Seamless revenue cycle management is crucial for all healthcare service providers. But first, you need to understand the importance of medical coding and how it fits in to developing a seamless RCM. Receiving funds allows a medical facility to stay open and operational. It even ensures that the medical office or hospital is reimbursed for the services they provide patients.
How does it work?
Today, there are three major coding systems employed by the healthcare sector.
- International Classification of Diseases (ICD)
- The Current Procedural Terminology (CPT)
- The Healthcare Common Procedure Coding System (HCPCS).
ICD codes ensure that a patient receives proper medical treatment and is charged correctly based on the services they receive. It also determines global trends and statistics about different diseases and ailments.
In February 2022, the World Health Organization released the eleventh version of the International Classification of Disease (IDC-11). According to this release, there are nearly 17,000 unique codes and roughly 120,000 codable terms. Roughly 35 countries around the world use IDC-11 for coding for certification of causes of death, cancer registries and clinical documentation, among others. The sheer number can be the answer to the burning question—why is medical coding important? Assigning the correct code is challenging. It’s prone to human error and in the context of hospitals and medical offices, a leading reason for rejecting claims. Given the high level of precision, skill and expertise involved accuracy is a critical component of medical billing and coding.
Now that we have established the importance of medical coding, here are some of the consequences of inaccurate coding and incorrect billing.
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Seamless revenue cycle management is crucial for all healthcare service providers. But first, you need to understand the importance of medical coding and how it fits in to developing a seamless RCM. Receiving funds allows a medical facility to stay open and operational. It even ensures that the medical office or hospital is reimbursed for the services they provide patients.
How does it work?
Today, there are three major coding systems employed by the healthcare sector.
- International Classification of Diseases (ICD)
- The Current Procedural Terminology (CPT)
- The Healthcare Common Procedure Coding System (HCPCS).
ICD codes ensure that a patient receives proper medical treatment and is charged correctly based on the services they receive. It also determines global trends and statistics about different diseases and ailments.
In February 2022, the World Health Organization released the eleventh version of the International Classification of Disease (IDC-11). According to this release, there are nearly 17,000 unique codes and roughly 120,000 codable terms. Roughly 35 countries around the world use IDC-11 for coding for certification of causes of death, cancer registries and clinical documentation, among others. The sheer number can be the answer to the burning question—why is medical coding important? Assigning the correct code is challenging. It’s prone to human error and in the context of hospitals and medical offices, a leading reason for rejecting claims. Given the high level of precision, skill and expertise involved accuracy is a critical component of medical billing and coding.
Now that we have established the importance of medical coding, here are some of the consequences of inaccurate coding and incorrect billing.
Impact of incorrect coding on patients
Some findings from a report published by the Office of the Inspector General (OIG) for the United States Department of Health and Human Service in July 2020 point out:
- The inaccuracy in diagnosis codes for severe malnutrition led patients to overpay nearly $1 billion between 2016 and 2017
- Findings indicate that many hospitals used the ICD-10 codes, E41 for nutritional marasmus and E43 for unspecified severe protein-calorie malnutrition
- The OIG found out that nearly 250,000 claims for severe malnutrition contained one of these two codes
Every process is susceptible to mistakes and these mistakes form the basis for how coding impacts reimbursement. The healthcare segment is one where even the smallest error can have several consequences for hospitals and patients.
Overcharged bills
Insurance companies have become more diligent about checking codes than ever before. Physicians and coding experts must collect precise information about medical conditions, pre-conditions and diagnoses (to ensure timely and correct payment from insurance companies).
If you fail to send accurately coded information, your patients will have to bear the consequences. Once the insurance company approves a specific payment, patients have to pay the remaining amount.
Negative impact on RCM
Insurance providers will verify eligibility and benefits based on coding information. Therefore, hospitals and medical offices must prioritize developing a proper flow for their revenue cycles.
If inaccurate information is provided, there will be discrepancies in benefits and coverage. Further, promptly claiming reimbursement from insurance providers and patients will become problematic and impact the hospital’s revenue streams. Hospitals and medical offices can avoid such situations by streamlining their entire revenue cycle management process.
Legal repercussions of claim resubmissions
If claims with incorrect codes are resubmitted repeatedly, they lead to federal penalties.
Governing bodies could use protective acts like the False Claims Act (FCA) to impose legal actions and financial penalties. Working with experienced and competent coders helps you avoid legal repercussions as well as other consequences of inaccurate coding and incorrect billing.
The importance of medical coding cannot be understated in the medical world as it impacts several aspects including reimbursement, clinical decision-making and financial decision-making, to name a few. This ultimately helps you streamline your revenue cycle and keeps a check on your costs.
Valerion Health brings two decades of lived wisdom to helping healthcare businesses streamline processes through tailored solutions. From medical billing and coding to auditing and education solutions, our expertise lies in helping you effectively manage your revenue cycle. Get in touch today.
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