The Coding Evolution: Impact of Value-Based Purchasing (VBP)

By : Susan Gatehouse

With the development of ICD-10 CM/PCS, the realm of coding continues to expand to support evolving government payment systems and data requirements.  As the payment landscape evolves towards patient-centered care and value-based reimbursement models, inpatient care is experiencing disruption within coding, clinical documentation, clinical workflows and care delivery. Although adoption has been slow, established Value-Based Purchasing (VBP) models attribute their success to advance-care or pre-admit plans, physician alignment, and synchronized clinical Value-Based Care (VBC) methodologies. The near-term impact of VBP and VBC varies widely throughout the industry however one point most stand unanimous on is the momentum (and disruption) is here to stay.

A Brief Overview

According to CMS, "The Hospital VBP Program rewards acute care hospitals with incentive payments for the quality of care they give to people with Medicare."

   Goals: improve health, increase quality of care, and lower costs. 

   Relevance: inpatient stays in over 3,500 hospitals nationwide account for the largest share of Medicare spending[1].

   Financial Impact: direct link between patient outcomes, HACs, readmissions, and hospital payments or penalties.

   Future Outlook: movement towards mandatory participation in bundles & VBP or VBC.

The outcome of changes today will impact the way payments are made in the future. Hospitals that are proactive in improving performance and quality of care, particularly in the area of hospital-acquired conditions (HACs), will be set up for success as VBP program participation becomes less elective and increasingly mandatory.

New in 2016: CAUTI & HAC Reduction

For FY2016, the added measures include IMM-2 Influenza Immunization, Catheter-Associated Urinary Tract Infection (CAUTI), and SSI -Surgical Site Infection Colon Surgery & Abdominal Hysterectomy. Given the direct link between HACs and quality scores, (and impact on the hospital’s financial health due to VBP), let’s take a closer look at CAUTI.  The CMS scoring methods for FY2016 will include CAUTI (together with SSI and CLABSI) in the total HAC score, as part of the HAC Reduction Program.

   UTIs are the most common type of healthcare-associated infection reported to the National Healthcare Safety Network (NHSN)[2]

   Approximately 75% of hospital-acquired UTIs are associated with a urinary catheter.

   Between 15-25% of hospitalized patients receive urinary catheters during their hospital stay.

Including CAUTI in the new scoring method supports the activity we're seeing in the Orthopedic and Cardiology space as CMS continues to introduce new mandatory value-based programs in each. Associating the payment model with patient outcomes intends to effect real micro and macro change—starting with clinical workflows and care delivery and reaching as wide as population and community health.

How Can CDI Help?

Clinical documentation improvement is always appropriate, but with VBP, the case for making CDI a priority has become even stronger.  Accurately identifying and coding HACs and Present on Admission (POA) conditions is imperative for accurate reimbursement. 

For payment purposes, for each condition, two questions are key to assessing the accuracy of coding: [3]

1.     Is there documented clinical evidence that the condition was present during the hospitalization?

2.     If yes, was the condition POA?

Refresher Points

    The Deficit Reduction Act of 2005 required all acute-care facilities reimbursed under MS-DRGs to identify and report POA conditions. 

   It’s imperative that POA indicators be assigned with ICD-10 CM/PCS codes if applicable. 

   Without a POA indicator a condition can be misconstrued as a HAC, the TPS score damaged, and reimbursement adversely impacted.

   Remember to instruct Providers on the importance of documenting POA conditions so Coders can query Providers on case specifics.

   HACs must be reported—over-reporting can be prevented with regular clinical documentation training and review. 

In closing, bear in mind that it's essential documentation capture the complete picture of the patient. The more granular the documentation, the better the outcome—for both your patient and your hospital's bottom line. 

What’s Next?

If you've been following VBP, you've likely noticed there's a plentitude of opinions on where VBP will lead and what real impacts will be experienced across the healthcare industry. I've mostly witnessed a "wait and see” attitude and behavior however the mandatory changes are stimulating slow adoption. What I know to be true is that with each layer of change, coding and documentation improvement will continue to evolve and continue to play a primary role in the financial health of a health system.

Thank you for tuning in—we welcome your feedback and look forward to continuing to provide you with information, expertise and solutions that address how clinical documentation improvement can help your facility meet the demands of VBP.


Susan Gatehouse is the CEO of Axea Solutions, a healthcare services company which partners with healthcare facilities and medical insurance providers to develop cost-effective financial solutions. Susan offers more than 20 years of healthcare information management expertise. Follow her on LinkedIn.