Practice Coding: Market Drivers and Demand Forecast

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1 : Market Drivers and Demand Forecast Synopsis A long-standing shortage of qualified medical coders continues to persist nationwide. The greatest impact to date appears to be in larger organizations or health systems that struggle to maintain coding staff. However, medical practices are not immune to the limited coding resources and future changes in diagnostic and procedural code sets. Specific steps should be taken now to offset the potential negative impact on care delivery and financial performance. Current Market Snapshot Sixty percent of respondents in a survey of the American Health Information Management Association reported that hospitals and other facilities are completely staffed for all approved positions. About a quarter (23%) or respondents have coding positions that have been open for more than 3 months. The balance reported positions that have been open 3 months or less. 1 Current Staffing of Coding Positions A lack of qualified candidates appears to remain the root cause. The vast majority of respondents (46%) said their departments are short on coders due to a lack of qualified candidates in the market. Many respondents commented that candidates lack on-the-job experience. A minimal number of respondents said their staffing shortages are the result of hiring freezes or layoffs All rights reserved. Reproduction prohibited without express written permission of 1

2 Trending Medical Practices Coding responsibilities within a practice can be performed primarily by the physician, a designated coder or other staff and depends on the physician s preference, staff training, as well as, how the practice has set up its workflow. McKesson Practice Consulting, a national physician advisory group, found that three quarters of respondents surveyed at the Health Care Compliance Association s annual Compliance Institute handled coding in house for professional services and 72% of the people who performed coding for professional services are coders 2. Who Performs Who Performs Coding Coding Practices in for Professional Services Services? Physicians/ Providers 28% Coders 72% The number of coders employed or contracted by a medical practice varies based on practice specialty and size with a median range from 3 to 10 coders, and 55% of those surveyed indicated they would use a mix of internal and external resources to provide coding and documentation training in the future. Practices that employ coders face a potential lack of skilled talent combined with the need to remain up-to-date on coding changes and meet regulatory compliance requirements. Continued attention from commercial carriers and the Federal government have also led to a growing number of audit programs targeting both hospitals and physicians which adds further pressure to ensure coding accuracy. Electronic Medical Records The coding support built within many current electronic medical records (EMR) is designed to assist physicians in selecting the appropriate Evaluation and Management (E&M) code based on the level of services delivered. Doctors who use an EMR with built-in coding support are usually prompted after the progress note has been completed. Options are then displayed based on the level of service and physicians can choose the E&M level prompted or another. Some practices that use an EMR have reported seeing a decrease in E&M under coding. While this tool may provide physicians with a level of coding support, the need to verify medical necessity, as well as, the need to correctly capture diagnostic and other related codes for care services is anticipated to become more complex in the future All rights reserved. Reproduction prohibited without express written permission of 2

3 Transition to ICD-10-CM/PCS The Department of Health and Human Services (HHS) announced in August 2008 that it is transitioning the health care industry to the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) and the International Classification of Diseases, Tenth Revision, Procedural Classification System (ICD-10-PCS) for coding and billing. The implementation deadline is October 1, ICD-9 Clinical Modification (ICD-9-CM) is nearly 30 years old and many of its diagnosis categories are full, preventing further expansion. In fact, it s estimated that the ICD-9-CM procedure code set will run out of codes in the near future. In addition, ICD-9-CM is not flexible enough to quickly incorporate emerging diagnoses and procedures, nor is it accurate enough to identify diagnoses and procedures precisely. In contrast, ICD-10-CM and PCS provide detailed information on procedures allows ample space for capturing new technology and devices and has a logical structure with clear, consistent definitions. All covered entities (health plans, health care clearinghouses, and certain health care providers) that bill Medicare for services must being using the ICD-10 code as currently scheduled. ICD-9-CM Diagnosis Codes ICD-10-CM Diagnosis Codes 13,000 diagnosis codes 68,000 diagnosis codes Uses 3 to 5 digit codes Uses 3 to 7 digit codes Chapters 1-17 uses all numeric characters, supplemental chapters use an alpha first digit (E or V) Digit 1 is alpha (A-Z, not case sensitive) Digit 2 and 3 are numeric Digits 4-7 are alpha ICD-9-CM Procedure Codes ICD-10-PCS Codes 11,000 procedure codes 87,000 procedure codes Uses 3 to 4 digit codes Uses 7 digit codes All four digits are numeric Any of the digits can be alpha or numeric. Letters O and I are not used to avoid confusion with number 0 and 1. Potential Effect on Coding Services With the transition to ICD-10 codes, the demand for qualified coding services is anticipated to increase. Simultaneously the supply of medical coders is expected to remain the same or decrease. The combination of both factors could have a dramatic effect on physicians and healthcare organizations All rights reserved. Reproduction prohibited without express written permission of 3

4 Potential solutions will require a mix of technology to help automate as much as possible in combination with qualified coding professionals who are trained and prepared to handle the changes ahead. The Department of Health and Human Services estimates total training costs for full-time hospital coders at $2,750 per coder ($2,200 for lost work time, plus $550 for training expenses), and $500 for part-time codes ($440 for lost work time, plus $110 for training expenses). The lack of experienced candidates in the market coupled with changes in coding is requiring organizations to be flexible, creative, and take corrective measures that will help practices thrive in the future. Important Steps to Take Provide regular coding and documentation monitoring, audits and training for staff and physicians. Encourage good habits now and track progress through improved documentation, compliant coding, fewer denied claims and increased reimbursement. Be sure to have an active compliance plan in place and update to address regulatory requirements. Make your staff aware of the upcoming coding changes and provide training. The Centers for Medicare & Medicaid Services ICD-10 Web site offers an ICD-10-PCS to ICD-9-CM information that can be downloaded from: Physicians and healthcare executives should evaluate outside consulting resources and services to augment current practice or department staffing needs and help control overhead costs. Consider hiring and training from within, reaching out to surrounding states for coding candidates and work with community colleges to boost the local pool of candidates. When evaluating an electronic medical record or new practice management system, ask how they handle coding support and what their plans are to address future coding changes. 1 American Health Information Management Association (AHIMA) Survey June 29 July 12 (95 responses), McKesson Practice Consulting Survey Findings, Health Care Compliance Association Conference, April (56 responses), All rights reserved. Reproduction prohibited without express written permission of 4

5 McKesson Practice Consulting Solutions Physician focused consulting experts with over 25 years of experience dedicated to making a measurable impact on the fiscal success of medical practices through strategic growth and practice performance Currently engaged with more than 100 clients nationwide, our consultants offer a broad range of core services including coding and compliance, managed care contracting, revenue and practice management, financial analysis and strategic growth. We will provide you with realistic recommendations and hands-on solutions to address tough challenges, find untapped opportunities and ensure measurable success. Call for a No Obligation Consult Or Visit Our Website McKesson 5995 Windward Parkway Alpharetta, GA All rights reserved. Reproduction prohibited without express written permission of 5