Comparing the Pros and Cons of Outsourced Healthcare Coding

Deciding on whether to outsource any portion of your healthcare facility's revenue cycle department is something that cannot be taken lightly. And facilities have different options when outsourcing the coding function. Some facilities have chosen to keep the coding in-house and only outsource the processes involved with electronic claims submissions, collections and financial reporting. However, with the increased number of audits, health care facilities are deciding to outsource all revenue cycle functions including the coding of claims.

The implication of inaccurate coding is significant. A healthcare facility should look at their available resources when determining if the coding should be outsourced. One only has to look at the two types of coding errors: "overcoding" and "undercoding." The obvious ramification of overcoding is potential for an extended audit; repayment and possible penalties and fines. Undercoding or what providers call "defensive coding" results in millions of dollars of lost revenue.

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Pros of Outsourced Coding

Comparing the Pros and Cons of Outsourced Healthcare Coding

As mentioned, healthcare providers are seeing audits from all areas. These claims audits include RAC, MIC, MAC, CERT, PERM, MFCU, ZPIC and others. With more claims audits, the healthcare industry is seeing a higher demand for qualified coders. One benefit of outsourcing the coding tasks is that the headache of hiring an individual with coding experience is no longer an issue.

Medical coding rules can be arduous. A coder must be privy to CPT rules, Correct Coding Initiative Edits (CCI), ICD-9-CM (and soon ICD-10-CM), Local Carrier Determination (LCDs) and National Carrier Determinations (NCDs). With small practices, those individuals who are granted the task of "coding" are also given other responsibilities which affect the amount of time they have on applying, learning and keeping abreast of all of the rules. Utilizing a company who only hires qualified individuals to conduct the coding tasks, provides confidence that the claims are being submitted based on the appropriate rules and policies.

The American Academy of Professional Coders (AAPC) and the American Health Information Management Association (AHIMA) provide various ways of obtaining the required continuing education credits. Many ways are affordable and do not require leaving your desk. However, many of these ways are not as specialty specific as you would find at regional and national conferences. With attending offsite conferences, the expenses are increased. The budgets in many health care facilities cannot accommodate the expenses associated with continuing education classes. Outsourcing the coding to a company eliminates this extra expense.

With the above benefits of outsourcing the coding, comes due diligence on the health care facility's end. It is imperative that it is understood that these companies do provide specialty specific continuing education and that they provide their staff with the appropriate resources that spell out all of the coding rules and policies.

Cons of Outsourced Coding

So what are the cons involved in the outsourcing of the coding? For one, when mentioning the benefits of using a coding company, we are making the assumption that their employees are qualified and educated on the coding rules. Negative outcomes have been shown with physicians of certain specialties that have more difficult coding scenarios. This is often seen with Interventional Radiology and Neuro Surgery. Although the coding company may have qualified individuals, they may not be experts on these more difficult specialties. It is imperative that you find out if your designated coder is educated on your specialty. Ask for the bios and CVs of the coders who will be working on your claims. In addition, coders lose their credentials. It is easy to contact the AAPC and AHIMA to determine if the coder who is submitting your claims has allowed her credentials to lapse. Find out what type of continuing education they have received in the past; get specifics.

Unless you contract with a coding company that only deals with claims in one particular part of the country, you are taking the gamble that they are truly applying LCDs and other regional coding policies to your claims. If you are a provider in Louisiana and you are utilizing the services of a company out of Minnesota, you must get confirmation that the coding company is experienced with Medicare, Medicaid and other third-party payers in your state.

Beyond the coding tasks, there is the remainder of the revenue cycle process that can be outsourced. The process for outsourcing billing can be pretty straightforward. Typically superbills and other documents are scanned and electronically sent or mailed to the medical billing service. If the practice is using EHR software, the patient's superbill is stored and electronically transmitted to the billing service. The medical billing service takes care of the data entry and claim submission on behalf of the provider. The company will also follow up on denied claims, work unpaid accounts (A/R management) and send out-patient statements. The mere fact that they do not have to deal with any of this is the major reason that providers choose to outsource. In this outsourcing scenario, the fee for outsourcing these revenue cycle tasks is based on a percentage of gross collections. The industry average for these fees is approximately 7 percent of gross collections.

Compare hard costs: Calculate the expense of doing it in-house (salary and overhead of your billing staff, amount of time you are spending on billing, third-party fees for claims clearinghouses, billing related supplies such as claim forms) versus the billing company fees (which are typically a percentage of collections). Many organizations provide salary surveys that can assist you with average cost of billing staff.

Compare soft costs and intangibles: This comes down to the basic hassle of dealing with daily billing issues and all issues related to human resources. Is dealing with these issues worth it?

Compare effectiveness: You must take into account the quality of the resources that you would have in-house versus assessing the potential effectiveness of a third-party. If you have done billing in-house, you can measure your collection rates; turnaround times and other points of billing to practices of the same specialty and size. This could assist you in determining how well your billing staff is doing. Another question that you could ask yourself is how often do you get reports regarding A/R, charges, and collections?

Any business decision requires acknowledgment of cost benefit, good business practice and common sense for the company. When determining whether to outsource the billing, consider these facts and apply them to your daily practices. The ultimate decision comes down to one thing and that is how can we practice medicine and maintain a business in the most efficient way.

Comparing the Pros and Cons of Outsourced Healthcare Coding

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Medical Billing Terms and Medical Coding Terminology

Those in medical billing and coding careers have a terminology of unique terms and abbreviations. Below are some of the more frequently used Medical Billing terms and acronyms. Also included is some medical coding terminology.

Aging - Refers to the unpaid insurance claims or patient balances that are due past 30 days. Most medical billing software's have the ability to generate a separate report for insurance aging and patient aging. These reports typically list balances by 30, 60, 90, and 120 day increments.

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Appeal - When an insurance plan does not pay for treatment, an appeal (either by the provider or patient) is the process of formally objecting this judgment. The insurer may require additional documentation.

Applied to Deductible - Typically seen on the patient statement. This is the amount of the charges, determined by the patients insurance plan, the patient owes the provider. Many plans have a maximum annual deductible that once met is then covered by the insurance provider.

Assignment of Benefits - Insurance payments that are paid to the doctor or hospital for a patients treatment.

Beneficiary  - Person or persons covered by the health insurance plan.

Clearinghouse - This is a service that transmits claims to insurance carriers. Prior to submitting claims the clearinghouse scrubs claims and checks for errors. This minimizes the amount of rejected claims as most errors can be easily corrected. Clearinghouses electronically transmit claim information that is compliant with the strict HIPPA standards (this is one of the medical billing terms we see a lot more of lately).

CMS - Centers for Medicaid and Medicare Services. Federal agency which administers Medicare, Medicaid, HIPPA, and other health programs. Formerly known as the HCFA (Health Care Financing Administration). You'll notice that CMS it the source of a lot of medical billing terms.

CMS 1500 - Medical claim form established by CMS to submit paper claims to Medicare and Medicaid. Most commercial insurance carriers also require paper claims be submitted on CMS-1500's. The form is distinguished by it's red ink.

Coding -Medical Billing Coding involves taking the doctors notes from a patient visit and translating them into the proper ICD-9 code for diagnosis and CPT codes for treatment.

Co-Insurance - Percentage or amount defined in the insurance plan for which the patient is responsible. Most plans have a ratio of 90/10 or 80/20, 70/30, etc. For example the insurance carrier pays 80% and the patient pays 20%.

Co-Pay - Amount paid by patient at each visit as defined by the insured plan.

CPT Code - Current Procedural Terminology. This is a 5 digit code assigned for reporting a procedure performed by the physician. The CPT has a corresponding ICD-9 diagnosis code. Established by the American Medical Association. This is one of the medical billing terms we use a lot.

Date of Service (DOS) - Date that health care services were provided.

Day Sheet - Summary of daily patient treatments, charges, and payments received.

Deductible - amount patient must pay before insurance coverage begins. For example, a patient could have a 00 deductible per year before their health insurance will begin paying. This could take several doctor's visits or prescriptions to reach the deductible.

Demographics - Physical characteristics of a patient such as age, sex, address, etc. necessary for filing a claim.

DME - Durable Medical Equipment - Medical supplies such as wheelchairs, oxygen, catheter, glucose monitors, crutches, walkers, etc.

DOB - Abbreviation for Date of Birth

Dx - Abbreviation for diagnosis code (ICD-9-CM).

Electronic Claim - Claim information is sent electronically from the billing software to the clearinghouse or directly to the insurance carrier. The claim file must be in a standard electronic format as defined by the receiver.

E/M - Evaluation and Management section of the CPT codes. These are the CPT codes 99201 thru 99499 most used by physicians to access (or evaluate) a patients treatment needs.

EMR - Electronic Medical Records. Medical records in digital format of a patients hospital or provider treatment.

EOB - Explanation of Benefits. One of the medical billing terms for the statement that comes with the insurance company payment to the provider explaining payment details, covered charges, write offs, and patient responsibilities and deductibles.

ERA - Electronic Remittance Advice. This is an electronic version of an insurance EOB that provides details of insurance claim payments. These are formatted in according to the HIPAA X12N 835 standard.

Fee Schedule - Cost associated with each treatment CPT medical billing codes.

Fraud - When a provider receives payment or a patient obtains services by deliberate, dishonest, or misleading means.

Guarantor - A responsible party and/or insured party who is not a patient.

HCPCS - Health Care Financing Administration Common Procedure Coding System. (pronounced "hick-picks"). This is a three level system of codes. CPT is Level I. A standardized medical coding system used to describe specific items or services provided when delivering health services. May also be referred to as a procedure code in the medical billing glossary.

The three HCPCS levels are:

Level I - American Medical Associations Current Procedural Terminology (CPT) codes.

Level II - The alphanumeric codes which include mostly non-physician items or services such as medical supplies, ambulatory services, prosthesis, etc. These are items and services not covered by CPT (Level I) procedures.

Level III - Local codes used by state Medicaid organizations, Medicare contractors, and private insurers for specific areas or programs.

HIPAA - Health Insurance Portability and Accountability Act. Several federal regulations intended to improve the efficiency and effectiveness of health care. HIPAA has introduced a lot of new medical billing terms into our vocabulary lately.

HMO - Health Maintenance Organization. A type of health care plan that places restrictions on treatments.

ICD-9 Code - Also know as ICD-9-CM. International Classification of Diseases classification system used to assign codes to patient diagnosis. This is a 3 to 5 digit number.

ICD 10 Code - 10th revision of the International Classification of Diseases. Uses 3 to 7 digit. Includes additional digits to allow more available codes. The U.S. Department of Health and Human Services has set an implementation deadline of October, 2013 for ICD-10.

Inpatient - Hospital stay longer than one day (24 hours).

Maximum Out of Pocket - The maximum amount the insured is responsible for paying for eligible health plan expenses. When this maximum limit is reached, the insurance typically then pays 100% of eligible expenses.

Medical Assistant - Performs administrative and clinical duties to support a health care provider such as a physician, physicians assistant, nurse, or nurse practitioner.

Medical Coder - Analyzes patient charts and assigns the correct ICD-9 diagnosis codes (soon to be ICD-10) and corresponding CPT treatment codes and any related CPT modifiers.

Medical Billing Specialist - The person who processes insurance claims and patient payments of services performed by a physician or other health care provider and vital to the financial operation of a practice. Makes sure medical billing codes and insurance information are entered correctly and submitted to insurance payer. Enters insurance payment information and processes patient statements and payments.

Medical Necessity - Medical service or procedure performed for treatment of an illness or injury not considered investigational, cosmetic, or experimental.

Medical Transcription - The conversion of voice recorded or hand written medical information dictated by health care professionals (such as physicians) into text format records. These records can be either electronic or paper.

Medicare - Insurance provided by federal government for people over 65 or people under 65 with certain restrictions. Medicare has 2 parts; Medicare Part A for hospital coverage and Part B for doctors office or outpatient care.

Medicare Donut Hole - The gap or difference between the initial limits of insurance and the catastrophic Medicare Part D coverage limits for prescription drugs.

Medicaid - Insurance coverage for low income patients. Funded by Federal and state government and administered by states.

Modifier - Modifier to a CPT treatment code that provide additional information to insurance payers for procedures or services that have been altered or "modified" in some way. Modifiers are important to explain additional procedures and obtain reimbursement for them.

Network Provider - Health care provider who is contracted with an insurance provider to provide care at a negotiated cost.

NPI Number - National Provider Identifier. A unique 10 digit identification number required by HIPAA and assigned through the National Plan and Provider Enumeration System (NPPES).

Out-of Network (or Non-Participating) - A provider that does not have a contract with the insurance carrier. Patients usually responsible for a greater portion of the charges or may have to pay all the charges for using an out-of network provider.

Out-Of-Pocket Maximum - The maximum amount the patient is responsible to pay under their insurance. Charges above this limit are the insurance companies obligation. These Out-of-pocket maximums can apply to all coverage or to a specific benefit category such as prescriptions.

Outpatient - Typically treatment in a physicians office, clinic, or day surgery facility lasting less than one day.

Patient Responsibility - The amount a patient is responsible for paying that is not covered by the insurance plan.

PCP - Primary Care Physician - Usually the physician who provides initial care and coordinates additional care if necessary.

PPO - Preferred Provider Organization. Insurance plan that allows the patient to select a doctor or hospital within the network. Similar to an HMO.

Practice Management Software - software used for the daily operations of a providers office. Typically includes appointment scheduling and billing functions.

Preauthorization - Requirement of insurance plan for primary care doctor to notify the patient insurance carrier of certain medical procedures (such as outpatient surgery) for those procedures to be considered a covered expense.

Premium - The amount the insured or their employer pays (usually monthly) to the health insurance company for coverage.

Provider - Physician or medical care facility (hospital) that provides health care services.

Referral - When a provider (typically the Primary Care Physician) refers a patient to another provider (usually a specialist).

Self Pay - Payment made at the time of service by the patient.

Secondary Insurance Claim - Insurance claim for coverage paid after primary insurance makes payment. Typically intended to cover gaps in insurance coverage.

SOF - Signature on File.

Superbill - One of the medical billing terms for the form the provider uses to document the treatment and diagnosis for a patient visit. Typically includes several commonly used ICD-9 diagnosis and CPT procedural codes. One of the most frequently used medical billing terms.

Supplemental Insurance - Additional insurance policy that covers claims fro deductibles and coinsurance. Frequently used to cover these expenses not covered by Medicare.

Taxonomy Code - Code for the provider specialty sometimes required to process a claim.

Tertiary Insurance - Insurance paid in addition to primary and secondary insurance. Tertiary insurance covers costs the primary and secondary insurance may not cover.

TIN - Tax Identification Number. Also known as Employer Identification Number (EIN).

TOS - Type of Service. Description of the category of service performed.

UB04 - Claim form for hospitals, clinics, or any provider billing for facility fees similar to CMS 1500. Replaces the UB92 form.

Unbundling - Submitting more than one CPT treatment code when only one is appropriate.

UPIN - Unique Physician Identification Number. 6 digit physician identification number created by CMS. Discontinued in 2007 and replaced by NPI number.

Write-off (W/O) - The difference between what the provider charges for a procedure or treatment and what the insurance plan allows. The patient is not responsible for the write off amount. May also be referred to as "not covered" in some glossary of billing terms.

Medical Billing Terms and Medical Coding Terminology

Gina Wysor has over 10 years experience in the medical billing industry and is the owner of a home based medical billing and coding company.

For a more comprehensive listing of Medical Billing Terms visit http://www.all-things-medical-billing.com/medical-billing-terms.html. Visit http://www.all-things-medical-billing.com/ for more information on medical billing as a or career.

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Medical Coding Careers

Careers in medical fields require great responsibility; dexterity in the specialized line of medical affairs is an inevitable part of the whole thing. As time goes by, a career in the medical profession is becoming more of a challenge, adventure and competition. One can belong to any of the fields of medical science.

One can be a doctor, medical officer, pharmaceutical manager, administrator of a hospital, a nurse, medical transcriptor, medical biller, medical coder and much more. Many new medical careers are related to the manufacturing, business administrative and management fields of medicine. Among all the various careers, one of the most intriguing and interesting fields is that of medical coding.

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The profession of medical coding involves the frequent use of alpha-numeric codes to record specific illnesses, injuries, and medical procedures. This process of assigning codes is usually done under the system of a particular rule of coding that is used across the world, from doctor's offices and hospitals to insurance companies and federal agencies. These codes are greatly utilized by the hospitals, nursing homes, labs and doctors for internal data collection and other planning objectives.

On the other hand, various insurance companies and public agencies concerned with the health care system require the codes to reimburse health-care providers. One of the greatest utilities that these codes offer is that they are even used by international health organizations to track patterns of disease and the costs of health care which will enable them to take measures to prevent the diseases.

Medical Coding Careers

Medical Careers [http://www.e-MedicalCareers.com] provides detailed information on Medical Careers, Top Medical Careers, Medical Billing Careers, Medical Coding Careers and more. Medical Careers is affiliated with Medical Malpractice Law [http://www.e-medicalmalpractice.com].

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