How medical practices leave money on the table through suboptimal coding

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Here are some reasons why suboptimal coding occurs.

As physicians, we are extremely proud of the work we do. Our work includes improving the quality of countless lives and involves maintaining, promoting and restoring health of those who seek our help.

But when it comes to getting paid for our work, we do not always take full advantage.

That often results from oversights when using Evaluation and Management (E/M) codes and sometimes not using current procedural terminology (CPT) codes for all services performed during a patient encounter.

There are a variety of reasons suboptimal coding occurs. Among them:

  • Doctors are distracted by seeing numerous patients in a short period, leading them to forgo charting notes,
  • when chart notes are taken, we write them in a way that doesn’t take specific codes into account,
  • doctors and other clinicians may not be aware that a single procedure–such as putting a cast on a patient’s arm–can include multiple codes and modifiers, and
  • concern among providers that overly aggressive coding may trigger an audit by an insurer or recovery audit contractors (RACs), prompting them to be overly conservative when coding

Multiply these issues by 20 or 30 patient encounters per day, and clinicians are forgoing a significant amount of revenue.

Compounding the issue, there have been significant changes in billing codes. This occurred in January, when the American Medical Association (AMA) substantially revised the guidelines of the E/M codes for outpatient visits, covering CPT codes 99202-99215.

The changes clarify what constitutes a discussion between physicians, other healthcare professionals and patients; and how test results are analyzed, among other things. The changes stressed the importance that physicians and clinicians should place on recognizing all patient problems, whether acute or chronic, and document them in more specific detail.

The AMA’s intent in making these changes was to provide better direction and increased patient care through the reporting of services rendered or considered at the time of service. They also want providers to better utilize the time spent managing patient care and the medical decision making process, rather than counting body systems in the exam.

The importance of the coding changes aside, they came at a particularly difficult time for providers. Medical practices were already struggling with the fallout from the COVID-19 pandemic. The financial risk of having coding rejected by payers increased exponentially.

The practice for which I am medical director, AFC Urgent Care in Memphis, Tenn., was hit hard by these changes. Although affiliated with a national franchise, we are independently owned and operated. And like many urgent care practices, we are small, with just two full-time and one part-time physician and a handful of auxiliary staff.

Our revenue dropped by 75% at the start of the pandemic, forcing us to cut business hours and enter survival mode. Although we recovered somewhat by administering COVID-19 tests and evaluations, the focus on keeping our doors open safely made it difficult to adjust to the new coding guidelines when they took effect.

This required us is to take an extremely close look at our coding and billing practices. We hired an outside revenue cycle management technology and consulting firm to examine our coding for daily patient encounters..

We quickly realized the depth of the missed revenue opportunities. In December 2020, 937 patient encounters were undertaken by our two full-time physicians. Of those, 914 were identified as having a coding problem—97.5% of the total.

The levels of E/M coding and modifiers were also an issue. We were usinglLevel 4 intensity E/M codes about 54% of the time. That compares to 74% of the time by the typical urgent care center. We used level 5 E/M codes 0.2% of the time, versus 4% of the time in a typical urgent care center. In addition, we weren’t using many modifiers.

AFC’s insufficient coding cost it about $44,000 last December—a sum that represents about 25% of the practice’s total monthly revenue. Of that total, $27,000 came from E/M codes below level 4. These basic codes are typically processed by payers without an issue when appropriate.

With focus, training and the help of our experts, by March 2021 provider documentation had steadily improved. As a result, missed revenue opportunities from suboptimal coding had dropped to less than $8,000 per month, a decrease of approximately 82% from December’s level. In addition, turnaround times for payments dropped significantly due to process improvements and quicker claims turnaround.

Although the revenue boost is welcome, AFC Urgent Care Memphis is still trying to recover from the pandemic. Its patient mix has yet to return to what it was pre-pandemic, and the practice remains too reliant on COVID-related services.

However, as the world and the practice of medicine returns to something more closely resembling normal, it’s become increasingly clear that the financial future for medical practices will rely on a clearer focus on coding optimization and proper documentation to move that forward.

Alice McKee, M.D., is a family medicine physician and the medical director of AFC Urgent Care in Memphis, Tenn. Lohith Reddy is senior vice president of ExdionRCM in Plano, Texas.