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The Biggest Impacts of Erroneous Medical Coding and Billing and How to Avoid Them

The negative effects of errors in medical coding and billing are vast as this is a key component of the insurance process and healthcare reimbursement. Because it is a significant factor in determining the level of reimbursement a physician or other healthcare provider receives for a specific patient visit, inaccurate information can have far-reaching financial consequences.

1. It Can Result in a Retroactive Denial of Payment

A provider’s reimbursement will depend on the type of insurance coverage their patient has. As many as 70 percent of healthcare transactions are paid through private payers (i.e., private insurance), 20 percent through Medicare, and 10 percent through Medicaid.

However, these percentages are in constant flux due to the changing nature of insurance plans and changes in legislation. It is difficult to estimate exactly how errors in coding and billing will affect a provider’s specific revenue stream because of this variability between payers.

However, most payers will attempt to recoup payments if they find that they have overpaid a provider. This is known as retroactive denial of payment and can result in penalties against the provider for the use of improper billing codes, incorrect billing codes, duplicate billing (using more than one code for a single visit), coding services that are not covered by insurance policies, etc.

2. Medical Providers Might Be Investigated for Fraud

In a worst-case scenario, medical coding and billing errors can result in a provider being investigated for fraud. This is especially true with the expansion of anti-fraud programs such as the fraud prevention system (FPS) and computerized provider order entry (CPOE). In addition to providers’ revenue streams potentially being affected by incorrect coding and billing, their professional and personal activities may be scrutinized.

3. Some Medical Codes Might Be Flagged for Audits

Another potential consequence of incorrect coding and billing is an increased likelihood of audits by the payer (i.e., Medicare or Medicaid). If a provider’s claims data looks suspicious or does not seem to match the patient’s diagnoses, they can be investigated for fraudulent activity.

Auditors will compare claims data with documentation supporting those claims’ data, such as clinical notes and other records, before making any determinations about whether or not an audit is necessary. Some claims data will be flagged for investigation, and auditors may choose to request that the provider submit documentation in support of their coding and billing. If the provider cannot meet the auditors’ requests, there is a good chance that their claims data will be denied.

4. An Error in Medical Coding or Billing Can Result in Payment Delays

Whether due to an initial error by the physician or billing team or an auditor’s request for documentation, delayed payment can have substantial financial consequences for providers.

In addition to providers’ revenue stagnating, their expenses remain the same. So even if a provider is eventually paid, they will not recoup all of the money they might otherwise have earned before the billing issue.

How to Minimize Errors in Medical Coding and Billing

Medical coding and billing errors can go as high as 75 percent, according to a 2016 report by NBC News. That’s equivalent to billions of dollars lost for both payers, healthcare providers, and even patients.

How do you minimize these mistakes? Here are four tips:

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1. Use a Virtual Medical Scriber

Outsource medical scribing services are one of the most effective ways to ensure that appropriate documentation will be available to support coding and billing later on.

A virtual scribe can work with physicians or other providers in real time at the point of practice. This means that everything from patient intake forms to final diagnosis codes can be recorded digitally rather than with pen and paper.

If a physician is audited, documentation will be available as it was recorded at the time of care. Upon request, the virtual scribe company can even provide this documentation directly to insurance companies or other third-party payers.

2. Use a Medical Coding Resources Database

Another way to avoid errors in coding and billing is to take advantage of medical coding resources. A good database will provide physicians with the appropriate codes for diagnoses, procedures, etc. Physicians also use these databases to stay up-to-date on new procedures, coding requirements, etc.

3. Hire a Billing Company

Physicians should consider hiring a billing company to handle coding and billing for them. These companies are well-versed in the rules and regulations that dictate medical coding, billing, documentation, etc.

Because of this expertise, they can make sure that all compliance requirements are met, including audits. A good billing company should never work on a physician’s documentation without prior approval or sign-off. This means that physicians can be assured that all required documentation is present.

4. Double-check All Documentation Before Submitting Claims Data to Payers

Anytime a physician or other provider submits claims data, they should double-check it to ensure that all appropriate documentation is included before submitting the claim. If possible, providers should consult with an experienced billing company before submitting data to ensure that everything is in order. This double-check can often catch coding errors, invalid diagnoses, etc.

Claims data that is not backed up with sufficient documentation is more vulnerable to rejection. Coding errors will make it difficult for providers to obtain the maximum reimbursement for services rendered. A lack of proper documentation, especially in cases where audits are necessary, could even result in payment delays or denials.

By using virtual scribes, utilizing medical coding resources, working with a billing company, and double-checking all documentation, providers can ensure that their claims data is as accurate as possible. This will allow them to receive the maximum reimbursement possible for the services they render, helping to keep revenue coming in while avoiding costly payment disruptions.

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