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Medical Coding in Hospitals: The Fundamentals

March 6, 2023

The revenue cycle in any healthcare organization revolves around multiple components, from the patient registration process through the visit, and ultimately the full reimbursement for the services rendered by the licensed healthcare provider. Whether the service is an office visit or a complex surgery, one of the most important aspects of the revenue cycle is the coding that takes place after the service. 

While billing and coding are separate processes that are typically performed by different people, they are both necessary for a healthcare organization or physician to receive full reimbursement. Understanding the fundamentals of coding creates a foundation of knowledge on how to maximize an organization’s potential for maintaining a robust revenue cycle.  

What is Hospital Medical Coding and Why is it Important?

Hospital medical coding professionals are trained to extract specific, billable information from clinical documentation or a medical record. Codes are assigned to patient diagnoses, services, and even supplies or circumstances that impact patient treatments, such as discontinuing a procedure. 

Medical coders, therefore, have an excellent understanding of clinical documentation, so, at baseline, they comprehend human anatomy and physiology, and can extrapolate the necessary details to assign accurate codes, which ultimately result in the creation of the insurance claim for reimbursement of services rendered.

coronis health hospital medical worker looking at chart

Coding is the precursor to the billing process, so the accuracy of coding is a top priority to ensure that every piece of documentation is captured. Furthermore, coders understand the importance of not under-coding, which may result in less reimbursement, or up-coding for more expensive services than the actual diagnosis. This practice is considered fraudulent and may incur fines or additional legal issues for a healthcare facility.

Accurate coding is paramount to the revenue cycle for hospitals, but it is also an essential piece of the patient care cycle as well. When hospital medical coding and billing are tied together with appropriate diagnoses and services, the patient is also billed accordingly. Whether the patient has financial responsibility or not, the outcome is a positive patient experience when the codes are correct. 

What are the Challenges Hospitals Face with Medical Coding?

Hospital medical billing is a combination of interpreting clinical notes, assigning accurate codes, and completing the process with the creation of medical claims for third-party and government payers. The process is not without its challenges. The transition to ICD-10 in 2015, and the subsequent transition to ICD-11 in January 2022, bring about the challenge of change within the healthcare industry. 

coronis health hospital medical billers having a meeting

With over 70,000 codes, the ICD manual is the bible for medical coders, but rapid changes in coding manuals and regulations necessitate the requirement to maintain a high level of focus on accuracy, efficiency, and collaboration with the revenue cycle team. Additional challenges hospital coders face include errors with clinical documentation, constant updates in technology, and a lack of communication with the servicing provider. Following some simple tips will help to increase accuracy with hospital medical coding. 

Tips for Maintaining Accuracy with Hospital Medical Coding

  • Stay current with regulatory updates – the ICD manual updates annually with new codes, and the Centers for Medicare and Medicaid (CMS) distributes regular updates to regulations related to medical billing and coding. 
  • Medical coders need to stay connected to the organizations that provide consistent updates and training that relate to medical coding. The American Academy of Professional Coders (AAPC) is at the forefront of credentialing and training medical coders. They provide the platform for coders to certify, train, and remain current on the changes that affect how they interpret clinical documentation for optimum and accurate coding. 
  • Updates with EHR technology – hospitals announce significant EHR updates months before they release. Medical coders can benefit from any updates that relate to the revenue cycle by interfacing with the EHR IT team regarding changes that affect how clinical documentation is accessed, or how a new workflow can create better efficiency for a coder.
  • Open communication with providers – medical coders are responsible for the accurate interpretation of clinical documentation. Errors in the analysis and coding of a surgery report or inpatient visit may result without accessibility to the rendering provider. Maintaining open communication between the revenue cycle team – specifically the coders – is essential to ensure that clarification is easily obtained with complex clinical documentation.

How Accurate Medical Coding Helps to Improve the Overall Efficiency of a Hospital

Accuracy in healthcare is paramount to positive patient outcomes. Medical coding is no exception, as it extracts the necessary components of clinical documentation to aid in the creation of the claim for the payer. The intricate process of coding begins with the provider’s assessment of a patient, so the documentation must provide accurate details – to include all diagnoses and procedures. 

Hospital billing services and the entire revenue cycle are integral in the overall efficiency of a hospital, as errors in coding or billing may result in a resubmission of claims, lost revenue due to inaccuracies in coding or documentation, and duplication of efforts across multiple departments. If a hospital submits a large number of claims with coding errors, they increase the potential of audits by commercial or government insurance payers. 

coronis health hospital workers having a meeting about medical billing

Medical coders can streamline their efforts and create efficiency in a hospital billing department through accurate coding, which is supported by effective communication with providers, utilizing appropriate tools and resources within the organization’s EHR system, and staying up to date on all regulatory changes related to medical documentation and coding. 

How Hospital Medical Coding Affects Patient Care and Reimbursements

Medical coding in hospitals, like any other service in a hospital, affects patient care and reimbursements. Direct patient care from healthcare professionals – through diagnostic testing, surgeries, and care while in the hospital, affects how the patient recovers – faster, more efficient service and treatment are directly related to positive outcomes and recovery for the patient. Conversely, the length of stay for a patient may negatively affect his or her outcome, resulting in a higher cost of care and loss of revenue due to lower patient turnover.

Coding also affects patient care and reimbursement. Medical billing and coding in hospitals rely on the highest level of accuracy as claims are representative of the actual care the patient received, either while admitted or during a surgery or procedure. The more accurate the coding, the higher the quality of care. 

If a provider can identify a patient with a chronic condition by noting a specific code in a chart – their work is streamlined and efficient. If codes are inaccurate or missing – the quality of care is negatively impacted. Hospitals must stress the importance of accuracy in documentation, which crosses over to accuracy in coding, billing, and ultimately, patient care and reimbursement. 

Take your Hospital Medical Coding to the Next Level with Coronis Health

Hospitals do not have to take on the task of coding on their own. The experts at Coronis Health have the solutions you need, and the capabilities necessary to help your organization maximize its revenue so you can concentrate on taking care of your patients. Call Coronis Health today, and find out how you can get more out of your medical coding. 

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