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December 5, 2005 Untapped
Coding Improvements Hospital coding operations could function much more effectively—many potential improvements simply require a more creative outlook on what is possible. Medical coding departments in virtually all hospitals tolerate various degrees of chaos. They respond to environmental pressures and crises, frequently struggling to get on top of the workload and departmental plans. External distractions include an increasingly tightened labor market, scrutiny and oversight by payors and auditors, dependencies on clinical documentation, and the wider pressures of medical records operations. Some of these pressures are unavoidable and will not abate. However, many hospitals show an absence of creativity in designing operational policies that could bring speedy and material order to the chaos of their coding departments, while also delivering sustained enterprise benefits. The
Rationale for Coding • Epidemiology and public health. Codes permit aggregation and analysis of overall health trends in the nation, which, in turn, can help guide public policy and evolving medical practices. • Revenue release. Diagnostic and procedure codes act as a Rosetta Stone to convert healthcare providers’ clinical services into dollars. Coding policies and operations can have a significant impact on revenue potential. • Compliance. Governmental, commercial, and private payors all want to know that the care they pay for is medically necessary and delivered with due regard to cost containment objectives. To meet these multiple objectives, coding operations depend on the involvement of several departments and constituencies. Ideally, coding activities should be conceived, implemented, and managed in a multidepartment fashion. Yet, in practice, they are generally isolated within the HIM department. As a result, HIM goals may diverge from hospital goals. As the coding market’s labor shortages intensify, it will be increasingly difficult for coding departments to perform at their best. The remainder of this article describes three problems making it difficult for coding departments to optimize outcomes for both their department and the hospital. In reviewing these problems, situations arise where a dose of managerial creativity could serve to materially improve the effectiveness of coding operations. Problem:
Unambitious Coding Priorities This isn’t a complete surprise. Most coding curricula for hospital coders place significant emphasis on diagnosis coding and substantially less on procedure coding. Moreover, the experts who own coding—HIM departments—are generally disconnected from the financial ramifications of their operations. For example, asking a hospital coder or an HIM director about the cost of a given procedure or the financial consequence of one coding policy or another will frequently yield the comment that “these are patient accounting issues.” When financial issues do enter the coder’s consciousness, they are almost always with the aim to reduce unbilled backlog rather than improve achieved revenue per case. In fact, priorities set for HIM by senior management frequently stress low discharged, not final billed (DNFB) balances rather than collectable revenue. Compliance departments frequently take a draconian position regarding coding risks. Rather than advocate a measured approach to the tradeoffs between charting quality, coding policies, and contractual risks, they often anticipate worst-case scenarios, recommending coding policies that result in clear undercharging. This causes hospitals to forego legitimate revenue—without offering appreciable gains in compliance protection. Finally, the process of chart workflow in typical hospital operations is manual and paper based. Paper-based processes increase the risk of misplaced charts and make it incredibly tedious to reconcile unbilled encounters or analyze and report charting deficiencies. Despite the obvious challenges of managing large volumes of paper, hospital senior executives rarely treat scanning and workflow technologies as organizational priorities. Solutions • Develop a “revenue consciousness” within the HIM department. Coding staff should be expected to understand the revenue consequences of their coding decisions. This can be accomplished by initial training, augmented by ongoing revenue feedback. • Be clear about the coding factors that affect revenue per case. This will vary by encounter type and the types of contracts the hospital holds with payors. If coders understand these consequences, they are less likely to miss revenue opportunities as a result of ignorance. • Use performance benchmarks such as DNFB levels, revenue per case, and denied claims—to permit rational evaluation of coding performance. Ratchet these to more ambitious levels over time. • Ensure that finance, compliance, and HIM staff meet routinely (at least quarterly) to review coding performance against a set of external performance benchmarks. Using external auditors can also help. • Analyze chart workflow to ease the flow of charts through the system, including understanding instances of “chart hoarding” within specific departments. As hospitals increasingly implement chart imaging or electronic medical record systems, the ability to share charts electronically can help considerably. As an intermediate step, simple databases can be used to track each chart’s coding status. Problem:
Poor Interdepartmental Communication Although coding policies have direct consequence on hospital financial performance, key departments are frequently detached from coding operations. For example, chief financial officers (CFOs) rarely contribute to the formulation and maintenance of coding policies. Essentially, this deprives a hospital’s financial leadership of the opportunity to adjust the “product pricing strategies” of their services. This level of executive detachment would be unheard of in most other industries. Physician documentation is a key input to the coding process, yet physicians frequently see coding as a hassle. Their primary focus, particularly if they are hospital employees, is clinical care. Therefore, chart documentation tends to cover clinical facets of an encounter without much attention to the revenue or compliance implications of documentation. Finally, coding and charging processes, which are logically linked in areas such as the emergency department (ED) and interventional radiology, are frequently administered by separate pools of people, in physically separate areas, with different managers, and with little direct coordination. This often results in a mismatch of coding and charging, which can cause legitimate charges to be missed, plus corresponding compliance risks. Although CFOs, clinical staff, and departmental charging staff can have a direct, integrated impact on coding performance—and, therefore, on compliance and revenue levels—they are generally detached from coding operations, undermining coding outcomes. Solutions • Start with the design of coding policies. Who is defining policies? Are these duties relegated solely to HIM staff or instead conceived through the teamwork of finance, compliance, and HIM personnel? • Challenge physician dictation habits and timescales. For example, many hospitals have policies allowing physicians to take up to 30 days to dictate a patient report without suffering consequences. Shortening this to 14 days would improve throughput considerably. • Consider implementing an incentive scheme whereby physicians and nurses are given some stake (financial or otherwise) in the revenue they help release. As a point of comparison, private practice physicians, who benefit financially from improved documentation and coding, typically document more attentively than salaried hospital employees. For this to work effectively, physicians and nurses also require ongoing educational support. • Consider the integration of coding and charging as a single function, especially in interventional radiology and the ED. This can be done by cross-training staff or considering technology-enabled solutions to map Current Procedural Terminology codes to charge codes. Problem:
Staffing Challenges Because of the tight market for coding labor, coder loyalty in many urban areas can be “bought” for a surprisingly low wage premium. There have been cases where hospitals have lost staff to nearby competitors for as little as $1 per hour in extra earnings. Oddly, this can frequently necessitate the use of overflow, contractor manpower at a price premium of $30 or more per hour. Aside from the pure shortage of coders, most hospitals lack imagination when scheduling staff. For example, although hospitals operate on a seven-day, 24-hour treatment schedule, coders are typically scheduled to work during normal Monday to Friday working days. This gives rise to coding backlog and workload stress in virtually all hospitals every Monday and Tuesday. The backlog causes the tendency to rush, which can undermine coding quality and thoroughness. Finally, coder shortages may be localized. Some regions experience greater staffing pressure than others. Because chart workflow is frequently paper based, this limits the ability to seek “geographic arbitrage” by using technologies to access readily available skilled labor pools. Solutions • Hospitals should cherish the reliable, skilled staff they already have. Try to convince the hospital’s personnel department that paying an extra $2 to $3 per hour is cheap compared with losing staff. Remember that the cost of losing staff is not simply measured in the excess fees incurred with overflow vendors—the loss of institutional memory about local hospital circumstances and policies can be even more damaging. • Examine nonlabor input costs. For example, adopting less expensive encoding software can save upward of $3,000 per coder, per year. These savings would be sufficient to fund the $1 to $2 per hour pay increase that may be needed to hire and retain the best coders in your area. • Hold staff to productivity statistics, possibly via a financial incentive scheme. Many outsourcing vendors routinely achieve coder productivity that is 50% higher than comparable hospital output. While excessive productivity can be harmful, there is a happy medium that allows both the coder and the hospital to win. • Implement more flexible staffing patterns. Using a seven-day, revolving work week can decrease the typical Monday/Tuesday coding backlog and discourage the need to rush excessively through charts on these high-volume days. • Remote coding technology can help improve retention and enable hospitals to reach high-quality coding manpower outside their region. Some vendors are even beginning to offer credentialed coding manpower from locations outside the United States. • Finally, consider use of external vendors, especially those who can offer transformational technology or processes. Because coding is essentially a workflow-centric business process, the automated workflow technologies offered by some vendors can bring particular gains to staff and departmental effectiveness. This article has described a set of practical steps that can be taken to refine the target outcomes of coding departments, especially relating to achieved hospital revenues. It has explored ways of harnessing the skills and involvement of other departments in achieving more holistic coding outcomes and offering strategies for coping with the challenges of an insufficient coder work pool. Given the right level of organizational commitment, these techniques can yield speedy and lasting improvements. —
Michael von Grey, BSc, MBA, is chairman of Atlanta-based RevenueMed,
Inc. He can be reached at mvongrey@RevenueMed.com.
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