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Australian Hospital Clinical Documentation 2026 — Coding, DRG & Audit Guide

Jul 3, 2026 12 min readAU

Complete guide to Australian hospital clinical documentation — ICD-10-AM coding, ACHI procedure coding, AR-DRG assignment, clinical documentation improvement (CDI), coding audit, and documentation software.

ICD-10-AM and ACHI are the Australian clinical coding systems. AR-DRG drives casemix funding. CDI improves coding accuracy and revenue. This guide covers Australian clinical documentation.

Coding and Documentation Workflow

  1. Clinical documentation: Doctor documents admission, diagnoses, procedures, complications, comorbidities
  2. Concurrent review: CDI specialist reviews documentation during admission
  3. Clinician query: CDI specialist queries clinician for clarification if needed
  4. Coding: Clinical coder assigns ICD-10-AM and ACHI codes after discharge
  5. DRG assignment: AR-DRG assigned based on codes
  6. Audit: Coding audit for accuracy and compliance
  7. Reporting: Codes reported to AIHW (NHMD)
  8. Funding: Casemix funding based on AR-DRG

CDI Key Focus Areas

Australian CDI Focus Areas
AreaDocumentation IssueImpact
Principal diagnosisIncorrect principal diagnosisWrong DRG, wrong funding
ComorbiditiesUndocumented comorbiditiesLower DRG weight, less funding
ComplicationsUndocumented complicationsLower DRG weight, less funding
Procedure specificityNon-specific procedure codeWrong DRG, wrong funding
SeverityUndocumented severityLower DRG weight, less funding
Present on admissionPOA vs HAC distinctionFunding and quality impact

Coding Audit

  • Internal audit: Regular internal coding audit (monthly sample)
  • External audit: Annual external coding audit
  • DRG audit: Audit DRG assignment accuracy
  • Coder feedback: Provide feedback to coders on audit findings
  • Clinician feedback: Provide feedback to clinicians on documentation
  • Education: Ongoing education for coders and clinicians
  • AIHW compliance: Ensure coding complies with AIHW standards

Frequently Asked Questions

What is ICD-10-AM and ACHI?
ICD-10-AM (International Statistical Classification of Diseases and Related Health Problems, 10th Revision, Australian Modification) is the Australian clinical coding system for diagnoses. ACHI (Australian Classification of Health Interventions) is the coding system for procedures. All Australian hospital admissions are coded using ICD-10-AM and ACHI. Codes are used for AR-DRG assignment, AIHW reporting, and casemix funding.
What is AR-DRG and how does it affect hospital funding?
AR-DRG (Australian Refined Diagnosis Related Group) classifies hospital admissions into groups based on diagnosis and procedures. Each AR-DRG has a weight that determines funding relative to other DRGs. Public hospitals receive casemix funding based on AR-DRG. Private health insurance uses AR-DRGs for benchmarking. Accurate coding and documentation directly affect hospital revenue.
What is clinical documentation improvement (CDI)?
CDI (Clinical Documentation Improvement) is the process of ensuring clinical documentation accurately reflects patient complexity and care delivered. CDI involves: 1) Concurrent review of medical records, 2. Queries to clinicians for clarification, 3. Education on documentation, 4. Ensuring all comorbidities and complications are documented. CDI improves coding accuracy, DRG assignment, and hospital revenue.