Five Common Coding Challenges Across Physician Practices

Coding can greatly impact the health of a practice’s revenue cycle. Poor quality coding can cause claims to be denied, leading to poor cash flow, delayed or inaccurate reimbursement, or payer takebacks and fines.

Claim denials have grown by 20% in the past five years, and in 2022, 11% of all claims were denied.1,2 More than 40% of denials are caused by coding issues.3

While numerous coding challenges exist, the following are some of the most significant.

five common coding challenges

One of the top issues leading to poor quality coding is ever-changing and increasingly complex payer requirements. Having inexperienced coders or high turnover on the coding team can exacerbate the challenge; getting a good handle on payer requirements can take years. Just staying on top of timely filing deadlines is difficult, and timely filing denials are some of the hardest to overturn.

Another challenge, and one that is especially problematic in large practices, is illegible provider handwriting or confusing provider notes in the EMR. Coders who have worked with a provider for many years may come to understand various abbreviations or often-used terms. Still, even then, best practices would deem a quick conversation with the provider to confirm. But for many coders, approaching a busy provider to ask for clarification can be uncomfortable, especially for new coders. Even those with a good rapport with the provider can find it difficult to catch them between patient visits. Yet, guessing what the provider meant generally ends up as extra work in the long run.

Unless the provider is also the practice owner, they may not fully appreciate the importance of coding in the practice’s financial health. They likely don’t realize its impact on the coding team when they leave poor-quality notes, either handwritten or in the EMR. They also may not realize how important note accuracy is in determining the appropriate coding for risk-adjusted payment models. Poor coding can lead to an increase in payer audits and penalties. In one case, an audit by the Office of Inspector General found that $54.4 million had been overpaid to providers due to incorrect coding.4
There are nearly 11,000 CPT codes. In 2023, 225 new codes were added, 75 were deleted, and another 93 were revised.5 According to the AAPC, every section of the coding guidelines was changed except for anesthesia. “The most significant changes are to the evaluation and management (E/M), percutaneous pulmonary artery revascularization, hernia repairs, lab and pathology, and COVID-19 vaccination codes.” There are also new appendices for taxonomy and artificial intelligence and “synchronous real-time interactive audio-only telemedicine services.” To say coding is complex is an understatement. Just staying on top of the changes could be a full-time job.

According to the American Medical Association, some of the top coding errors include unbundling, upcoding, incorrect appending of modifiers, overuse of modifier 22, not including documentation for unlisted codes, and not referencing National Correct Coding Initiative (NCCI) edits for multiple code reporting.6

Just as the complexity of conditions specialists treat is greater, so, too, are the codes for those encounters. Many require complex code combinations that are error-prone and take longer to process. Besides the myriad of new codes, there have been many revisions to existing codes, including amendments and contractual changes.7 Some of the most challenging specialties to code for are cardiology, nephrology, ophthalmology, orthopedics, pediatrics, and radiology.

Simplifying the Complex

Many practices, especially those facing labor challenges and high turnover, have decided to outsource their coding function—and with good reason. Coding outsourcers can access a larger pool of on-shore and off-shore certified coding professionals. They also invest heavily in training so they can ensure results such as fewer errors, lower denial rates, and faster and more accurate reimbursement. The right outsourcers also focus on developing a high level of regulatory and payer expertise. Many times they will meet with a client’s most problematic payers to identify issues and help improve the payer-provider relationship.

In addition, coding outsourcers typically have made extensive investments in automation technology that helps improve quality and streamline processes. The result is greater efficiencies and lower costs, which they then pass along to their clients as added value. Finally, coding outsourcers will have greater resources and expertise in coding audits. Hence, they are able to proactively identify potential issues, as well as help practices prepare for the possibility of an audit.

One health system in the southeast realized significant improvements by outsourcing its coding function, including:


increase in average monthly collection*


decrease in A/R days


Reduction in coding turnaround time**


In collections from implementing 17 new quality measures***

from $2M (2016) to $4.1M (2022)
from 15 days to 3 days
via NCQA healthcare effectiveness data and information set

Next Steps

Physician practice coding is unlikely to get easier any time soon. Practices experiencing an increase in denials, payer takebacks, coding backlogs, a decrease in per-visit revenue, or suboptimal revenue performance may want to consider outsourcing either all or a portion of their coding function.


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