Good Medicine: Five Reasons to Outsource Medical Coding

medical, billing, healthcare.Health care is getting complex. And between the provider and the payer, the patient is getting increasingly concerned and confused about diagnosis, treatment and billing. Current Procedural Terminology (CPT) codes have come to everyone’s rescue. CPT is the uniform code that describes medical, surgical, procedural and diagnostic services provided by healthcare providers. Even a small error in coding can lead to incorrect treatment and payments that could prove disastrous. To ensure this does not happen and to ensure the correct management and analysis of patient billing and provider reimbursement, everyone needs to be ultra-careful about how services are coded.

Importance of getting codes right

The good news is that the codes for medical conditions and treatment are maintained by the American Medical Association (AMA). Coders need to be familiar with the published AMA list and assign them to diagnosis and treatment. The bad news is that medical science is evolving very rapidly forcing the AMA to generate a massive list of new codes each year. This means that without being on top of the latest AMA codes it is impossible to be accurate. Not keeping pace with AMA assigned codes is guaranteed to make reimbursements go off the rails.

However, there is regulatory pressure to keep things on track. Regulations such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA) must be adhered to and privacy guidelines for the management of medical records under the American Health Information Management Association (AHIMA) have to be maintained. This makes CPT coding a complex job, better left to professionals and experts who have domain understanding in a variety of areas such as pathology, internal medicine, oncology, neurology, cardiology, radiology, pediatrics, etc

What exactly is the downside of inaccurate CPT coding? Poor coding leads to billing errors, insurance denials, delayed reimbursement for care givers, claims rework, patient insecurity and regulatory penalties. This makes accurate coding one of the central pillars of business success in the healthcare industry.

CPT codes play another critical role. They help payers identify medical fraud that has been on the rise and is a matter of growing concern for the industry. For example, a doctor may charge a patient for chest congestion when all a patient has is a sore throat. In the US alone the federal government recovered $4.3 billion through healthcare fraud investigations in fiscal 2013 according to a report released by the US Department of Health and Human Services (HHS) and the Department of Justice[i]. In essence, CPT codes are a dissuasive measure for potential fraud.

From a patient perspective, accurate CPT codes can literally make the difference between life and death. The codes capture patient symptoms, diagnosis, treatment and condition, assuring continuity and accuracy of future care. And for patients, who are invariably suspicious of medical costs, CPT codes become a simple and dependable way to check across doctors if the cost of care is indeed right or if they are being overcharged. These codes then become a way to negotiate lower care pricing.

Improving patient care through outsourcing

Despite its importance, providers and payers cannot afford to let coding become a distraction from their core capabilities of enabling patient care. Outsourcing coding makes sense to help keep patients and health care providers healthy.

Here are the Top 5 Reasons to Outsource CPT Coding:

  1. Control operating costs. There are a number of coding tools available, such as the Healthcare Common Procedure Coding System (HCPCS) and ICD-9 along with IT tools such as Kareo, E-Clinical Works and Practice Admin. These are critical to execution speed, accuracy and cost. For providers, acquiring, maintaining and upgrading these tools is expensive and an unnecessary management overhead. They can avoid the risk of technological obsolescence by outsourcing CPT coding.
  2. Focus on core business. Fast and accurate medical coding depends on an understanding across medical specialties and a deep understanding of compliance requirements. Coders who are certified by bodies such as the American Association of Professional Coders (AAPC) to maintain industry-recognized standards ensure a high level of accuracy. Healthcare providers will not be able to gain the ROI on investments required to maintain a team of dedicated trained and certified coding professionals. Recruiting and retention costs too can be avoided by outsourcing the task. Instead, by outsourcing, caregivers can focus on their core business.
  3. Reduce claims denials. Poor coding and data inaccuracies result in claims being denied and potential revenue loss. This increases rework of claims and creates delays in reimbursement. Outsourcing the task to experts reduces coding errors and in the event rework is required, it is done substantially faster. This is a large problem that caregivers and payers need to address. According to the US Government Accountability Office, aggregate application denial rate across the US was 19 percent though the percentage depended on the insurer. Some insurers showed an average rate of higher than 40 percent[ii].
  4. Value added services. Outsourcers are well positioned to provide caregivers regular reports related to claims status and their progress. These reports could also help identify areas of inefficiency in managing coding productivity and outcomes.
  5. Elastic pay-as-you-go service. Not only can an outsourcer ensure rapid deployment of coding services but also ensure that the service is elastic and aligned to business needs. It is extremely difficult for providers to shrink or expand their coding teams based on business trends and other imperatives. With the process being outsourced, care providers don’t need to worry about volume or infrastructure required to manage those volumes.

Being able to focus on patient care helps create healthier, better informed patients and also represents a key step to building a healthier health care system. Recognizing these benefits, isn’t it time to consider outsourcing CPT coding?



[i] http://www.modernhealthcare.com/article/20140226/NEWS/302269955

[ii] http://www.gao.gov/products/GAO-11-268

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