A Best-Practice Approach to Coding, Coding Quality and Compliance Improves Reimbursement

Debby Cornett
VP of Clinical Revenue Integrity

Proactive coding, coding quality and coding compliance programs collectively form the foundation for reimbursement effectiveness. Healthcare providers need to ensure they are accurately paid for the care provided, and that starts with timely, correct and consistent coding. This critical revenue cycle process codifies the clinical care performed and documented.

It is critical to have the tools and quality programs embedded in the process to achieve accurate and timely coding.

The coding process determines which codes accurately reflect the care provided by reviewing the clinical information in a patient’s medical record, including diagnoses, patient characteristics, patient medical history, type of provider, care setting and services. With tens of thousands of codes to choose from, it is critical to have the tools and quality programs embedded in the process to achieve accurate and timely coding.

Getting it right continues to be even more challenging for healthcare providers as new medical therapies, care-delivery models, value-based reimbursement models, government and payer regulations evolve and emerge, adding additional complexity.

Healthcare providers need a best-practice approach to coding that maintains accuracy throughout the subtle and not-so-subtle changes in how the system in the U.S. delivers and finances patient care. This best practice approach to coding has three levels, or what can be called: the three lines of oversight. Those three lines of oversight are coding operations, coding quality and coding compliance.

Here’s how these processes work in an integrated approach that gives providers the capabilities needed to elevate their coding performance.

Coding Operations

Within coding operations, healthcare providers should be evaluating how coding is performed once care is rendered, focusing on all coding processes and workflows. The most critical driver of coding operations is accurate and thorough physician clinical documentation detailed in patients’ medical records. The documentation must be timely, consistent and completely capture all clinical information that needs to be coded. That way, coders can efficiently complete their process to achieve efficient and accurate billing.

Because timely, consistent and complete clinical documentation is not always the highest priority on physicians’ to-do lists, hospitals and health systems continue to experience increasing denial rates that can erode an organization’s net patient revenue.

As clinical documentation requirements become more complex and the reimbursement environment more stringent, providers must reconsider their approach to denials management by using strong analytics and insights. Understanding the impact of rising denials as part of a strong denials management program is crucial to organizational financial health.

Provider organizations should collaborate with physicians to develop approaches that enable coders to do their jobs without interfering with clinicians’ direct patient care responsibilities. A proactive approach should happen on three levels as follows:

  • First, provider systems should regularly educate physicians on the clinical documentation required to support accurate coding.
  • Second, provider organizations should deploy clinical documentation specialists to bridge the documentation gaps between physicians and coders.
  • Third, coders and specialists should provide feedback to physicians from coding quality reviews and coding compliance audits to show physicians how their clinical documentation affects clinical and financial outcomes.

The key to a coding operation’s success is creating that forward-looking partnership with physicians that drives timely and complete clinical documentation that, in turn, drives coding quality that leads to accurate and timely reimbursement.

Coding Quality

Coding quality measures the accuracy of how coders assign codes to the clinical documentation in patients’ medical records and adhere to coding guidelines set by the provider, coding standards organizations, health plans, other payers, and state and federal regulators. Coding quality evaluates the effectiveness of each coder’s work to ensure coders’ quality is at an optimal level of performance, measured as the percentage of clinical items coded correctly. The long-time established industry quality standard is 95%, as prescribed by the American Health Information Management Association (AHIMA).

Provider organizations need to take a proactive approach, similar to that taken with coding operations, to coding quality. A sound coding quality function must focus on the coders, which starts with determining a prospective coder’s aptitude for coding by administering a skills assessment test. If the coder meets baseline hiring requirements, a provider should then invest in, train and educate the coder extensively on coding guidelines and relevant provider-developed protocols, and only assign active patient accounts when the coder can consistently score 95% or higher on overall coding quality.

Regardless of a coder’s experience, an efficient operation should perform monthly quality reviews of each coder’s work and provide regular feedback on their performance to ensure sustained and consistent coding from individual coders. The quality review looks for patterns and trends that need to be corrected or modeled. The coding quality program is also responsible for updating and educating the coding team on new codes and changes in codes and code sets.

Coding Compliance

Coding compliance helps ensure providers are following coding guidelines as mandated by the Centers for Medicare and Medicaid Services (CMS). These guidelines are established from a risk perspective rather than a reimbursement perspective, warranting a different approach to assessing compliance than quality.

The risk for the provider emanates from the submission of an incorrect claim to Medicare or Medicaid, potentially implicating the Federal False Claims Act. A claim can be incorrect if a code is wrong or missing or is not supported by clinical documentation in a patient’s medical record.

On the low end of the risk spectrum, a provider would have to pay back Medicare within 60 days of discovery if the incorrect or inaccurate claim led to an overpayment. On the high end of the risk spectrum, knowingly submitting incorrect or inaccurate claims or a pattern of incorrect or inaccurate claim submissions could rise to the level of a violation of the Federal False Claims Act, which carries substantial penalties and fines as well as reputational harm to the organization.

The approach to coding compliance is driven by risk. Risk can be identified through monitoring the Office of Inspector General’s annual Work Plan and enforcement actions, reviewing denials from Medicare and Medicaid and gaining insights from coding quality results and compliance matters arising within the provider organization. Ensuring that consistent feedback loops exist between coding operations, coding quality and coding compliance only serves to bolster the strength and effectiveness of the overall coding program and will, no doubt, drive accurate reimbursement.

This approach also has the benefit of preparing provider organizations for when practical changes occur. Below are three examples:

Healthcare organizations that embed these best practice coding principles will be able to adapt more easily to changes while maintaining coding quality and compliance.

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