Wednesday, 08 April 2015 20:26

Value-Based Purchasing and Quality – Is the Coded Data Relaying the Right Information?

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k charlandI had the pleasure of attending the American Health Lawyers Association's (AHLA) annual Institute on Medicare and Medicaid Payment Issues last week (March 25-27) in Baltimore. I attended two and half days of sessions, and value-based purchasing (VBP) and/or quality was mentioned in some aspect in every session! There were a few sessions that dealt directly with VBP, quality, and coding:


  • Making Pay-for-Performance (P4P) Pay: Opportunities and Pitfalls of a Shifting Reimbursement Paradigm
  • Payment for Physician Services
  • Meaningful Use Stage 3 Coming, Stages 1 and 2 Compliance
  • Introduction to Medical Coding for Payment Lawyers
  • ICD-10 Transition: What Health Lawyers Need to Know

It was clear in these sessions that while the intent is good with VBP – increase quality of care and patient experience while reducing healthcare costs – certain factors may not be aligning well to result in optimal outcomes. I have also been seeing articles and discussions on disagreements on hospital rating sites, plus questions about whether bundled payments will work, whether accountable care organizations (ACOs) are working, and whether there are flaws in the data. Basically, the key question is this: Is VBP working?

We all can agree that this is a massive undertaking with an expectation to learn as we go; if this was easy, we would have done it a long time ago. There have been steps taken by the Centers for Medicare & Medicaid Services (CMS) to make itself more available to the public for input and comment, the Obama administration recently launched the Health Care Payment Learning Action Network, and we also have the Health Care Transformation Task Force, just to name a few initiatives to help facilitate dialogue among service areas of healthcare – patients, providers, payors, and purchasers in both the private and public sectors.

In preparing to launch, I came to believe that we are at an appropriate point in the implementation of all this to really start evaluating the effectiveness of the programs that have been developed. How do we do this? By looking at the data that has been collected, the intention of the data collection, the results, the expectations, etc. and by asking the tough question – before we get too far into this, is it working, and if so, what revisions need to be made?

Much of the data that is used in the VBP programs is reported with ICD-9 codes, and soon (Oct. 1, 2015), ICD-10 codes. To sum it all up, it's all about the coded data, and it all starts with physician medical record documentation. The documentation gets turned into codes that then get reported to payors and various agencies (quality, mortality, registries, etc.). With all this, does your coded data really reflect the acuity of your patients and services provided to them in comparison to severity of illness (SOI), risk of mortality (ROM), length of stay (LOS), and patient charges? What does your data show? Do you know? Quality data reporting is usually in one area and finance in another.

Quality reporting requirements are continuing to increase and impact hospitals and physicians in many ways. Items such as staffing, processes for collecting and reporting data, technology, the anticipated conversion to ICD-10, and medical record documentation requirements are a few major areas being affected. These items then impact the reporting of coded data, which impacts quality reporting, scores, reimbursement, and consumer interpretation of the data.

Have you looked closely at your data? You may be doing your "coding audits," but are you really looking at the physician documentation to see if it is saying what it should? Are you looking at what the coded data is saying in regard to complications, hospital-acquired conditions (HACs), readmissions, etc.? What are the SOI and ROM rates of your patients? Are you getting a lot of Recovery Auditor (RAC) denial letters for lack of medical necessity? Has Medicaid started auditing you yet? Payors are mining data and using the APR-DRG grouper to see what your SOI and ROM are; they look at your coded data, including diagnoses, procedures, present on admission (POA) indicators, LOS, MS-DRGs, and charges to see how each compares to national and peer averages.

Payors also are mining data to see how they can reduce contract payments, plus whether your data is showing low SOI, low ROM, longer LOS, and higher charges – and if so, they are going to try and reduce your payments. Can your data defend against them doing this?

In addition to the payors and regulatory agencies using our coded data, it is also being accessed by consumers to see how hospitals and physicians compare to each other and with national data. Consumers are then using this data to determine where they go for healthcare. You need to make sure that you are reporting accurate coded data based on complete documentation. In addition, you need to be sure that the collection of this data is in the right place and is being reported appropriately.

Information is power, and therefore, data is power. So again, what does your data say? It's time to determine if it is accurate so that decisions on these VBP initiatives can be adjusted to meet our goals – the highest patient care and experience at reduced costs.

The regulatory information is out there, so no matter what your views are on VBP and quality, we hope to bring to you a representation of opinions, best practices, practical news, and information that you can take and apply practically. We look forward to hearing from you on what you think, so please contact me at This email address is being protected from spambots. You need JavaScript enabled to view it..

About the Author

Kim Charland is the editor of and the senior vice president of clinical innovation with Panacea Healthcare Solutions. Kim has 30 years of experience in health information and reimbursement management for hospitals and physician offices. Kim's primary role with Panacea is publisher of, which is the company's newest online monitor focused on value-based purchasing and quality. She is also co-host of's Internet news broadcast "Talk-Ten-Tuesday." In addition, she assists with product development for Panacea's consulting and software divisions as well as the MedLearn Publishing division helping to ensure that Panacea is in the forefront of the industry and delivering the most current and beneficial products to its customers. Kim is also recognized as a national speaker and has spoken for numerous organizations.

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Last modified on Monday, 06 April 2015 20:45