For Hospitals


HSMN has extensive experience with the DRG system since the beginning of Prospective Payment. Having managed clinical documentation and coding-related projects since 1985, we are well positioned to develop a roadmap to assist facilities in the transition to the ICD-10 coding classification system.

Our roadmap consists of a 3-avenue approach:

1. Analytics:

We know that understanding the systems at work and operational practices comes from performing a “deep dive” into the data.  Our past experience has proven that studying line item detail uncovers issues that are lost in high level reporting. We start with assessing the current state which provides a “value add” of the identification of opportunities for improvement under ICD-9. We analyze current workflows and systems to identify the changes that will be required by the conversion to ICD-10 reporting. An unstructured assessment of current processes can result in missing critical points that can result in claims denials, duplicate billings and/or inaccurate claims submissions.

2. Assessment of Documentation and Coding:

There are approximately 14,000 ICD-9-CM diagnosis codes and 4,000 ICD-9-CM procedure codes compared to 68,000 ICD-10-CM diagnosis codes and 87,000 ICD-10-PCS procedure codes. This increase in code volume allows for greater specificity in reporting. Since reimbursement is tied to procedure and diagnosis coding, it is imperative that clinical documentation supports the level of specificity that exists in ICD-10. We perform an assessment of the documentation and coding to identify areas of deficiencies that will require more detailed documentation for optimization under ICD-10. Our record selection process involves a detailed targeted approach based on key factors.

3. Practice Excellence:

HSMN is well known for tailoring our work specifically to the client. We do not believe in “cookie cutter” programs; health care providers come in many shapes and flavors.  We design programs that build on the strengths of an organization instead of attempting to implement a “one-size-fits-all” plan. Tools for transition are always based on an assessment of tools currently in use, industry “gold standard” tools, and metrics to support process improvement for ICD-10. The principles of an effective transition plan rely on understanding and adapting the tools and processes already underway in a medical center to a new system.

CDM Review

The Charge Description Master (CDM), commonly referred to as the chargemaster, is a tool that is comprised of key billing data elements that are necessary for billing and receiving payment for services and supplies rendered to patients in the hospital. The CDM is an integral part of the hospital’s revenue cycle. It is estimated that approximately 70% of the hospital’s revenue is driven by the chargemaster. If the chargemaster is not current, complete and compliant, the facility might be missing out on billable services and items.

Services and supplies that are reported on the claim as a result of the CDM process are considered to be “hard coded. ”However, not all services performed in the hospital end up on the bill from the CDM. Hospitals commonly have services coded by the health information department. The critical decision that has to be made for every service line in the hospital is: Should the service be hard coded in the CDM or abstracted and soft coded by certified coding professionals in Health Information. Many facilities are considering hard coding more services these days due to a lack of available qualified certified coders.

While both charge processes have their advantages and disadvantages, this can be a difficult decision based on the need to maintain billing integrity. A common problem for many facilities though is that code assignment may come from both sources, the CDM and HIMs. When this occurs, the end result may be:

  • Charges are duplicated on the bill,
  • Charges are missing from the bill, or
  • Charges are incorrectly reported on the bill.

It is critical for the HIM coding staff to know what CPT/HCPCS codes are reported from the chargemaster. HSMN recommends that facilities adopt an attitude of Charge Management rather than Charge Maintenance. How does the hospital manage the CDM and the Charge process?

  • Assign organization wide team ownership,
  • Perform an annual internal CDM update and review,
  • Have an external facility-wide documentation, charge capture and billing review every two years, and
  • Develop comprehensive policies and procedures that cover all aspects of the charge management process.

Call on HSMN to help you design and implement a Charge Management Program.


Since the implementation of the APCs in 2000, HSMN has worked closely with facilities in developing internal E/M guidelines. Even now, we find that there continue to be hospitals that level clinic visits based on physician E/M guidelines, have not developed E/M guidelines based on the utilization of resources and/or have not defined different sets of E/M guidelines that consider relating resources specific to the Emergency Room or Clinic environments. Additionally, we have found that hospitals have not assessed compliance with internally developed guidelines or looked for opportunities to improve E/M reporting.

HSMN is well known amongst providers for our work with clinical documentation, especially in our ability to abstract quantifiable data elements to meet coding and billing standards. What stands us apart from other consulting firms is our ability to understand the unique culture of an organization and incorporate those cultural differences to develop solutions that are specific to the way you do business. So we ask you, do your E/M guidelines accurately reflect your facility’s utilization of resources? Is there opportunity for improvement in relating resources to E/M level intensity in your Emergency Room and Clinic settings? Find out by letting us review you E/M utilization patterns.

Medical Necessity

Medical Necessity is an issue in all healthcare settings. All payers have “medical necessity” policies. Some payers adopt Medicare standards. According to The Centers for Medicare and Medicaid (CMS), if signs, symptoms and/or diagnoses are not recognized as a “standard” for the services performed, “medical necessity” does not exist. A service is considered reasonable and necessary if the service is:

  • Safe and effective,
  • Not experimental or investigational, and
  • Appropriate; of a duration and frequency that is considered appropriate for the service.

Additionally, in order for a given item or service to be covered by Medicare it must:

  • Fit into a statutory benefit category.
  • Not be specifically excluded from coverage.
  • Be reasonable and necessary for the treatment or diagnosis of disease

The CMS has developed a hierarchy of Medicare Coverage Rules:

  • Medicare Benefit Policy
  • National Coverage Determinations
  • Laboratory National Coverage Determinations
  • Local Coverage Determinations

Medicare Regulation also requires the physician to provide an appropriate diagnosis when ordering services. How can a physician be expected to keep up with the myriad of policies, to know if a service is statutorily excluded, or to know if a service is guided by a Local Coverage Determination?

The End Result:
Healthcare providers write off millions of dollars every year due to Medical Necessity denials. Valuable resources are wasted researching and resolving denials and handling patient complaints about services deemed medically un-necessary. How can providers stop the annual revenue lost due to medical necessity?
HSMN has lived these scenarios in many hospitals across the country. We have designed processes, systems, and education to eliminate loss due to medical necessity denials. We start with the premise that physicians do not order services that are not medically necessary. At HSMN we understand that the key to eliminating medical necessity denials is in translating standard clinical practice in accordance with the rules that govern reimbursement.

Training & Knowledge Transfer

A Consulting engagement to assess an operational/financial area of Practice or Hospital must conclude with an implementable Action Plan. Our clients tell us of the many engagements that conclude with Final Report that is never implemented. The reason is usually, “We can’t do that here; we have never done that here”; “Sounds great but that is not who we are”. What is missing the one ingredient that without which there cannot be any success, “Understanding the culture in which the assessment is being done”. The solution to a problem can only succeed if it can fit into the culture of the organization who recognizes The “Action” plan as something that works in their history and culture.

The alternative is to change the Culture or the people or the organization. At times that is what is necessary. For the most part, interviewing staff especially with “institutional knowledge” might give clues as to what is possible in that setting. In our 25 years of consulting, we have often found that a solution to a problem may be in linking it to something that had previously been done in an analog fashion but not transferred forward in a digital world.

The Consultant must appreciate the history and culture of the organization before a full fledged “Action Plan” can be presented and implemented. An important part of the “Action Plan”is to Transfer Knowledge to the client, not a Black Box. The objective is to join the knowledge that the Consultant has gained in the assessment to the that enjoyed by the staff. So often instead of a Knowledge Transfer there is a competition between the consulting team and the hospital staff. The famous line is “I have been telling them this (consultant findings) for years. Why didn’t they listen”? HSMN listens very well so that the client (hospital employees) can recognize their own ideas in the solutions that are presented.


Coding is complex. Many provider types place little importance on diagnosis coding; however, carelessness in diagnosis coding can lead to denied claims. Diagnoses are relevant to reimbursement in two respects, specificity and medical necessity.

  • Specificity
    • In the context of ICD-9-CM coding, the “highest degree of specificity” refers to assigning the most precise ICD-9-CM code that most fully explains the narrative description of the symptom or diagnosis.
  • Medical Necessity
    • Defined as accepted health care services and supplies provided by health care entities, appropriate to the evaluation and treatment of a disease, illness or injury and consistent with standards of care. Payor coverage determinations determine medical necessity criteria for specified diagnostics and services.

ICD -10-CM

Although the transition to ICD-10 has been postponed, providers should consider this an opportunity to develop a roadmap to ICD-10 transition. Fortunately, most specialized providers will only be impacted by ICD-9-CM diagnosis code changes but going from a classification system that has 14,000 diagnosis codes to a system that has approximately 68,000 diagnosis codes will still require significant preparation.

Understanding complex billing rules, medical necessity criteria, coding rules and numerous payer regulations is the key to meeting the goal of coding accuracy and compliance.


Many hospitals still struggle producing “clean claims.” The average clean claims rate for hospitals in the United States is 75%. The goal of course is to produce 100% clean claims. So what is a clean claim? Correct completion of a UB-04 is crucial to filing a clean claim. A clean claim has no deficiencies that delay payment. From the payer’s perspective, facility and professional claims are considered to be “clean” if they meet the following general requirements:

  • All required information and data elements has been received,
  • The claim has been properly, accurately and completely coded,
  • Only medically necessary services provided are provided,
  • Payment liability (i.e. subscriber, patient demographics) can be established, and
  • Most importantly, a claim that has not been denied.

Understanding complex billing rules, medical necessity criteria, coding rules and numerous payer regulations is the key to meeting the goal of 100% clean claims. HSMN staff has expert knowledge of payment rules, particularity Medicare and Medicaid. Our approach to performing a claims assessment starts with appointment scheduling – determining why the patient was presenting for care. We follow the patient encounter through to looking at the Remittance Advice to ensure that payor has appropriately adjudicated the claim.

Coding Specialties

  • Allergy & Immunology
  • Anesthesiology
  • Cardiology
  • Colon and Rectal Surgery
  • Dermatology
  • Emergency Medicine
  • Family Medicine
  • Gastroenterology
  • General Surgery
  • Hematology/Oncology
  • Infectious Disease
  • Internal Medicine
  • Medical Genetics
  • Nephrology
  • Neurology
  • Neurosurgery
  • Nuclear Medicine
  • Obstetrics and Gynecology
  • Ophthalmology
  • Orthopaedic Surgery
  • Otolaryngology
  • Pathology-Anatomic/Pathology-Clinical
  • Pediatrics
  • Physical Medicine and Rehabilitation
  • Plastic Surgery
  • Preventive Medicine
  • Psychiatry
  • Pulmonary Medicine
  • Radiation Oncology
  • Radiology/Interventional Radiology
  • Rheumatology
  • Thoracic and Cardiac Surgery
  • Transplant
  • Urology
  • Vascular Surgery

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