Conquering Pay for Performance: Leveraging the Legal EHR as an Essential Tool

Rachel C. Chebeleu, MBA, RHIA, Director of Medical Records and Professional Fee Abstraction and Carl Cottrell, Senior Director, eWebHealth


Late in 2005, the Center for Medicare and Medicaid Services (CMS) began financially rewarding top performing hospitals in a pay for performance (P4P) demonstration project. In total, they disbursed nearly $9 million that year to these facilities in reward for providing what they describe as patient focused, high value care as measured by quality indicators, access efficiency, and successful outcomes. Much like the New Jersey DRG demonstration project in the 1980s – the harbinger of the radical shift to prospective payment – this project is also likely to set off a call to embrace new P4P strategies. As we learned from the adoption of DRGs, the organizations that heed the call early and prepare will be ahead.

Pay for performance is a key part of CMS’s Quality Strategy which employs several key components: Evidenced-Based Care and Quality Measurement; Payment Aligned with Quality; Health Information Technology; Partnerships; and, Information Dissemination and Technical Assistance.

Hospitals need to be prepared for the current Pay for Submission programs and the soon-to-come P4P programs. The Legal EHR is an important component to organizations succeeding in this new landscape.


More than 98 percent of all hospitals are currently involved in a CMS-sponsored pay for performance program. Performance is evaluated according to ten quality measures for three medical conditions: acute myocardial infarction, heart failure, and pneumonia. The amount of the payment is a 0.4 percent increase in their PPS rate which would otherwise be reduced by this amount without voluntary submission of the data. The results from these submissions are published on the Department of Health and Human Services (HHS) Web site and are broadly available.

The value of reporting this data cannot be argued. The value of this data becomes much stronger when one considers that the results of this data will soon be used to determine reimbursement for healthcare organizations. In one particular demonstration, the Premier Hospital Quality Incentive Demonstration, hospitals receive additional payments for being in the top performing organizations and in the same turn could face reduced payments if they are toward the bottom of the performing organizations.

In order to succeed and potentially receive additional payments in the future, or at the very least avoid incurring reduced payments, healthcare organizations must ensure that the data they collect is timely, accurate, and hopefully demonstrative of the high quality care the organization is rendering to their patients. An electronic record, even one post-discharge, can speed the data collection process, improve data outcome results, and be relied on to back-up the data once it is submitted.

The Premier Hospital Quality Incentive Demonstration

In September of 2005, the original ten measures were increased to twenty. These measures are part of the 34-measure set being used in the largest of the Medicare P4P demonstration projects, the Premier Hospital Quality Incentive Demonstration.

The Premier demonstration is a voluntary program available to all of the members of the Premier hospital purchasing alliance. Of the 1,500 Premier members, 278 hospitals elected to participate in the program. This program may well be the model chosen by CMS when P4P is mandated.

The Premier approach awards bonuses to top-performing hospitals and includes penalties for the lowest performing organizations. After one year of measurement to set a baseline, hospitals who improve performance on the indicators over the following three years will receive an additional payment of 2 percent for being in, or moving into, the top 10 percent of participating hospitals and 1 percent for the next 10 percent. Hospitals still in the bottom 20 percent of performers in the third year of the project will face reduced payments—a 2 percent reduction for the lowest 10 percent and a 1 percent reduction for the next lowest 10 percent.

If every hospital improves on the indicators and moves into the top 20 percent of performers, all will get bonuses. In addition, if all hospitals improve to rates higher than the lowest 20 percent, based on the baseline measurement, none will receive reductions in the third year of the demonstration.

Step One: Measure Performance.
Step Two: Make Improvements.

Measures are typically collected through chart review and reported via software provided by HHS. Even though this collection process is relatively straightforward, it is still time consuming, if performed on paper. Estimates from the Premier project show that collection can take from seven to thirty minutes per case. Data collection is much more efficiently performed from electronic records. Still, collection of the measures is only a small part of the process. Improving performance, a process that involves changing clinical practice and physician behavior, is much more challenging. One way to get physicians to participate is to make it as easy as possible for them to do so.

The American Medical Association (AMA) has published guidelines for physician participation in P4P programs. Hospitals are well advised to pay attention to these points as well. In most hospitals, it is the independent physician who must choose to incorporate the quality measures into individual practices.

Until point-of-care systems with clinical prompts are broadly available, peer review will remain the cornerstone of quality improvement. First, standards of care are published and accepted by the physicians. Peers evaluate cases outside the standards by reviewing charts. Peers share their findings and substantiate their results with chart references. Reviewed physicians independently evaluate findings through their own chart reviews. Recommendations for improvements are created and processes modified in order to achieve them.

To provide this level of review and feedback in accordance with the AMA guidelines is extraordinarily difficult with paper records. They can only be accessed by one person at a time and in one place—the HIM department. Further, they can only be accessed during a specified time – when HIM is open.

With paper records, external department core measures reviews are almost always behind. One reason is that they are typically batch processes. The reviewer waits until sufficient records are identified and put aside to justify a trip to HIM. They travel to the department, abstract their charts and if they aren’t interrupted, completely clear their backlog. More typically, they are called out on some matter more pressing and must continually return. The time that reviewers waste in this process is significant. The time wasted by HIM in this process is also significant.

Legal EHRs make the core measures abstracting process much more efficient no matter whether the reviewers are within or outside HIM. These systems virtually eliminate all of the waste involved in the handling, logging, notification and transportation within the abstracting process. With the ability to perform the work of core measures collection from anywhere, Legal EHRs also make collection more current. A reviewer can stop in the middle of an abstract, go do something else and then pick up right where they left off.

Moving forward, there will be more data collection, not less. Effective and efficient chart review requires an online electronic legal record that can be broadly accessed by reviewers, physicians, quality assurance departments, and medical staff committees. Ongoing peer review requires ongoing chart access. Ongoing chart access is best provided by electronic records, not by paper.

Like the transition to DRGs, those who are prepared for P4P when it arrives will excel.


For decades, the HIM department’s central role was managing most of the clerical medical record functions, such as getting the records completed, ensuring dictation was completed, submitting tumor registry data, and generating birth and death certificate data. In the past 20 years, HIM’s role has evolved into the department that assigns the codes to the diagnoses and procedures that then result in the reimbursement for the hospital. In that time, HIM also began to take on a role in assigning the diagnoses so that the hospitals are assigned appropriate ratings, such as the All Patient-Refined DRGs that U.S. News and World Report uses for their ratings.

In the last five years, HIM has assumed an even more prominent role in the hospital. More and more, HIM is the source department that the hospital relies on to collect Core Measure, Surgical Care Improvement Project (SCIP), and now Present on Admission (POA) data that is becoming the basis of the Pay for Performance system in our nation.

The time that the HIM department needs to spend collecting and analyzing this data can vary significantly from one institution to the next. Those organizations with an electronic health record generally are able to collect this mandatory data more promptly, accurately, and in a shorter period of time. Automation is a particularly important aspect in collecting this data. In many hospitals HIM departments are not given more resources when a new initiative is introduced. Increasingly, HIM departments are challenged to source more efficient ways to gather this data.

The HIM department often works with the hospital’s Quality Improvement (QI) department related to outcomes. QI wants the data as promptly as possible, so that they can analyze it, discern and act upon any non-compliance issues, particularly as they relate to quality. The Finance department also holds a stake in this information. They want the discovered issues acted on promptly and outcomes improved as quickly as possible to ensure that no CMS payment decreases are seen due to these outcomes in this emerging P4P world. The lynchpin to all of this activity is the medical record. As HIM struggles to collect the data in a timely fashion to meet QI, Finance, and administrative demands, the source document, the complete medical record, must be easily accessible by all the clinicians and non-clinicians who need to review it to understand the outcome results.


The data referred to above is generally collected from medical records and reported to the required agencies through software provided by a number of different vendors. Collection of this data can be quite time-consuming, taking up to 30 minutes per record, if using a paper-based record. Abstraction times using an electronic record are dramatically reduced. The presence of interfaces between electronic systems is important to ensure that the data needed is available with minimal effort to the abstractor. Better still, to have one system pull the needed data from a multitude of disparate clinical systems helps to create more efficiency and completeness of information.

Once the data is collected and analyzed, it is very important to work to improve the outcomes if issues with compliance are discovered. This involves having staff other than the abstractor look at the record.

If the record is paper-based, P4P quality improvement change will be slow. QI will want to review the record. The physician or other clinicians will want to review it. At times, the Chief Medical Officer or even Finance will want to assess the situation. If all of these professionals are “waiting in line” to access this record and they are waiting on the HIM department to produce it, report times will lag significantly for the hospital. This will likely cause reports to be delayed to the next quarter and there will have been no significant improvements to show, and pressure from above to meet reporting deadlines will only increase over time.

The AMA has published guidelines for physician participation in P4P programs. Peer review of medical records is still the cornerstone of quality improvement. Recommendations for improvement are created and processes modified in order to achieve them, most often through the physical review of the records.

Core Measures and SCIP data collection as well as subsequent reviews by clinicians need to move to a more concurrent environment. Legal EHRs make Core Measures and SCIP data collection much more efficient and help ensure accuracy and completeness of the record. The data is then available earlier. The reviews of the data and the planning on improvement activities can also be more current, particularly with the incorporation of a Legal EHR.

The Hospital of the University of Pennsylvania (HUP) has begun work on the improvement of outcomes related to the P4P metrics while the patient is still in-house, prior to discharge. HUP has begun to use software that assists in identifying diagnoses to focus on related to MS-DRGs. At the same time they are assessing POA items. HUP is also assessing compliance with Core Measures and SCIP criteria. By working directly in the units with the clinicians accessing the electronic record, HIM and clinicians are partnering to improve outcomes, documentation, and also the specificity of the diagnoses and procedures coded, which in turn supports P4P and better quality care.

If the prior record needs to be accessed to assist with education while the patient is in-house, this is an easy task at HUP using the Legal EHR. All records from the previous stays at all three hospitals in the University of Pennsylvania Health System can be accessed promptly, within the same electronic system. This simple access can help clarify history findings, and it has proven to assist with POA data collection.

As we move forward, data collection volumes will continue to increase. Electronic legal records become a must in the P4P process because they enable effective and efficient chart review online that can be broadly and simultaneously accessed by all necessary parties.


  1. Explain the history of the CMS Pay for Performance system.
  2. Discuss the direction Pay for Performance may be headed.
  3. Define the service that HIM provides in improving quality and in Pay for Performance.
  4. Share information from HUP’s experience around documentation improvement and Pay for Performance improvements.
  5. Discuss the role the Legal EHR can play in the Pay for Performance initiatives.
  6. Provide real-life examples from HUP of the financial benefits of a Legal EHR related to Core Measures, SCIP, and POA.

Summing Up

All hospitals are struggling with implementing the data collection, review, assessment, and subsequent improvement efforts of Pay for Performance measures. This session will discuss and describe how utilizing electronic record solutions, along with process changes, can assist your organization in making this arduous requirement easier and, likely, a more successful one for your hospital.

Chebeleu, Rachel C.; Cottrell, Carlton. "Conquering Pay for Performance: Leveraging the Legal EHR as an Essential Tool." 2008 AHIMA Convention Proceedings, October 2008.