Blog Post
Best Practices

R1 RCMNovember 8, 2018

Recognizing the Importance of Innovation in Medical Coding

stethoscope near keyboard

A significant portion of operational impact, support and overall compliance in healthcare services starts with coding. Medical coding helps the healthcare industry transform diagnoses, physician’s notes, and various medical services into a common language that ensures both the patient, provider and payers receive the best end-to-end experience.

Thousands of medical coders across the globe are responsible for illustrating the clinical picture of patient health by utilizing claims data, depicting the level of sickness, comorbidities, provider effort to manage care and so forth. While coding may be considered a more traditional, established healthcare practice, that does not mean there isn’t room for innovation.  The following guidelines, programs, and processes are ways that forward-thinking revenue cycle management companies are currently deploying to make sure coding is accurate, captures the quality of care being delivered and ensures appropriate reimbursement. 


  1. Implementing Quality Assurance

It’s important that medical coders continue to select the appropriate value codes and do not expose organizations to potential Medicare audits where large sums could potentially be owed to the government/private payers for over or underpaying a provider. Millions are lost every year due to professional fee underpayments, which is often due to the complexity of medical coding and the quickly changing nature of real-world payer processes.

To promote correct coding practices and methodologies, official coding regulations are covered by The Centers for Medicare & Medicaid Services (CMS), the American Medical Association (AMA) and more healthcare organizations that typically make updates on a quarterly or annual basis. One example is the National Correct Coding Initiative Policy Manual for Medicare Services, a quarterly updated resource as part of the larger National Correct Coding Initiative (NCCI). The coding policies included reflect current national and local coding practices and standards, coding guidelines established by national societies and an analysis of standard medical and surgical practices.


  1. Applying Value-Based Care Methodology Under the Quality Payment Program

The Quality Payment Program under MACRA changes compensation provided to physicians based upon patient health outcomes and efficient use of medical resources instead of paying for procedures and testing that do not need to be administered to diagnose and treat the patient. Part of this program is the Merit-Based Incentive Payment System (MIPS) which is made up of the following four categories that evaluate a provider’s overall performance score and ultimately determine their revenue: quality improvement, resource use/cost savings, clinical practice improvement and advancing care information.

Quality scores are largely measured based on claims data, which is why it’s important for coders to be responsible for accurate reporting and coding to the highest specificity. Codes are currently assigned an RVU (Relative Value Unit), a measure of value used in the U.S. Medicare reimbursement formula for provider services. The Specialty Society Relative Value Scale Update Committee (RUC) is also an expert panel of providers organized by the AMA that make recommendations to the government on the resources required to provide a medical service based upon physician work, practice expense, liability insurance and geographical location. There are at least several codes that are evaluated each year.

This past year, over 2,000 recommendations were reviewed based on factors such as whether or not a service was performed over a million times per year in the Medicare population. These recommendations were also made based off a survey that, at least, 75% of providers completed.  As a result of these recommendations, several updates were made—such as new modifiers, as well as revised and deleted codes. Approximately 40 percent of the codes reviewed had a reduction in RVU, 20 percent were deleted entirely and many codes are still under review.

The Quality Payment Program changes the way Medicare pays clinicians and offers financial incentives for higher provider value care— the emphasis being on the word ‘value.’


  1. Using Data Analytics to Track and Visualize Payer Reimbursements

Today, private payers update their medical necessity and deniability qualifications on a monthly, or sometimes even more frequent basis. Through data analytics, coding teams can anticipate payer shifts and identify denied or underpaid claims much more quickly. This has allowed coding teams to shift from a retrospective to prospective model. The key to winning will lie in using this insight to manage clinical and financial risk better.

With accountability and risk being shared more broadly across the healthcare continuum, it challenges providers, coders and payers to change their traditional role within the healthcare ecosystem. As illustrated above, dedicated educational efforts for coding professionals are needed now more than ever to improve coding efficiency and accuracy, increase revenue and lower compliance concerns.