Four reasons why hospitals have to start outpatient CDI programs now

graph1-hospital revenues are shifting from inpatient ot outpatientHere are four reasons why hospitals have to start their outpatient CDI programs now and not later.

1) Hospital revenues are shifting from inpatient to outpatient
Historically, 92 percent of Medicare revenues to hospitals have come from inpatient and outpatient services. Over time, however, the share of revenue coming from the outpatient setting has increased, and the share coming from the inpatient setting has decreased.

From 2010 to 2014, the share of revenues coming from the outpatient setting increased from 21 percent to 27 percent. The increase resulted from several changes: a shift in services from the inpatient to the outpatient setting, a general increase in beneficiary outpatient service use, a shift in the billing of physician office services from the physician fee schedule to the OPPS, and changes made to the outpatient payment system that packaged many lab services into outpatient payment rates that were previously paid on a fee schedule rather than the OPPS

The share of revenues coming from the inpatient side fell from 71 percent in 2010 to 60 percent in 2014. This decline results from (1) a shift in services from the inpatient setting to the outpatient setting, as just discussed, and (2) changes in Medicare DSH payments.

As hospitals see increased revenues from outpatient services, they need to put in processes and procedures in place to protect their revenues.

2) Rate of growth of outpatient visits far outpaces inpatient discharges
CMS data shows that between 2006 and 2014 outpatient visits per beneficiary have increased by a whopping 44% while inpatient discharges per beneficiary have decreased by almost 20%. And projections show that this trend is going to continue well into the future.

As hospitals see a faster rate of growth in outpatient visits, they need to put processes in place to maintain revenue integrity.


3) Hospitals have aggressively acquired physician practices to offset the decrease in inpatient revenues.
This is resulting in increase in hospital revenues as payments shifted from Physician Fee Schedule to OPPS which generally pays higher. Now CMS is working aggressively to streamline the payments and make the payments equal for Hospital Outpatient Departments and Physician offices. CMS has already moved some of the clinical laboratory fee schedule services into OPPS resulting in a saving of $2.4 billion in a year. Now CMS is also working on bundling more services into Comprehensive-APC to further reduce reimbursements under OPPS.

As hospitals see the outpatient revenues get more and more streamlined, and as they lose the advantage of seeing increased revenues from OPPS compared to Physician Fee Schedules, they need to focus on outpatient CDI programs to protect revenues.

4) The HCC Risk Adjustment Model under the Affordable Care Act
The Hierarchical Condition Categories for risk adjustment has also become complicated from jumping from 3000 codes in ICD-9 to over 11000 in ICD-10. This degree of specificity requires appropriate documentation and as the CMS moves to value based reimbursement models, this aspect of documentation becomes critical for revenue integrity.

Hospitals have to out in place outpatient CDI programs to ensure that the physician documentation is truly reflective of the acuity and the chronic conditions of its patient population.

Most of the hospitals have a mature CDI program in place to take care of their inpatient population, but over 90% of the hospitals still haven’t put in an outpatient CDI program. Outpatient settings is where all the action is. Hence the time to think of outpatient CDI is now and not later.

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