How the Effects of Under-Coding Have Gone from Bad to Worse

Now More Than Ever, Data Counts

The near-universal mandate to measure healthcare outcomes — and the corresponding trend towards population health initiatives, value-based contracts, and other payment reform — have renewed attention on the importance of data collection, including charge capture.

“Increasingly, what’s good for a healthcare organization’s patients is what’s good for a healthcare organization’s bottom line,” said Steven Liu, M.D., SFHM, Ingenious Med Founder and Chief Medical Officer. “Sooner than later, large percentages of a healthcare organization’s revenue will be determined by the extent to which it produces positive health outcomes for a given patient population.”

Unfortunately, charge capture — the process used by doctors and other healthcare professionals to record patient treatments in support of a medical claim — has been a longstanding industry problem. Many health systems, hospitals, and physician groups under-code the care they provide, thereby undermining their profitability.

“The revenue of many healthcare provider organizations is inexorably tied to charge capture. The stability of that revenue is key to providing services and quality,” said Dr. Liu. “The status quo is no longer an option.”

The Economic Costs of Ineffective Charge Capture

Historically, under-coding has existed for a variety of reasons. To begin, many physicians don’t regard coding as a responsibility that falls under their purview, instead relying on coders to do the heavy lifting. This leads to unnecessary coder follow-up to verify the accuracy of data and supporting documentation before submitting a claim.

Other physicians argue they simply don’t have the time to code procedures immediately after seeing a patient. And if that isn’t done, a backlog accumulates.

“A physician friend explained to me that he has been under-coding for most of his 31 years in the practice of medicine and he does not see that changing,” said Ingenious Med Chief Technology Officer Jim Keener. “Most of his colleagues under-code as well. It gives them a sense of security knowing that they are delivering value in the services that they provide, but only coding for services to a level less than they have delivered. It allows most charges for services provided to pass through the process without question and be paid as submitted.”

Regardless of the reasoning behind under-coding and inefficient charge capture, healthcare organizations are paying the price.

In fact, a 2017 survey of 49 organizations representing more than 13,000 physicians conducted by the consulting arm of the American Medical Group Association (AMGA) dispels the popular notion that inadequate charge capture has little economic cost.

Among the key findings is that the operating revenue per physician worsened from a loss of 10 percent of net revenue found in the 2016 survey to a loss of 17.5 percent of net revenue in the 2017 survey. Also, despite the gross professional revenue increasing for this same period, from $1,217,350 to $1,328,625 at median, net professional revenue actually decreased.

At best, inadequate charge capture results in a highly inefficient back-and-forth between providers and coders, which compounds the distaste many physicians have for the practice. At worst, it results in significant economic losses that many healthcare provider organizations simply cannot afford.

An Easier, More Effective Approach to Charge Capture

Recognizing both the economic and operational benefits derived from effective charge capture, Ingenious Med pioneered a new approach to data collection that ensures efficiency and compliance, and also ease-of-use. The streamlined, physician-friendly approach is enabled by mobile technology.

“There is a popular myth that technology is a silver bullet to data collection and analysis in healthcare, but technology is only as good as the underlying process that it supports,” said Keener. “Ingenious Med’s technology is without equal, but works best when paired with a new and better approach to charge capture.”

At the core of Ingenious Med’s approach is making coding patient encounters more intuitive — a process many physicians currently regard as a burdensome add-on to an already long list of responsibilities. This re-tooled process allows healthcare provider organizations to optimize the workflow through efficient and timely charge capture, which eliminates the need for charges to be stockpiled for entry later.

Ingenious Med also emphasizes best practices, such as daily shift huddles, tracking individual provider performance metrics, and a regular review of charge capture processes.

Ingenious Med’s application is both an educational resource that informs and educates clinicians on the best coding and documentation practices, as well as a tool that enables physicians to input data at the point of care with the relative ease of ordering coffee by way of a mobile app.

Significant Performance Improvements in Various Clinical Settings

Ingenious Med helps healthcare provider organizations address oversights ranging from inadequate coding and documentation to missing charges that slow the revenue cycle. In so doing, it has helped a diversity of clients realize higher revenue capture and profitability.

For a nationally recognized children’s hospital in the Mid-Atlantic:

  • Completed an additional 700 wRVUs per physician annually.
  • Captured 80 percent of physicians’ charges within 24 hours.
  • Reduced time to send bills to the billing center to three days.

For a leading academic healthcare system on the West Coast:

  • Increase in revenue per physician FTE of $39,381.
  • Charge quantity increased by 9.5 percent.
  • Charge lag reduced by 12 days.
  • Average daily collections per provider increased by 17 percent.

For a top 100 cardiology specialty hospital in the Northeast:

  • Increased revenue per physician by $23,028.
  • Increased total wRVU per provider of 10.3 percent.
  • Increased gross dollars per charge by 17.3 percent.

Whether through under-coding, delayed charge submission, missed charges, or other unoptimized processes, inadequate coding and inefficient charge capture are having a real effect on the bottom lines of healthcare organizations across the U.S.

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