Top Challenges in Medical Coding: Takebacks, Payer Audits, and Denials - Omega Healthcare

Top Challenges in Medical Coding: Takebacks, Payer Audits, and Denials

Omega Insights

Responding to New-age Medical Coding Challenges Demand Clinically and Technologically Enabled Transformational Solutions

Hospital and healthcare system staff working at every level know only too well about the outdated and inefficient processes that are still commonplace in today’s medical coding workflows and the subsequent costs to their organization. Administrative waste is among the greatest contributors to rising costs, which may account for up to 30 percent of all healthcare spending.[1] As providers attempt to address and control the rising rates to deliver quality healthcare, they can’t disregard the wasted time staff spends that may lead to issues with cash flow, longer than necessary A/R periods, and the necessity for write-offs. 

Healthcare organizations must evaluate the ways that they manage patient coding and charge capture to contain these losses. With the forecast for healthcare spending in the U.S. to hit $6.8 trillion by the year 2030, a 5% rise from today, it is an imperative that no provider can afford to ignore.[2]

Providers need to manage the growing administrative demand—a familiar concern among most healthcare professionals and facilities—to help improve their revenue integrity. Does the existing staff have the capacity to redesign the current processes? Is setting up and operating an internal revenue integrity department feasible? Would outsourcing this function help realize more revenue? The risks surrounding medical coding errors show that the time has come to consider these questions and take the steps to implement a new approach.

$54 million was improperly paid by Medicare to hospitals according to a review that found more than 18,000 claim submissions had the wrong patient discharge disposition, the DHHS reported.[3]

The Enormous Pain of Takebacks

The work to collect revenue is a growing hardship for healthcare workers and facilities. The idea of expending more time and resources to ultimately pay back claims is a painful reality. Claims with incorrect discharge dispositions are one of the most prevalent mistakes that the Department of Health and Human Services finds. Providers may opt to simply return revenue rather than initiate a potentially lengthy appeals process. 

HCC coding audits uncover millions in overpayments each year.[4]

Important to Apply Correctly

Hierarchical coding categories (HCC), established by the Centers for Medicare and Medicaid Services (CMS), are known for improving health outcomes and reducing costs for plans. Yet, an oversight by the provider of an HCC code could mean that the patient won’t be flagged for intervention or a more holistic view for treatment. The provider could  also fall short of receiving reimbursement at the level that matches the true care that the  patient needs.

Coming out of an audit, providers can see major takebacks by federal government agencies that examine this activity. In January 2023, CMS announced its delayed final rule for new regulations governing Risk Adjustment Data Validation (RADV) audits, the primary audit and oversight tool of the Medicare Advantage (MA) program. CMS believes this final rule will help it target plans that are at the highest risk for improper payments and estimates they will recover almost $5 billion over the next decade from these new policies.[5] Due to this increased scrutiny, providers must now be more proactive with their health plans to collaborate more closely.

Of the $3 trillion in total claims healthcare organizations submitted in a single year, the HFMA reports $262 billion were denied.[6]

Operating in a State of Denials

As payers adopt sophisticated algorithms and identify potential diagnosis-related group (DRG) downgrades or issues with medical necessity, denial rates will increase. The forecast is for more complex claims submission criteria, expanding beyond the CMS requirements. What’s more, staff also need to stay abreast of the unique requirements of their various payers.

Providers and payers seeking to expand their medical coding capabilities to reach payout optimization should explore partnering with a Health Information Management (HIM) coding expert that delivers the advantages of outsourcing and automated solutions. 

Revenue Integrity Can Close the Gaps 

To close the gap, providers have implemented two solutions: revenue integrity programs and dedicated teams of highly trained coders. These are major initiatives to undertake, yet a sound investment toward increasing overall net collections, gross revenue capture, and lowering compliance risks, according to a survey conducted by the Healthcare Financial Management Association.[7]

With hospitals and healthcare systems striving to retain the most revenue possible, billing, HIM, and revenue cycle leaders and managers know simple errors in coding processes can lead to denials, rejections, and takebacks of claim payments. As more sophisticated technologies are used to identify issues around claims submissions criteria, the possibility of a payer denying the claim grows.

Through better coding and charge capture, providers can minimize their risk of non-compliance, optimize their reimbursement, and offset the trouble of having to fix claims later. Familiarity with these most common challenges prepares your organization for the increasing levels of scrutiny that agencies are undertaking in medical claim reviews. 

Omega Healthcare empowers healthcare organizations to improve financial outcomes through our Omega Digital Platform and clinically enabled transformational solutions. Our medical coding solution, enabled by ODP-CODE, helps with:

  • Expertise from 118+ million charts coded
  • Over 7,000 medical/HIM coders 
  • Coders experienced in facility, pro fee and risk adjusted coding 
  • Industry training conducted to educate coding employees, clients, and coders at-large

Learn more about how Omega Healthcare can help organizations address these top coding challenges.  Download the whitepaper “The Risk and Impact of Medical Coding on Revenue Integrity.” [PDF]

[1]  “How Administrative Spending Contributes to Excess US Health Spending,” Laura Tollen, Elizabeth Keating, Alan Weil, Health Affairs, February 20, 2020 

[2] “United States Medical Coding Market Analysis Report 2022: A $32.6 Billion Market by 2030 – Increasing Automation and Development of New Technologies for Faster and More Efficient Medical Coding –,” Business Wire, September 6, 2022 

[3] “Medicare Improperly Paid Acute-Care Hospitals $54.4 Million for Inpatient Claims Subject to the Post-Acute-Care Transfer Policy,” Department of Health and Human Services Office of Inspector General, November 2019 

[4] “Millions in Medicare Advantage overcharges revealed in audits,” Jeff Lagasse, Healthcare Finance News, November 28, 2022 

[5] “CMS releases RADV final rule: Unwelcome changes ahead for Medicare Advantage plans,” Ana Handshuh, Rise Health, January 23, 2023 

[6]  “Success in Proactive Denials Management and Prevention,” Glen Reiner, HFMA, August 29, 2018 

[7] “The Future of the Revenue Cycle,” HFMA, accessed via web January 23, 2023 

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