Following these best practices while coding helps providers avoid costly mistakes

Medical billing errors are a costly problem for the healthcare industry. Research has estimated that up to 40% of claim statements passed between insurers and hospitals have errors, while up to 15% of all claims have outright waste, fraud, and abuse.

In May 2022, a California doctor was sentenced to nearly eight years in prison for his involvement in a $12 million Medicare fraud scheme. His crime: performing unnecessary vein ablation procedures on patients, and using incorrect billing codes to receive larger reimbursements. Most instances of “upcoding” and “overcoding” are not as malevolent or expensive, but even an innocent mistake can cause well-intentioned hospitals and health systems to attract attention from federal auditors, and result in stiff penalties to physicians and those who input the wrong billing codes.

It’s no wonder that coding expenses run $172 per bill in the United States ― the highest in the world. Hospitals and health systems are willing to spend a little to prevent a more costly error down the road. This is especially true in a healthcare industry ravaged by layoffs, where every line item is scrutinised and every budget is tight. 

With practices merging, consolidating, and finding other ways to reduce their operating expenses, cutting the cost of coding expenses is a tempting area to downsize. Yet, having a dedicated team of coders offers critical oversight. They’re often the last line of defense between logging the correct code and a mistake that costs a provider millions of dollars.

The benefits of outsourcing coding tasks

Increasingly, providers are outsourcing coding tasks to a third-party organisation whose remote teams come with less overhead costs, and lack the burden of having to acclimate to other aspects of a hospital’s functions. They can focus their professional development on staying current with coding, and coding alone.

Outsourcing is often standard practice for independent physicians, who sometimes do procedures in a health care system, but can’t use that system’s coders. Simply outsourcing all their coding becomes the more efficient choice.

Whether outsourcing or in-sourcing, staying current with the rules and regulations of coding is essential to a hospital or health system’s financial health. Physicians and their staff must regularly update their coding knowledge to stay in line with the latest guidelines. This prevents errors and helps accurately represent services provided. 

Here are 11 other best practices for avoiding a costly coding mistake:

1. Code accurately: Avoid both upcoding (billing for a higher level of service than performed) and downcoding (billing for a lower level of service). Coding should accurately reflect the medical necessity and complexity of each visit. 
2. Document accurately: Complete and accurate medical documentation is essential for justifying services provided. Clear, detailed, and comprehensive records support appropriate coding and billing, ensuring that services are reimbursed at the appropriate level.
3. Utilise modifiers: Correct use of modifiers can clarify specific circumstances that may affect reimbursement. For example, modifiers can indicate if a service was provided on the same day as a procedure, if a service was discontinued, or if multiple procedures were performed.
4. Demonstrate medical necessity: Demonstrating medical necessity is crucial to secure reimbursement. Physicians should clearly document the reasons why a particular service was necessary for the patient's condition, linking the diagnosis to the treatment provided.
5. Review utilisation patterns: Regularly reviewing utilisation patterns can help identify opportunities to improve efficiency, without compromising patient care. This can involve analysing patterns of referrals, tests, and treatments to ensure they align with evidence-based guidelines.
6. Negotiate with payers: Effective negotiation with insurance payers can lead to more favourable reimbursement rates. Physicians should emphasise their value in terms of patient outcomes, quality of care, and cost-effectiveness.
7. Explore other cost-saving initiatives: Participating in value-based care models and accountable care organisations ― groups of clinicians, hospitals, and other healthcare providers who come together voluntarily to give coordinated high-quality care to a designated group of patients ― can lead to increased reimbursement based on improved patient outcomes and cost savings.
8. Minimise denials and appeals: Preventing denials through proper documentation and coding reduces the need for appeals, saving time and resources. When appealing denials, ensure that the appeal includes all necessary information and supporting documentation.
9. Improve collection processes: Efficient patient billing and collections processes can improve cash flow. Clear communication about patient financial responsibilities and available payment options can lead to fewer outstanding balances.
10. Utilise technology: Electronic health records (EHR) systems and practice management software can streamline billing processes, improve accuracy, and reduce administrative burdens.
11. Prepare for audits in advance: Maintain records and documentation in a way that ensures readiness for audits. Compliance with regulations and guidelines is crucial to avoid penalties and loss of reimbursement.

Although time and money are in short supply for nearly all healthcare professionals, taking resources away from coding can easily cost more money than it saves.