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June 26 , 2013
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The "Four C's" of Revenue Cycle Management (RCM)
The Third “C”: Coding The classic tale repeated among RCM professionals over the years explains how billings are done by non-credentialed staff in the office or in the basement of someone’s house. So essentially, the practice pays “nothing” for billing services—it’s just part of office expenses, and no we don’t need to hire an “expert.” But the truth is that even in the darkest of the “dark ages” of billing, practices “paid” for billing services: either by investing in expert help to improve their RCM performance or by paying less (or “nothing”) for initial billing services, and then accepting the lower revenue and other negative consequences that followed.
In today’s healthcare business environment, with physicians more frequently “aligning” with hospitals and the many increasingly complex technical and regulatory requirements associated with RCM, healthcare providers have moved away from using internal staff or “mom & pop” billers. Instead, providers from small physician practices to large metropolitan hospitals, are moving toward larger, more highly trained and qualified coding and billing teams. Many providers are also starting to consider outsourcing to more capable third-party firms with teams of practice area experts employing sophisticated modern Revenue Cycle Management (RCM) software.
How best to gain the coding expertise, training, and skills needed to comply with modern regulations without compromising revenue begins with an understanding of just how complex modern coding and RCM is now, and how much more complex it will soon become. Coding Practices: The Good, the Bad, and the Ugly Whether you have your own in-house billing team or you outsource, coding is the core competency of RCM. Doing it right can lead to significant increases in revenues, facilitate regulatory compliance, and reduce collection costs and hassles. Inaccurate, incomplete, or non-compliant coding always results in underpayment or denial of payment for services. Repeated, ongoing mistakes can significantly erode provider income and lead to other poor outcomes, like a Medicare audit.
For compliance, following legal and ethical coding practices establishes an integral part of compliance efforts, while reducing legal violations, such as under-coding, up-coding, and “unbundling” codes. Proper coding also results in fewer collection activities (such as having to review, audit, and revise improper billings prior to payment). Correct coding practices and a thorough understanding of the current coding rules significantly improve a healthcare provider’s chances of getting paid in full and quickly. Correct, accurate, and “clean” claims equal optimized collections.
Besides the risk of rejected claims (which then have to be resubmitted and take much longer to pay than initially “clean” claims), and reduced revenue, billing mistakes can lead to a payer audit or worse: CMS has already announced its intention to expand its auditing and compliance activities related to healthcare billing.
The Ugly . . . the World after ICD-10
Beyond the direct costs of conversion, adopting the ICD-10 code set may impact physician revenue and pose a more significant risk for medical practices and other healthcare providers than earlier conversions. Why? Unlike previous conversions, ICD-10 is a more complete change. Virtually none of the current code set will translate after the switch. And where a carefully planned and executed switch to the 5010 code set opened up some opportunities for new revenue, ICD-10 won’t improve revenue for healthcare providers . . . it’s just a new cost of doing business.
As a consequence, many coders, especially in “Mom and Pop” coding shops and some physician groups, will simply quit or retire prior to the ICD-10 switch. Providers will need to replace them either through “alignment” with hospital groups who have larger, more sophisticated RCM providers in place or through third party providers who are already ICD-10 compliant and ready to help train healthcare providers. Either way, physicians need more thorough training to align their documentation for coding under ICD-10. Coders working in their specialty area will be critical to successful conversion.
On the positive side, converting to ICD-10 will bring the U.S. in line with World Health Organization technical standards. Most of the rest of the world made the switch (originally planned for implementation in 1989!) long ago and survived. Businesses that take the time to work with their vendors, get the needed training, and prepare their internal systems in advance will have a significant competitive advantage in the post-ICD-10 landscape.
Resources . . .
. . . PBN is here to help. Contact PBN Business Development, 800.288.4901 or .
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What’s a “good” coder? In today’s environment, it’s not enough to have office skills and take a coding short course to become a "good" coder. Besides extensive training, most accredited coders have at least an associate’s degree, are required to have 1-2 years of coding experience, pass a coding certification exam covering general coding practices, and have a specialty specific certification. Specialty billers often also have internal training and experience requirements. The best coders understand both how to use modern RCM software to full advantage, and take an “eyes on” approach, adding a knack for identifying and correcting claims before submittal.
Not communicating with (and training) physicians. “Physician documentation is the center of the reimbursement universe.” Experienced coders know keeping the lines of communication open with the doctors and other specialists is key to avoiding mistakes.
As an example, under the current code set an experienced coder processes about 130 codes an hour. During the transition to ICD-10, the same coder will only be able to process about 35 codes an hour. That’s a 73% reduction in capacity in one fell swoop! While that level of reduction is temporary, it’s bound to happen, and the coder’s capacity will never return to current levels. Add to that the increased potential for errors and associated costs, plus the cost of training coders and physicians, and the estimate of the total cost of conversion ranges from six to seven figures, depending on medical group size.
