Don't Leave Money on the Table: Mastering MACRA, PQRS, and Value-Based Purchasing: How Quality Coding Impacts Quality Reporting

By Mary Butler

Whenever there’s a flashy new piece of consumer technology, there are always holdouts who insist on sticking with the old, more comfortable way of doing things. Consider a grammarian who rejects online dictionaries for a cumbersome hard-bound book. Or the road tripper who prefers their ancient dog-eared atlas to GPS or Google Maps. Then there are those who take the plunge with new technology but refuse to maximize its features—like getting a smartphone but only using it to make phone calls. 

Considering that a basic “flip phone” retails for $100 or less, while a shiny smartphone can set one back for $700 or more, the person who uses their smartphone for rudimentary purposes is leaving money on the table. Especially when you consider all the tasks smartphones can facilitate that save the user valuable time—shopping, banking, and calendar planning. So much can be lost when users stick to the old way of doing things.

Doctors and hospitals now find themselves in a similar situation. By failing to comply with the new ways of getting paid due to initiatives like value-based purchasing, they risk leaving millions of dollars on the table. The same can be said for not properly documenting treatment—which has become key for these new initiatives.

Programs from the Centers for Medicare and Medicaid Services (CMS), such as the Physician Quality Reporting System (PQRS), the “meaningful use” EHR Incentive Program, and the Hospital Outpatient Quality Reporting Program (Hospital OQR), were launched to ensure CMS is getting its money’s worth for care provided to patients. But research has found that nearly 40 percent of providers eligible for PQRS faced a payment reduction in 2015 for failing to report quality data, according to a report by the Advisory Board Company.1

To ensure compliance with these and numerous other reporting programs, it’s important for health information management (HIM) professionals to understand what’s driving the increase in quality reporting in the outpatient setting and to grasp how value-based reporting measures are influenced by coding. Additionally, HIM professionals need to be able to engage physicians on the issue of quality documentation and reporting, and become increasingly capable of implementing and using clinical documentation improvement (CDI) to improve quality measure reporting.

Quality Measure Alphabet Soup

While PQRS and meaningful use started as incentive programs, these programs transitioned into their noncompliance penalty phase in 2016. Physicians could see combined penalties up to nine percent of their annual revenue by 2017 if they don’t get on board with these programs, according to the Advisory Board Company.2

Also with Hospital OQR, hospitals must submit data for measures on the quality of care furnished by hospitals in outpatient settings that meet administrative, data collection and submission, validation, and publication requirements, or else receive a two percentage point reduction in their annual payment update (APU) under the Outpatient Prospective Payment System (OPPS).

What’s more, the newly proposed Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), effectively combines the PQRS, meaningful use, and the Value-Based Modifier Program (VBMP) with other value-based and quality reporting programs, one of which is the Merit-based Incentive Payment System (MIPS).

The onslaught of these programs means providers are going to have to prove they did their due diligence in the total care of their patients—and that is only achieved through the clinical documentation and coding. MIPS should provide greater flexibility when it comes to quality reporting, says Devendra Saharia, CEO of AGS Health. 

Saharia notes that MIPS also added a new program, called Clinical Practice Improvement Activities (CPIA), “which means coders will have to continue abstracting certain PQRS measures and VBMPs for providers, and will be an integral partner in collecting data for CPIAs.”

Indeed, coding professionals and CDI programs are going to be integral in helping providers comply with these programs. And as the industry pushes more and more services and procedures into the outpatient realm, documentation in that setting will face more scrutiny.

HIM experts worry that quality measure reporting is something that slips under the radar for physicians, especially those in smaller practices. “We do have a lot of independent physicians that are not a part of big organizations, I really do feel that that does put a burden on them,” says Christine Lee, MHA, RHIA, CCS, CPC, manager of provider practice services at CIOX Health. “Most of the time [physicians] do not have a plethora of staff to help them interpret these guidelines and meet these criteria for these programs. Many times they don’t have certified or credentialed HIM professionals available to help them with this.”

Better Documentation for Better Compliance

Under the new payment programs, diligent physicians who are already treating their patients according to clinical guidelines can keep doing what they’ve always done. They just need to document some steps they might have skipped in the past.

In addition to payment changes enacted by the government, some insurance companies are also implementing their own quality measures, says Kim Huey, MJ, CHC, CPC, CCS-P, PCS, CPCO, president of KGG Coding and Reimbursement Consulting.

“I know, for example, a large private payer that dings physicians if they’ve not ordered a colonoscopy, or they’ll ding the physician payment if they’ve not documented preventive care procedures, that kind of thing,” Huey says. “So, yes I think everyone’s looking at quality, but in terms of a direct cut in reimbursement, Medicare’s driving most of them.”

Sharon Easterling, MHA, RHIA, CCS, CDIP, CPHM, FAHIMA, CEO of Recovery Analytics, says that physician practices need to re-evaluate their chronic care management documentation and how they’re assessing their patients on an annual basis in order to avoid unnecessary revenue hits under new payment schemes. Depending on the alternate payment model they choose to participate in, such as MIPS, there’s going to be risk-adjustment scoring.

“I don’t think we know all the details yet, as far as what that’s going to look like, but I would say you should know how to capture your patient’s diagnosis appropriately for severity to make sure you’ve given a good example of the level of patients you have at your facility, relative to the quality you deliver,” Easterling says.

Dr. William Haik, MD, FCCP, CDIP, a practicing pulmonologist and director of DRG Review Inc., emphasizes that physicians don’t necessarily need to know how to code, they need to know how to document appropriately. The big thing they need to know with changes associated with MIPS and MACRA is that their payment is no longer going to be based on evaluation and management coding—it’s going to be based on the level of services they provide, and the severity of a patient’s illness, which is linked to risk.

Haik says current value-based reforms and quality reporting are like health maintenance organizations (HMOs) on steroids. “Back in the HMO days, you were paid a certain amount per patient, per month. Regardless of who that patient was—it could be a healthy young kid, or it could be an unhealthy person with multiple comorbid illnesses. The illnesses weren’t stratified and therefore payments weren’t stratified. But with the bundled payments being proposed, they’re looking at the level of risk you’re accepting and those patients’ illnesses are being stratified based on diseases that are documented in that reporting year,” Haik says.

For example, you can’t spend millions of dollars on a patient with a urinary tract infection (UTI) but it’s okay—in a payer’s eyes—to spend money on a patient with diabetes, a UTI, peripheral vascular disease, neuropathy, nephropathy, and retinopathy, which a number of Haik’s patients may have all at the same time. In the past, a physician may have been treating all those things but not documenting them. Now all those factors could impact reimbursement.

“I think a physician is probably going to be the first and the last patient advocate. Probably the one advocacy role we can play for our patient is to make sure the resources are there through adequate documentation of a patient’s illness,” Haik says.

A physician’s primary concern is taking care of their patients and documenting well enough to get paid for the care they’re delivering. The extra burden and extra work involved in reporting quality measures requires them to have a strategy in place to meet the new rules, says CIOX’s Lee. CDI professionals are in the best place to help educate physicians on the coming rules.

CDI Central to Meeting Reforms

As payment reforms change how physicians in small practices and ambulatory centers document, the demand for outpatient coding professionals and CDI specialists is expected to balloon. This will be harder on physician practices that aren’t affiliated with large hospital systems that could expand on their inpatient CDI programs.

“Accurate and appropriate documentation paired with quality coding and abstracting is the only path for success with value-based/quality measure improvements,” Saharia says. “Outpatient coders will find themselves more engaged in the CDI process than ever before. Physicians will need guidance from coders to better understand what documentation is lacking to support quality measures/requirements. Speedier cash flow starts with better CDI and coding.”

Lee says the industry is on the cusp of funneling CDI specialists into the majority of its outpatient settings, especially in larger health systems with robust compliance departments. That said, it is a big undertaking.

“When you work with CDI in a hospital, inpatient setting, you primarily are dealing with physicians for the documentation piece, and the coder who assigns the codes which of course affects the DRG,” Lee says. “But in the outpatient setting we also have the complexity of adding physician-selected codes. And many times the physicians are not really well versed in the application of nuances of coding guidelines, so it’s really important that those diagnoses that are being assigned are accurate and the documentation can substantiate that diagnosis that was chosen.”

Of course, the primary challenge of outpatient CDI is that any queries are being done retrospectively after the patient has long since left the care setting. Also, inpatient CDI specialists may have difficulty transitioning to the outpatient setting due to differences in workflow and documentation needs. Huey says inpatient CDI specialists are so focused on capturing and documenting things that are important to hospitals, that it’s difficult to make the transition to the outpatient setting.

“I think it’s [outpatient CDI] definitely going to be more important for my clients—and I’ve got a mix… I will say that those that are not affiliated with a hospital are still not doing the CDI. Even if they are affiliated, they’re not necessarily doing it on the outpatient side,” Huey says. “I still think it’s key to complying with the MIPS and the new quality initiatives.”

Vendors will soon play a big role in outpatient CDI, Haik says, particularly when it comes to helping hospital systems find ways of integrating physician documentation throughout the system in order to properly reflect risk adjustment. Whether it’s achieved with the help of a vendor such as a natural language processing program, or an electronic health record (EHR) that’s set up to capture certain measures, Haik says outpatient CDI will be the “tip of the spear” in documenting hierarchical condition categories.

And in order to meet all the varied measures, providers should take advantage of every existing resource they currently have—especially EHRs. While having a vendor make changes to their software or hiring a consultant to come in and help with documentation improvements could be costly, it’s worth it in the long run, Lee says. 

Even with the help of a natural language processing solution or alterations to an EHR, physicians still need to slow down while they’re documenting to make sure it’s clear and concise and complete. Either the physician or CDI specialist should still thoroughly spot check vendor-assisted documentation, Lee says.

“We see a lot of notes that are absolutely nonsense, [sometimes] because the EHR didn’t pull things in the correct sequence to make a sentence that makes sense. And a lot of times we see where organizations have maybe used a voice recognition technology to provide supplemental documentation into that electronic record and sometimes that doesn’t make sense—it’s full of grammatical or spelling errors,” Lee says. “The dictation was garbled and voice recognition can’t make it out.”

Headaches aside, outpatient and physician practices shouldn’t waste any time getting on board with the new programs, lest they fall prey to a carrot versus a stick situation.

“They’re either going to offer you the incentive and offer it as a carrot, or they’re going to turn around and use the incentive to beat you with it later,” Lee says. “That’s kind of what we saw with the different programs—especially the ones from government payers. I don’t see that cycle changing any time soon.”


[1] Advisory Board Company. “Nearly 40% of doctors lose Medicare pay for failing to report patient data.” April 27, 2015.

[2] Bloom, Steve and Nicole MacMillan. “With PQRS penalty increases, it’s time to rethink your quality strategy.” Advisory Board Company. March 17, 2016.

Mary Butler ( is associate editor at the Journal of AHIMA.

Article citation:
Butler, Mary. "Don't Leave Money on the Table: Mastering MACRA, PQRS, and Value-Based Purchasing: How Quality Coding Impacts Quality Reporting" Journal of AHIMA 87, no.9 (September 2016): 16-19.