Clinical Documentation and Reimbursement Enhancement

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Client Profile:

A free standing, academically affiliated, 190-bed pediatric hospital offering a comprehensive array of pediatric inpatient and ambulatory services including Levels 3 and 4 neonatal intensive care units, state-of-the-art ambulatory surgery center, five specialty care centers, and one of the busiest Level 1 Pediatric Trauma Centers and Primary Care Centers in the region.


The client was preparing for a significant shift in its state's Medicaid inpatient reimbursement from per diems to an APR-DRG basis, fundamentally impacting more than 50% of its inpatient revenue.

Historically, this pediatric hospital had been reimbursed on a per diem basis for all payers, including Medicaid, and never experienced risk associated with stays beyond an expected geometric mean length of stay. APR-DRG based reimbursement posed a significant operational challenge and potential financial risk.

i3 performed a rapid assessment of the pediatric hospital's operational preparedness, especially around clinical documentation, HIM and coding, and revenue cycle billing. The assessment quickly identified areas of potential risk or improvement. Additionally, i3 reviewed and validated a financial impact analysis, regrouping the pediatric hospital's historical inpatient discharges under the appropriate APR-DRG grouper version to replicate the state's APR-DRG version, state-specific case weights, program exclusions, and outlier thresholds to identify the expected financial risk and identify clinical areas most at risk for reduced reimbursement.

i3 designed and supported the implementation of the following programs:

  • Established a clinical documentation (CDI) improvement program and team focused on the quality, clarity, and completeness of clinical documentation within Medicaid inpatient records to support consistently accurate Severity of Illness (SOI), Risk of Mortality (ROM), and other quality measures derived from coded charts.
  • Customized specialty-specific clinical documentation training for the pediatric hospital's Medical Staff, Care Management, Quality and other departments documenting in the patient's record
  • Documentation and coder training for HIM and coders to improve the productivity, quality and accuracy of coding APR-DRG patient records
  • Established a specialized program of independent pediatricians remotely reviewing Medicaid inpatient charts and supporting clinical documentation in Epic after discharge and initial coding, but before billing, to assist CDI and HIM departments in identifying opportunities to query physicians on incomplete or non-specific documentation to ensure accurate APR-DRG assignment and resulting SOI and ROM.

During the first 15 months since implementation, this pediatric hospital has experienced a 4.03% increase in its Case Mix Index (CMI) for Medicaid inpatient cases resulting in nearly $2M in incremental reimbursement since the State's conversion to APR-DRGs and an ROI of approximately 8:1 on its project related investments.