What is Value-Based CDI?

By Brian Murphy

Value-based healthcare is a delivery model in which providers (i.e., hospitals and physicians) are rewarded for the quality of care they provide. It is perhaps easiest to understand when contrasted with traditional fee-for-service delivery models.

Fee-for-service reimbursement models reward volume. For example, physicians are paid per office visit through submission of E&M codes, and a hospital is reimbursed for a three-day inpatient stay via MS-DRG. In contrast, providers and organizations operating in value-based care contracts get rewarded (or penalized) based on outcomes. Value-based healthcare incentivizes prevention over cure. It’s how we as a country should be paying for healthcare, and it’s the way we are starting to pay for healthcare, and will be paying for all of it, in time.

Despite some well-documented failures with value-based programs, CMS remains committed to this approach and has launched a new five-prong strategy to increase their penetration. By 2030, CMS aims to have all Part A and B Medicare beneficiaries to be in a care relationship with accountability for quality and total cost of care—and most Medicaid beneficiaries as well.

That’s a pretty staggering, ambitious goal. To effectively operate in this new environment, hospitals will need to implement clinical documentation integrity (CDI) programs aligned with value-based concepts.

So, what concepts do CDI specialists need to embrace in this new and rapidly changing paradigm of hospital reimbursement?

  1. Getting comfortable with value-based contracts. Medicare Advantage (MA) is the fastest-growing segment of healthcare, with enrollment more than doubling over the past decade. CMS pays MA health plans a capitated payment to cover their patients’ costs in a given year. This means CDI specialists will need to get comfortable with concepts such how accountable care organizations (ACOs) operate, and per member per month (PMPM) payments.
  2. Closing risk gaps through reporting the true complexity of patients with acute and chronic conditions. Risk scores are reset to zero in January each year, and chronic, non-resolving conditions like diabetes need to be re-addressed by the provider and redocumented (when appropriate) in the chart.
  3. Changing their mindset from improving revenues to (also) reducing costs. This includes hitting your marks in CMS value-based programs, including the Hospital Readmissions Reduction Program (HRRP). These are a (not so hidden) cost. Readmissions cost U.S. taxpayers up to $26B annually, with some 2,500 hospitals suffering a combined $521M in penalties. CDI professionals can help reduce ED usage by working with their care management teams to perform weekly patient check-ins.

What are some recommended strategies for making an impact in value-based CDI?

  • Providing targeted physician education, reinforced with simple, powerful reminders. Although some physicians are self-coders, this is often out of necessity. They don’t need training in ICD-10-CM—they need to know what to write in the chart, and the powerful phrases that will help to make a ripple effect across their caseload.
  • Leveraging the right tools and technology. Unlike inpatient CDI, which in some instances allows for 100% review of all payers, the sheer volume of outpatient encounters precludes a review of all records. To extend their impact CDI professionals will need to get comfortable leveraging technology, including physician-facing artificial intelligence, to improve documentation.
  • Implementing the right review strategies. How can you touch every outpatient encounter? You can’t (at least not right away). But you can start with a high-yield review of annual wellness visits to ensure HCCs that have been documented are captured on a claim, for example. Knowledge of chronic conditions including major depressive disorder will need to be added to your arsenal.
  • Keeping an eye on compliance. Audits by the Office of Inspector General (OIG) are coming fast and furious, and hospitals ought to be concerned. We’re still going to need the touch of CDI professionals with a clinical eye, who do more than just capture a diagnosis, but also capture the support for said diagnosis with a clinical validation query. In short, whether a condition has been monitored, evaluated, assessed, or treated.

Value-based CDI is not just a catchphrase, but a mindset change that gets the profession back to its clinical roots.

“Value-based CDI turns it around from a DRG based financial revenue system, to more of a patient focus,” says Jessica Vaughn, MSN, RN, CCDS, CCDS-O, CRC, VP of value-based CDI for Norwood. “What is the value of care you are getting when you go see your physician, and does the documentation show the value? And if it doesn’t, how can we make it better?”

Value-based healthcare is here to stay. It will soon be the standard model under which hospitals are reimbursed, and therefore how value-based CDI specialists perform their day-to-day work. Just like MS-DRGs and CC and MCCs are the acronyms of today, VBP and HCCs and RAFs will be the parlance and language of tomorrow.

We’ll talk more about why you need an ambulatory CDI program in our next article in this series, and why it is mission critical for value-based CDI. But for now, we’ll leave you with a question:

What comes to your mind when you hear value-based CDI?  

Interesting in learning more about value-based CDI? Contact Jason Jobes, SVP of Solutions for Norwood, at jason@norwood.com

About the author

Brian Murphy is the founder and former director of the Association of Clinical Documentation Integrity Specialists (2007-2022). In his current role as Branding Director of Norwood he enhances and elevates careers of mid-revenue cycle healthcare professionals.


CMS, Innovation Center Strategy Refresh: https://innovation.cms.gov/strategic-direction-whitepaper

Kaiser Health News, “Medicare Punishes 2,499 Hospitals for High Readmissions”: https://khn.org/news/article/hospital-readmission-rates-medicare-penalties/

New England Journal of Medicine (NEJM) Catalyst, “What is Value-Based Healthcare?”  https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0558

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