ, CDIP, CCDS, CPC, CRC


Healthcare delivery is evolving in the US as legislators, payers, and providers grapple with how to reduce expenditures without compromising quality of care. Value-based reimbursement initiatives, which the Affordable Care Act (ACA) introduced to bring about these savings, are now testing whether incentivizing cost savings—rather than simply reimbursing providers for services rendered—will nudge the healthcare industry toward a more fiscally sustainable economic model.

Largely in response to these new value-based reimbursement programs, hospital systems have reexamined their care delivery networks, with the goal of shifting patient volumes out of the hospital and into more affordable outpatient settings. Hospital-owned outpatient service offerings quickly expanded beyond same-day surgery, observation, urgent, and emergent care under the ACA, and now routinely include specialized clinics, diagnostic centers, hospital-owned physician practices, and telemedicine. With newly expanded healthcare delivery networks, patient volumes are now being pushed out of the inpatient care setting and into the outpatient setting. According to the 2017 Medicare Payment Advisory Commission Report to Congress, Medicare inpatient discharges per beneficiary have dropped by 20 percent in the last decade, while outpatient visits have increased by 47 percent.

This shift in patient volume has also shifted much of a hospital’s revenue from inpatient to outpatient service locations, which has significant downstream effects on clinical documentation improvement (CDI) programs. Many acute care hospitals have implemented inpatient CDI programs to ensure that clinical documentation is complete, accurate, and compliant with regulatory requirements, and has captured the condition of the patient and the services rendered. The need for quality documentation is now being recognized in the outpatient arena. Managing clinical documentation and coding in this arena is critical.

Embarking on the implementation of an outpatient CDI program can be overwhelming. Where does one start? Each outpatient area has unique challenges, specific regulatory requirements, and specific documentation guidelines. This is illustrated by regulatory guidelines such as the Office of Inspector General’s work plan, which addresses the two-midnight rule, medical necessity of services, unbundling of services, coding pair edits, and improper use of modifiers, to name a few.

When moving to the development phase of a hospital-based ambulatory/outpatient CDI program, the inpatient and outpatient settings have stark differences. The ICD-10-CM diagnosis codes are used in both settings; however, the ICD-10-PCS codes used to capture inpatient procedures are replaced with CPT and HCPTS codes. Developing a thorough understanding of the National and Local Coverage Determinations will be value added when submitting clean claims for reimbursement and for supporting medical necessity. Furthermore, differential diagnoses—like probable and suspected—fit nicely into inpatient documentation but have no place in outpatient documentation. The Charge Description Master may also sound foreign, but it is a major factor for charge capture in the outpatient setting.

The implementation of the Medicare Access and CHIP Reauthorization Act (MACRA) has increased the need for healthcare organizations to consider CDI in the outpatient setting. MACRA replaces the current Sustainable Growth Rate methodology, streamlining multiple quality reporting programs into the Quality Payment Program (QPP). This new framework will reward healthcare providers for giving better care. The MACRA QPP includes the Merit-based Incentive Program (MIPS). MIPS combines the Physician Quality Reporting System, the Value-based Modifier, and the Centers for Medicare and Medicaid Services’ (CMS’) “meaningful use” Electronic Health Record Incentive Program into four new performance categories on which provider quality will be measured. MIPS data collection started January 1, 2017, and this data will begin to impact provider reimbursement in 2019.

In 2017, Medicare Advantage enrollment is projected to reach 32 percent of all Medicare beneficiaries. CMS expects penetration approaching 49 percent of beneficiaries by the mid-2020s. This growth stems from the fact that the average monthly premiums are projected to decline by 13 percent. This will increase the need for coding professionals and documentation specialists well-versed in Hierarchical Condition Categories (HCC) methodology. Complete and accurate documentation is paramount to achieve successful outcomes.

As healthcare providers continue the transition from fee-for-service to value-based reimbursement, they must simultaneously provide quality care and manage the costs associated with the care they provide. To achieve this, the providers’ documentation must be complete and accurate.

Each organization is unique and will strive to develop an outpatient CDI program to meet its specific needs. However, basic steps are needed to create a solid foundation for attaining long-term success. Build a core team of subject matter experts that will provide the depth of knowledge needed to visualize and implement an outpatient CDI program. Identify an engaged physician leader to ensure physician participation. Develop goals, objectives, and a strategic plan to move forward.

An effective outpatient CDI program can provide complete, accurate, and compliant medical records; medical necessity for services; alignment with value-based and risk-adjustment payment models; submission of clean claims; correct quality ratings; fewer denials; and appropriate reimbursement.


Bonnie Peters is managing director and Joni Dion is associate director at Berkeley Research Group, LLC.

BRG thrives in the midst of tough, high-stakes challenges.

Our clients benefit from BRG’s intellectual rigor, industry expertise, and reputation in navigating dynamic healthcare environments.

Drawing on a strong healthcare foundation, BRG’s Clinical Economics practice comprises highly credentialed experts, prominent academics, and seasoned consultants with a deep understanding of HIM.


The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.

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