Medicare's Value-Based Payment Initiatives: Impact on and Implications for Improving Physician Documentation and Coding

Medicare has introduced a number of new payment initiatives that will have a profound effect on hospital reimbursement and quality and safety ratings. The new medical severity diagnosis-related group (MS-DRG) payment system adds a number of new DRG categories to more adequately account for patient severity. The new present-on-admission (POA) initiative is designed to withhold additional reimbursement for selected complications that were not recorded as being POA but that occurred during the course of the hospitalization. The recovery audit contract requires hospitals to repay Medicare for services deemed not clinically necessary based on retrospective chart review. Reimbursement and quality rankings for each of these initiatives are based on the extent and thoroughness of physician chart documentation. Physicians must understand the importance of their role and responsibilities in this process and embrace what needs to be done through appropriate education, coaching, and guidance, which leads to more effective chart documentation.