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 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.
I have good news – I am going to share five methods that must be implemented sooner than later to prevent coding errors and reduce financial losses for all healthcare providers.
In conclusion, think: Training, Technology, Audits, Outsourcing and Collaboration. Please reach out to me if you have questions.
Programming note: Listen to Susie Vestevich report this story live today during Talk Ten Tuesdays at 10 Eastern.
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EDITOR’S NOTE: Dr. Nirav Kamdar is the vice president of quality and clinical operations at Huntington Health-Cedars-Sinai Health System in Los Angeles. Dr. Kamdar is
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