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Ready CDI teams for CMS’ proposed expansion of mandatory ortho episode payment models

Ready CDI teams for CMS’ proposed expansion of mandatory ortho episode payment models

by Shannon Newell, RHIA, CCS, an AHIMA-approved ICD-10-CM/PCS trainer

If your hospital resides in one of the 67 metropolitan statistical areas (MSA) required to participate in the Comprehensive Joint Replacement Model (CJR), you will also be required to participate in a new orthopedic payment model called ‘SHFFT’ (surgical hip and femur fracture treatment) if an August 2 proposed rule is finalized. The impact? The following assigned MS-DRGs will no longer define hospital reimbursement:

  • Major Joint Replacement or Reattachment of Lower Extremity (MS-DRGs 469, 470)
  • Hip and Femur Procedures Except Major Joint (MS-DRGs 480, 481, 482)


MS-DRGs 469 and 470 are included in the CJR, which we have discussed in prior articles. Let’s take a look at the proposed SHFFT episode payment model (EPM), which involves the other three MS-DRGs, and see what role the CDI program can play as reimbursement shifts to episode-based payments.

Model overview

The episode of care defined for the SHFFT EPM begins with an admission to a participating hospital of a fee-for-service Medicare patient assigned MS-DRGs 480?482. This admission is referred to as the anchor hospitalization. The episode continues 90 days post-discharge from the hospital, and payments for all related Part A and Part B services are included in the episode payment bundle. CMS holds the hospital accountable for defined cost and quality outcomes during the episode and links reimbursement?which may consist of payment penalties and/or financial incentives?to outcome performance.

This is a mandatory EPM for hospitals already impacted by the CJR; the SHFFT model will apply to the same 67 geographic MSAs. The EPM is proposed to begin July 1, 2017, and will last for five years, ending in December 2021.


Cost outcomes

CMS will initially pay the hospital and all providers who bill for services during the episode using the usual fee-for-service models. Thus, the SHFFT EPM will not impact the revenue cycle at first. However, at the end of each performance period, which typically represents 12 months (January through December), CMS will compare or reconcile the actual costs with a preestablished ‘target price.’

CMS will set target prices using an approach that will phase in a blended rate of hospital to regional costs. In recognition of the higher costs associated with discharges in MS-DRGs with an MCC or CC, CMS has developed an algorithm to adjust the target price for this subset of the patient population.

If the reconciliation process indicates that the costs to deliver services for the episode were higher than the target price, CMS will require repayment from the hospital. If, however, the costs to deliver care for the episode were lower than the target price, CMS will provide additional payments to the hospital for the provided services. To receive additional payments, however, performance for defined quality outcomes must meet or exceed established standards.

Quality-adjusted target price

To receive any earned financial incentives, the hospital must meet or exceed performance standards for established quality outcomes. CMS therefore adjusts the target price based on quality performance, referred to as the quality-adjusted target price.

The SHFFT EPM uses the exact same quality outcomes as those defined for the CJR:

  • Patient experience. This is the HCAHPS measure also used in the Hospital Value-Based Purchasing Program (HVBP). The source of information for this measure is the HCAHPS survey.
  • Patient-reported outcome data. As with the CJR, the hospital can collect and submit patient-reported data elements and at present will earn quality composite points for submitting the data. These data elements are collected both before and after the procedure and will be used by CMS to create a functional status measurement tool.
  • THA/TKA complication rates. This is the Hospital-Level Risk Standardized Complication Rate (RSCR) following the THA/TKA measure. This measure already impacts financial performance under the HVBP. Like the CJR, performance for this measure is weighted the heaviest in the quality composite comprising 50% of the composite score.


Hospital (accountable party), collaborators, and Advanced Payment Models

The hospital is held accountable for episode cost and quality outcomes and all associated financial risks/rewards, even though a variety of providers deliver services and impact performance. As with the CJR, the hospital has been designated as the accountable party because CMS believes the hospital is best positioned to influence coordinated, efficient delivery of services from the patient’s initial hospitalization through recovery.

CMS permits the hospital to enter into collaborative arrangements with physicians and other providers to support and redesign care delivery across the episode and to share financial gains and/or losses. The proposed rule expands the list of collaborators defined in the previous CJR final rule to include other hospitals and Medicare Shared Savings Program accountable care organizations.

The proposed rule also provides an Advanced Payment Model (APM) track for the EPMs, an important step that will further incentivize collaborator participation.


CDI program opportunities

There are five key ways that clinical documentation and reported codes across the continuum impact SHFFT performance:

  • Identification of patients included in the EPM. The assigned MS-DRG impacts which discharges are included in the cohort. As one example, consider a patient who would fall into the EPM (MS-DRGs 480?482) unless he or she has a bone biopsy. If reported, the bone biopsy would result in assignment of different MS-DRGs (477?479) and the discharge would not be included in the EPM.
  • Establishment of target costs. The capture of the MCC and/or CC impacts establishment of the episode target price.
  • Determination of related costs. The costs for hospital readmissions within the episode are included in episode costs if the readmissions are related. The assigned MS-DRG for the readmission determines whether the readmission is related.

The costs associated with Part B claims are included in episode costs if the services are related. The primary diagnosis for each visit determines whether the visit is related.

  • Reported complications. Assignment of ICD codes for the following conditions are counted as complications when those conditions result in inpatient readmission:
  • Complication risk adjustment. As with other hospital-centric measures such as risk-adjusted readmission and mortality rates, comorbidities reported for the 12 months prior to the anchor hospitalization are used to assess case-mix complexity. The CMS risk adjustment module uses defined comorbidity categories to identify conditions that impacted predicted rates of complications for the THA/TKA cohort.

The capture of at least one condition for each of the 28 comorbid categories over the 12-month period will strengthen risk adjustment and RSCR performance. RSCR performance contributes to 50% of the quality composite score, which, in turn, impacts the quality-adjusted target price.



Together the CJR and SHFFT models cover all surgical treatment options (hip arthroplasty and fixation) for Medicare beneficiaries with hip fractures. These MS-DRGs typically represent one of the largest inpatient surgical volumes for most short-term acute care hospitals.

As hospitals and collaborators assess and refine the management of patients to achieve or exceed the quality-adjusted target price, the data we submit on claims will be used to assess our performance. The CDI program in the inpatient and ambulatory setting must be positioned to promote and support the capture and reporting of impactful documentation.

Additional information on the proposed rule can be located at



Editor’s note

Newell is the director of CDI quality initiatives for Enjoin. Her team provides CDI programs with education, infrastructure design, and audits to successfully and sustainably address the transition to value-based payments. She has extensive operational and consulting expertise in coding and clinical documentation improvement, case management, and health information management. You can reach Newell at 704-931-8537 or – HIM Briefings

Reflections of a Coder Coach: Ready to Get Back to Normal

A few weeks ago, it occurred to me that my job hasn’t been “normal” for the last six years.  Right around this time six years ago is when I first went to AHIMA’s ICD-10 Academy and earned my status as a trainer.  Creating and presenting ICD-10 training materials came soon after that and it wasn’t until recently I realized that my job hasn’t been normal for the last six years.  And since I’ve only known my husband for four years, one could argue that he’s never known me when I’m normal… er.. at least when my job is normal!

As I look around the articles and social media related to coding, a lot has changed in this industry in the six or seven years that I’ve put myself out there as the Coder Coach.  When I first started blogging and meeting once a month with coding students and wanna-be’s, there weren’t a lot of people out there looking to mentor coders.  Now, my voice is one of many as people who never heard of coding before ICD-10 jump on the bandwagon to get a piece of the action.  There have been questions about certifications – which ones to get and how to make sure ICD-10 certification requirements are met.  There have been questions about how to code things we never had to think about before – initial vs. subsequent encounters for injuries and poisonings and root operations based on procedure intent.

I have to be honest and say that in my abnormal day-to-day life as a coder over the last few years, I’ve had trouble finding my voice and giving advice as a coding mentor.  I no longer feel qualified to tell a coder how to break into the industry because things are so different than they were 20 years ago when I got my start and coding is something that many people are now aware of – not something that people kind of fall into anymore.  Since I fill my days adding to my own intellectual bank by researching procedures and learning how to explain them – and how to code them – I wonder what it is that new coders need right now.  And for everyone who is trying to learn coding, I just want to reach out and give them all a virtual hug because this is, in my humble opinion, about the hardest time to learn this industry.

This week I am working on something I haven’t done in years.  I’m reading the Final Rule for the 2016 MS-DRG changes.  That is something I used to read and summarize every year for my clients.  And even though the codes are different and there are some new sections to read in this super long file, I had a moment of realization, a sigh of relief if you will, that this… this is normal!  After we flip the switch on October 1 and everyone starts using ICD-10 (because I have pretty much zero faith in our congressmen to accomplish any earth shattering legislation in two weeks when they’re so focused on Donald Trump’s run for president), I’m sure there will be a few things that don’t go as planned.  But for coders, it’s a time for us to return to “normal.”  I miss having a general confidence in assigning codes (although this has gotten better as I train more coders!).  I miss code updates!  Oh, how I miss those code updates!  We’ve had frozen ICD code sets for four years!  I’ve been following the recommendations made to the Coordination and Maintenance Committee and I can’t wait to see which changes they decide to adopt on October 1, 2016.

And maybe when the dust settles a bit and we see how many people really want to stick with coding in ICD-10, I will find my voice again as the Coder Coach.  I sincerely hope so, because I miss meeting people with a passion to learn about my passion and giving them little nuggets of wisdom to help them make a difference in this industry.

Coder Coach