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Healthcare Coding Errors and Implications

Lia Cirelli and Ted Balowski


April 28th, 2022

Healthcare Coding Errors and Implications

What is healthcare coding?

Healthcare coding is the process of assigning a code to a medical procedure that a patient went through. This code comes from the clinical documentation that clinicians will write in the electronic health record (EHR) that coders interpret and match with an appropriate code. ICD (International Classification of Disease) codes describe the patient’s condition and CPT (Current Procedural Terminology) codes describe the procedure. Another type of code that is used is DRG which stands for Diagnosis Related Group and is derived from both the diagnosis and procedure. The DRG “determines the single payment the hospital will receive for treating the patient that covers the entire care episode” (Care Voyance). Then this code is used for billing the payer, CMS or another insurance company, and patient based on the services the patient received. The graphic below highlights the process of healthcare coding from start to finish:

healthcare coding process

Unfortunately, the review of healthcare records and assignment of appropriate codes is not always a straightforward process. Not all providers document their healthcare visits the same, they may lack pertinent information that a coder would need to translate into the appropriate code. With that, you can get miscoded cases and other healthcare coding errors.

What are the implications of coding errors?

The implications of coding errors come down to how a healthcare organization is being paid for their services. When the code is generated, it goes to billing so the organization can charge the appropriate parties for payment. If a particular procedure was coded incorrectly, the facility could undercharge or overcharge the client.

A 2018 study in the BMC Health Services Research journal looked at the potential loss of revenue due to errors in clinical coding. In this study, researchers took a sample of cases coded by the in-house hospital coders during a 1 year time frame and had an independent senior coder (ISC) review the original case notes and clinical documentation to re-code the cases. Then the codes made by the independent senior coder were compared to the original in-house hospital coders to find differences in the coding “and if there was any disagreement, the codes by the ISC were considered the accurate codes” (BMC Health Services Research). In the end, the study showed a rate of 89.4% of coding errors in the cases.

A few direct quotes from this study show, “the coding process is error-prone and any error may lead to far-reaching consequences” and “a wrong code will relate to an incorrect assignment of the DRGs code, and it may have an adverse impact on the hospital income.” This study noted a few areas that directly could influence coding errors include the type of discipline being coded, the completeness of the discharge summary and the completeness of the admission form. The findings of this study indicated that the coding errors that occurred in the hospital were more likely related to profit loss than profit gain.

Going forward, the quality of coding is a crucial aspect in utilizing the electronic health record system and provider payment tool. There are a few things to keep in mind for the in-house hospital coders. Continuous coding training should be undertaken to ensure that the coders’ skills are aligned with current coding rules and guidelines. Similarly, improving documentation in the patient summary could help reduce the coding error rate in hospitals. “Ensuring healthcare organizations understand the fundamentals of medical billing and coding can help providers and other staff operate a smooth revenue cycle and recoup all the allowable reimbursement for quality care delivery” (Revenue Cycle Intelligence).

What are we doing at Avant-garde Health to help?

Correctly billing miscoded cases can result in millions of dollars of additional revenue for a hospital or health system. Many of the coding solutions available focus on reviewing the operative notes and clinical documentation to identify errors. This requires a lot of work as briefly mentioned in the 2018 study and needs a lot more information.

At Avant-garde Health, we’ve taken our own approach to identifying miscoded cases by analyzing the surgical supply information to identify discrepancies between the supplies used and how the case was billed. We then flag the miscoded cases and provide a report through an easy to use web interface. It’s a simple process to get started and requires very little effort from our hospital and health system partners.

If you are interested in learning more about how Avant-garde Health can help you better identify miscoded cases, increase billing accuracy, and drive additional missed revenue across key surgical procedures, contact us today! avant-garde-health-icon

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