Medical coding is an essential aspect of healthcare in that it translates diagnoses, procedures, medical services, and equipment into alphanumeric codes. The processes involved in medical coding is complex, however, so errors can often result in payment delays and significant financial losses.
The most common errors leading to delays and lost revenue are tracking down clinical notes and ensuring that the submissions for payment comply with the most recent coding regulations and guidelines (which are complex and continuously changing). Additionally, human errors such as incorrect coding, data entry mistakes, and lack of documentation can lead to financial losses.
A report by the American Medical Association (AMA) estimated that coding errors cost the healthcare industry approximately $36 billion annually in lost revenue, denied claims, and potential fines.
One significant issue we have identified is that healthcare providers are still using paper-based notes to document patient encounters. These records may be scribbled on pieces of paper, left forgotten in folders buried under piles of mail, or even misplaced altogether. As a result, these critical patient interactions are not efficiently captured in order to be coded and submitted to the billing team, leading to substantial revenue losses for hospitals, clinics, and individual practitioners alike.
Moreover, both the Centers for Medicare & Medicaid Services (CMS) and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) impose fines and penalties on healthcare providers for improper billing, coding, and documentation. In 2019, fines and penalties imposed by CMS amounted to $2.5 billion, and OIG collected approximately $3.7 billion in fines and penalties.
In short, patient encounters that are not properly captured and coded; coding errors, and penalties assessed for non-compliance with established coding and payment protocols result in significant financial losses for healthcare providers.
These lost patient encounters, errors, and penalties often have a profound impact on facilities and physician practices.
A study by the Journal of the American Medical Informatics Association (JAMIA) found that clinics can experience a 10 to 30 percent decrease in revenue due to coding errors alone, losing up to $125,000 per year. In fact, sole practitioners are more vulnerable to Medcial coding errors because they have fewer resources and less support than larger practices. A report by the American Academy of Family Physicians (AAFP) found coding errors can cost a sole practitioner up to $50,000 in lost revenue annually.
Five methods to prevent coding errors and reduce financial losses for all healthcare providers.
- Training and Education: Invest in training and education programs to ensure that staff members responsible for medical coding and medical billing are up to date on coding regulations and guidelines. Regular and ongoing training will reduce errors due to lack of knowledge or understanding.
- Use of Technology: To enhance the precision and efficiency of coding, it is highly recommended to adopt automated coding tools and software. These cutting-edge tools have the capability to minimize the possibility of human errors and enhance documentation, ultimately resulting in fewer mistakes and greater accuracy. By utilizing such technology platforms, providers and coders can simplify the intricate nature of coding, making the process more streamlined and effortless.For example, TiaStat’s AI-assisted coding platform helps in tracking a provider’s daily-patient-list, whether patients are seen in one location or several, so that notes and encounters are properly captured in clinical notes. Working off the clinical notes, the platform assists in capturing ICD and CPT® codes, for more a complete code capture. For Coder’s working with hospital encounters, TiaStat can capture Diagnostic Related Group (DRG) coding and optimize those claims.
- Regular Audits and Reviews: Conducting regular audits and reviews of coding practices can help identify errors, trends, and areas that need improvement. This can help implement corrective measures to prevent future errors and financial losses.
- Outsourcing Medical Coding: Outsourcing coding to experienced and reputable third-party Medical coding companies can help reduce the risk of errors and improve accuracy. When coders are unavailable, and providers prefer not to code, also offers coding as a full service, allowing clinics to focus on patient care. Outsourcing can also provide a cost-effective solution for small practices and sole practitioners.
- Collaborate with medical coders: providers and administrators who collaborate with their coders ensure proper documentation and coding practices are maintained. Regular communication and feedback can help improve accuracy and reduce errors.