Practice Management

Documentation and billing: Tips for hospitalists

Is it AMS, Delirium, or Encephalopathy?


During residency, physicians are trained to care for patients and write notes that are clinically useful. However, physicians are often not taught about how documentation affects reimbursement and quality measures. Our purpose here, and in articles to follow, is to give readers tools to enable them to more accurately reflect the complexity and work that is done for accurate reimbursements.

Dr. David Tong of Atlanta

Dr. David Tong

If you were to get in a car accident, the body shop would document the damage done and submit it to the insurance company. It’s the body shop’s responsibility to record the damage, not the insurance company’s. So while documentation can seem onerous, the insurance company is not going to scour the chart to find diagnoses missed in the note. That would be like the body shop doing repair work without documenting the damage but then somehow expecting to get paid.

For the insurance company, “If you didn’t document it, it didn’t happen.” The body shop should not underdocument and say there were only a few scratches on the right rear panel if it was severely damaged. Likewise, it should not overbill and say the front bumper was damaged if it was not. The goal is not to bill as much as possible but rather to document appropriately.


The expected length of stay (LOS) and the expected mortality for a particular patient is determined by how sick the patient appears to be based on the medical record documentation. So documenting all the appropriate diagnoses makes the LOS index (actual LOS divided by expected LOS) and mortality index more accurate as well. It is particularly important to document when a condition is (or is not) “present on admission”.

Key take-home points for hospitalists

While physician payments can be based on evaluation and management coding, the hospital’s reimbursement is largely determined by physician documentation. Hospitals are paid by Medicare on a capitated basis according to the Acute Inpatient Prospective Payment System. The amount paid is determined by the base rate of the hospital multiplied by the relative weight (RW) of the Medicare Severity Diagnosis Related Group (MS-DRG).

The base rate is adjusted by the wage index of the hospital location. Hospitals that serve a high proportion of low income patients receive a Disproportionate Share Hospital adjustment. The base rate is not something hospitalists have control over.

The RW, however, is determined by the primary diagnosis (reason for admission) and whether or not there are complications or comorbidities (CCs) or major complications or comorbidities (MCCs). The more CCs and MCCs a patient has, the higher the severity of illness and expected increased resources needed to care for that patient.

Diagnoses are currently coded using ICD-10 used by the World Health Organization. The ICD-10 of the primary diagnosis is mapped to an MS-DRG. Many, but not all, MS-DRGs have increasing reimbursements for CCs and MCCs. Coders map the ICD-10 of the principal diagnosis along with any associated CCs or MCCs to the MS-DRG code. The relative weights for different DRGs can found on table 5 of the Medicare website (see reference 1).


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