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For other articles and previous issues click here. June 28, 2004 Where’s
My Coder? As qualified coders become harder to find, more facilities are opting for outside help. Outsourcing: It is a simple word fraught with controversy in practically every industry. Healthcare is no different, particularly when it comes to the issue of whether or not a system or hospital should outsource its medical coding services. On one hand, keeping these services in-house keeps the control within the health system or hospital. There are less logistical issues and a perceived savings of a significant amount of money. Yet, outsourcing is becoming more popular as the cost of hiring in-house employees rises and employee benefit costs skyrocket. The industry has experienced a growth in overseas outsourcing of coding services, which has made the marketplace more competitive and cost-effective for hospital administrators. As a result, medical coding suppliers are actively working with their clients in a more consultative manner. “For a relationship to work, there needs to be constant communication between the coder and the healthcare provider,” says George Alex, managing partner of Baltimore-based Iatro, Inc., which offers complete coding solutions for healthcare professionals or organizations. “There has to be a team-effort approach in knowing that everyone is on the same page.” For Alex, this means developing a comprehensive, competitive analysis for potential clients that actively shows them where they can save time and money. Alex, who previously worked as an administrator in a healthcare system, says Iatro professionals often provide multiple options to clients. “I’ll try to quote two different rates: One is a per-encounter rate, and then I will give them a discount that we call an efficiency bonus,” he says. “This encourages clients to get physicians to work more closely with us and to provide more information on how their process works.” Making outsourcing relationships work takes much more than good faith and committed people. Too few such arrangements actually come anywhere near reaching their desired goals, according to Michael F. Corbett, president of Michael F. Corbett and Associates, Ltd., a business consulting firm that focuses on the relationship between commercial clients and third-party vendors. Corbett says both providers and customers benefit from effective relationships, but in most cases the customer usually stands to benefit the most from good relationships and suffer the greatest from bad ones. “Customer executives need to ensure that their organizations have the ability to systematically and repeatedly develop value-expanding relationships by focusing on building relationship management capacity at both the relationship and organizational levels,” he says. In general, the trend of outsourcing medical coding work is increasing, says Paul T. Gallese, senior consultant for The Lewin Group, a medical consulting firm located in Falls Church, Va. Gallese believes the biggest reason for the move toward outsourcing is that hospitals are finding it difficult to hire qualified people to take on various roles, whether that role be as a nurse, radiology technologist, or coder. “In general, it has been difficult the last few years for healthcare systems to find and retain high-quality talent,” he says. “Healthcare systems used to be the employers of choice, but now there is so much competition in the high-tech field.” Gallese adds that medical coding is a complex profession and that the expertise to understand the regulations is daunting. In some cases, that requires healthcare facilities to design exhaustive training sessions for new employees that require a lot of time and even more money, thus making outsourcing a more desirable option. According to Gallese, everything in healthcare is based on sound business transactions. “Some healthcare organizations prefer to have an unbiased third party do their coding so there aren’t any compliance issues,” he notes. So for some organizations, outsourcing has become a necessity. Whether or not that’s the case, there are many challenges associated with melding two staffs and philosophies. One of the challenges involved with outsourced coding work is integrating coding professionals with on-site hospital staff. With healthcare systems having to be constantly aware of shrinking budgets, some uncomfortable situations can arise. “What we try to communicate is that we are there to do a job and then move on,” says Robin Lumbert, RHIT, account manager for Complete Coding Solutions in Cincinnati. “Fortunately, we haven’t experienced many problems at all. One of our consultants even received a going-away party after having worked on-site at a customer location for just six months.” She notes that once an outside vendor has worked with a hospital or health system for a few months, the process of working together automatically becomes easier. Coders become familiar with the client and can better identify billing trends while offering reporting and consulting services that may help improve compliance and other aspects of the business. Lumbert admits there are some issues that require special attention when outsourcing coding work to third-party firms, but in virtually every case, the healthcare system experiences few problems. One potential trouble spot is ensuring that each party’s information technology system and programs can communicate effectively with each other. A second issue is a simple but essential subject that all organizations struggle with at some point: communication. “It’s important for us as a vendor to understand when the work is needed and the processes that a client has in place we need to be aware of,” says Lumbert. In addition, she says it is critical for outsourced vendors to keep clients informed of work progress and any internal changes that may have even a slight effect on the work or relationship. “That’s what providing excellent customer service is about—keeping in close contact with the client so they feel comfortable and confident,” she says. Creating confidence in the client’s mind is indeed half the battle, Alex says. Toward that end, it is extremely important to gain certification. Since Iatro will occasionally outsource some of its coding to third-party vendors, it is critical that these third-party vendors are also certified. Alex says CCS or CCSP certification with the American Health Information Management Association and CPC or CPCH certification with the American Academy of Professional Coders are most commonly recognized. However, some coders specialize in certain areas, such as orthopedic coding, and hospital and system administrators should be aware of these specialization areas. “Coders should be able to actively demonstrate their experience in a certain area,” says Alex. “Certifications go a long way toward building confidence in our firm, but they don’t mean anything unless you apply that knowledge.” Alex says other professional organizations, such as the Board of Advanced Medical Coding and the American Academy of Orthopaedic Surgeons, have also developed their own coding certifications that help better identify some of these specialized areas. Another way to create confidence in a client’s mind is for a coder to learn more about the hospital or healthcare system they are working with, Lumbert says. Her consultants spend time meeting hospital staff and administrators and determining the types of coding they prefer and require. “We go out of our way to tailor what we provide to suit their needs,” she says. “If the customer isn’t happy, we’ll make it right because in our business word of mouth will make or break us.” Outsourcing your inpatient medical coding work isn’t for everyone and there are many skeptics among healthcare system and hospital administrators. Saint Barnabas Health Care System (N.J.) Vice President of Compliance Jonathan H. Barkhorn says there are several issues why it is preferable for his organization to keep coders on staff in-house. “One principal consideration is proximity to the medical staff,” says Barkhorn. “You have a number of local issues such as knowing the medical staff and who their partners are, the handwriting, and other things that make it important to have coders near our staff.” Barkhorn adds that since the quality of the coding is paramount, it is important for his staff to maintain management of coding services on a day-to-day basis. In addition, because medical records can’t leave the hospital, outsourcing medical coding requires proxies or scanned medical records, which can cause some significant concerns. “It’s a volume throughput operation,” he says. “You need to have the ability to manage in the moment.” Despite Barkhorn’s misgivings, outsourcing does work for other hospitals—especially during the summer when many employees take vacations. That way, hospital administrators don’t have to worry about juggling schedules in an effort to maintain their coding backlog. In addition, issues such as long-term sick pay or maternity leave do not become a concern. Corbett says the power of outsourcing to transform healthcare organizations and deliver improved business performance is well understood and well documented. He adds that outsourcing medical coding work is now a “preferred option” at many of today’s leading healthcare institutions. During the rare occasion when a client is unhappy with coding services, vendors should first check their internal practices to ensure it is not a process problem, says Alex. He points out that Iatro hires a third party to audit its coding work as needed and that a checks-and-balances system should be part of the process. In some cases, no error has been made and the vendor simply needs to help educate the healthcare provider. “One example is explaining to a client the difference between net collection ratio and gross collection ratio,” says Alex. “In reality, we only earn a few cents on the dollar for our services, and once we explain this to the client, they better understand where some of our are fees are generated.” Saint Barnabas does not currently outsource any of its medical coding work, but that doesn’t mean that can’t change in the future despite the complex issues, according to Barkhorn. He views a coding provider that hires clinicians on staff in a more favorable light but adds that doing so would likely raise the cost of such services. Yet, Barkhorn understands the cost of coding will likely increase anyway since there is a nationwide shortage of medical coding professionals—particularly on the East Coast—while the demand for higher quality continues to increase. “I can imagine at some point or in some circumstances where the cost of outsourcing this work is 50% of what it is to hire employees (in-house),” says Barkhorn. “It’s not an easy calculation to make, but if there is some way we can use [a third-party firm] that provides highly educated coders at a cost-effective price, then obviously we would have to consider it.” Alex says cost issues will often come to the forefront as healthcare administrators learn how each coding company prices its services. He provides potential clients an outline that details how work is priced. Demonstrating how prices are calculated and the processes with which Iatro deals on a daily basis helps ease the potential customer’s mind. “It’s a confusing business,” Alex says with a laugh. “But I think the better-qualified [coding providers] will help to alleviate some of this confusion through providing details and overall professionalism.” When negotiating a deal with a third-party coding provider, Gallese says it is best to leave it in the hands of someone who has experience developing contracts. “Most often it is the revenue cycle management folks who negotiate these deals,” he says. No matter who’s doing the negotiating, experts agree that the two sides must be compatible and leave open the lines of communication. — Mike Scott is a freelance writer who has contributed to more than 70 magazines, newspapers, and Web sites on numerous topics—from business to healthcare to technology. He lives in Waterford, Mich.
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