Myth Busted: Maximizing APR-DRG Risk Staves Off Performance Penalties

Myth Busted: Maximizing APR-DRG Risk Staves Off Performance Penalties

This monthly blog will discuss all the components of quality clinical documentation with a comprehensive approach to cover all areas of the healthcare industry.

By James P. Fee, MD, CCS, CCDS


Targeting severity of illness (SOI) and risk of mortality (ROM) has for many years defined in-hospital risk through documentation and coding. For example, mortality cases have been benchmarked as high-risk with an SOI and ROM of 4/4, respectively. But why are organizations receiving pay-for-performance penalties in the face of optimizing SOI and ROM?

Fact: Performance is measured within the population, not just the outcome of interest, and APR-DRG is missing the mark.

Outside of APR-DRG reimbursement models and subsets of performance-ranking organizations, SOI and ROM leads to unreconciled vulnerabilities. Navigating the sea of quality measures and performance programs extending beyond a single inpatient encounter has exposed the reality that chronic disease burden defines population risk rather than acute in-hospital severity.

Although there are many benchmarking organizations that assess high-quality, cost-effective care within healthcare, one unifying trend has emerged: patient risk is defined by chronic disease and its management across the continuum. APR-DRG does not encompass the true population risk beyond in-hospital acute disease interaction. Evident by care evolution, organizations should consider expanding the risk adjustment focus beyond APR-DRGs. That said, subsets that rely on APR-DRG for payment and/or payer contracts should maintain those processes but move beyond for others.

If not APR-DRG, then what is the model? Hierarchical Condition Categories (HCCs) and its backbone Condition Categories close the gaps in telling the patient story across the continuum. Aligning performance programs and respective quality measures with risk-adjusted payment models through chronic care management will provide the next success story. In fact, documentation and coding—and hence clinical documentation improvement (CDI)—will unite the patient medical record across the continuum. For example, such risk adjustment strategy links the Centers for Medicare and Medicaid Services 30-day risk-stratified quality measures and alternative payment models in population management.

Beyond understanding risk adjustment, success hinges on a move from the patient-specific outcome of interest to the population under treatment. For example, with the acute myocardial infarction mortality measure, the risk of all patients being treated for an acute myocardial infarction should be accurately defined instead of just those that expire. Shifting from the patient encounter at a specified place of service to the population across the continuum will appropriately demonstrate expected outcomes. Some refer to this as “denominator management.” If providers completely and accurately tell each patient’s story regardless of where care was provided, then the true risk of the population is apparent.

Within the evolutionary canvas of healthcare reform, risk adjustment beyond APR-DRGs is mandated to illustrate accurate performance. The horizon is broader than a single inpatient encounter. It’s time to unite the continuum in documentation and coding.


James P. Fee is vice president at Enjoin. Fee is board-certified in Internal Medicine and Pediatrics and maintains a clinical practice in hospital medicine. Fee has extensive experience in hospital-based medicine, DRG management, and clinical documentation improvement. He has been actively involved in operations and process development of CDI programs across the country.

1 Comment

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