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Medical Coding’s Increasing Impact on Revenue Cycle Performance

In revenue cycle, payment posting and collections often take the starring role. After all, this is where the money comes in. But, the truth is, the champion of the revenue cycle often gets overlooked — that is, until there is a glaring problem.

In the new era of value-based reimbursements, never before has the process of medical coding had such a powerful impact on revenue cycle performance.Every stage of the healthcare revenue cycle has an impact on the next. This means that what begins as a small problem in one phase has the potential to mature into a costly setback further down the line.

Medical coding lives quietly in the middle of the revenue cycle. When done accurately and completely, charges get out the door quickly and the claim is adjudicated appropriately in the shortest amount of time possible.

Yet, mistakes happen even in the best run coding operations. Today, they occur even more frequently given the increased diagnosis level of specificity requirements as a result of the ICD-10 implementation.

When timely filing deadlines are missed or messy claims are submitted, they come back to haunt their processors in the form of denials. To make matters worse, the Medicare Access and CHIP Reauthorization Act (MACRA) will shine an additional spotlight on coding accuracy and drive payments to physician practices.

Denied Claims

Denied claims put a major strain on revenue as they can delay or even stop payment to providers. A 2014 report from the Medical Group Management Association found that every denial costs practices $25 to $30 each to work. Ideally, preventing denials to avoid associated costs is the best option.

But when denials happen, the cost to work them shouldn’t be seen as an expense, but rather as an investment that often yields big returns.

Working coding denials is a time-consuming, multi-step process that includes conducting research to determine the reason for the denial and then re-coding and re-submitting the claim. Often, the claim is missing critical encounter data or, worse, is miscoded entirely. But in other instances, it’s coded correctly and an appeal is warranted.

Either way, few providers truly have the necessary resources to handle the demands of continuously mounting claims denials and appeals.

Steadily rising coding-related denials (the Medical Group Management Association reports that the industry benchmark for total claims denials is typically below 5 percent), low clean claim rates, a backlog of items waiting for coding and high charge edits are all signs that it might be time to evaluate and realign coding resources.

Providers who find it difficult to hire or retain the right coding staff may find it necessary to outsource portions of their medical coding in order to maximize efficiencies and drive revenue.

While some third-party revenue cycle firms will handle the breadth of a provider’s entire coding functions, many will act as an extension of the current in-house coding team, providing support to existing staff and lessening the workload.

This means the provider organization benefits from maintaining legacy employees while gaining the ability to scale up quickly when volume unexpectedly increases, a specialty is added or specific expertise like Hierarchical Condition Category (HCC) coding is needed. As experienced outsourced coders require a much shorter ramp-up period, the high costs of locating, training, and retaining certified coding specialists in-house is eliminated.


Even better? Rather than simply addressing denials after the fact, the right partner will be able to identify trends within the data to maximize reimbursements and prevent denials by stopping claims with errors from ever going out the door in the first place.

And, when in-house coders are ill or on extended leave, outsourced coders will be able to seamlessly pick up right where they left off.

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Taking the time to completely and accurately document and then subsequently code patient records will have an increasing impact on a practice’s bottom line given the requirements of MACRA. Communication between providers and coders will become even more important, so putting processes in place to address HCC coding needs to be a priority.

The quality and accuracy of medical coding may have an unforeseen impact on the patient experience as well.

Incorrect and incomplete coding may directly impact the amount a patient is required to pay following the visit, something that might be particularly concerning for those already feeling the effects of a high deductible health plan. A routine wellness visit that requires no copay could be miscoded as a problem-driven office visit, resulting in added fees for the patient and undue frustration.

 The Bottom Line

Paying close attention to coding accuracy is necessary — actually, imperative. Is it a pain? Is it expensive? Yes, but the longer a coding mistake is left undetected, the more effort it takes to correct it. And ignoring new requirements under MACRA and other value-based reimbursement models can mean missed payments. Taking the time at the outset to evaluate and realign coding processes and staff will result in fewer denials and quicker, more accurate reimbursements — and, ultimately, a high-performing revenue cycle.



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