Accurate Medical Coding, Part 2: Understanding Sources of Variation in Medical Coding

Introduction

In Part 1, we provided an overview of medical coding, how medical codes are used for reimbursement, and common medical coding errors. Medical coding facilitates essential healthcare operations, such as quality and performance assessment, morbidity and mortality tracking, and medical billing.

In this blog, we will explore the sources and risks associated with variations in medical coding. First, we will address the benefits of consistent medical coding practices. Then, we will explore factors that contribute to coding variations, including medical record complexity and inconsistencies in Electronic Health Record (EHR) integrity. In addition, we will suggest ways to address these sources of variation.

Who Benefits from Consistent Medical Coding?

Consistent medical coding has many positive impacts on multiple healthcare stakeholders. Consistency supports positive first order benefits including effective medical record compliance, regulatory reviews, and payment cycle optimization. Downstream benefits can include propagation of best practices and improved population health. We provide more detail on who can benefit from consistent coding below.

Healthcare Providers

Consistent coding practices support effective — right the first time — exchanges between billing teams and payers, reducing costly time-consuming billing errors and denials while improving administrative efficiency for the patient, provider, and payer.

Consistently coded documentation allows providers to analyze medical data effectively and provide better quality of care. Quality of care has been shown to directly correlate with evidence-based decisions supported by metrics including tracking patient outcomes, identifying trends in disease prevalence, and comparative effectiveness of different treatments — analyses all enhanced by consistently coded documentation.

Finally, consistent medical coding facilitates better provider compliance with Centers for Medicare & Medicaid Services (CMS) regulations and guidelines, supporting reduced improper payments and the risk of legal or regulatory action related to medical coding practices.

Billing Teams

As mentioned earlier, billing teams receiving consistently coded documentation can submit claims at lower risk of error and/or denial. Additionally, standardized coding practices help reduce the risk of underpayment, improving the potential revenue of providers and payers.

Public and Private payers

Consistently coded medical record documentation puts payers in a better position to effectively price and manage risk. Accurate measurement of trends in health outcomes and prevalence of disease are key inputs to proper measuring of healthcare service utilization — a key input in risk measurement. Such analyses also inform reimbursement models designed to incentivize best practices.

As payers are becoming incentivized to consider Social Determinates of Health (SDoH), similar analysis focusing on population health efforts becomes critical. Consistently coded documentation supports identifying individuals or groups at risk for disease or poor health outcomes. By targeting these groups with early interventions, payers can improve health outcomes, patient satisfaction, and be responsive to SDoH mandates and initiatives.

Finally, consistent medical coding makes it easier for payers to detect and prevent fraud by identifying anomalous coding patterns.

Patients

Accurate medical coding improves patient safety, ensuring that healthcare providers have complete information about a patient’s treatment plan. Additionally, accurate codes help providers make better clinical decisions and reduce risks of errors or adverse events. Consistent coding practices also ensure that patients are billed correctly, reducing the chance of unexpected healthcare costs.

Researchers

Consistent coding supports researchers by providing them with more accurate and reliable data. Researchers use patterns in the data to inform future research and discover data-driven ways to improve patient care. Accurate coding is particularly important in supporting clinical trial research. The quality of patient outcomes from these new treatments are measured by medical codes. Inaccurate medical coding can have a serious impact on establishing the efficacy of emerging and existing treatments.

Regulators and Policymakers

Accurate medical data is critical for measuring the impact of policy changes. Policymakers use healthcare utilization and morbidity data based on standard procedure and diagnosis codes to identify vulnerabilities in the healthcare space. Regulators can also use coding patterns to ensure healthcare providers are complying with the law. Anomalous coding patterns can indicate fraud, waste, and abuse of medical products and services. Both stakeholders are downstream benefactors of consistently coded documentation.

Sources of Variation in Medical Coding

There are several sources of variation in medical coding. Adding to the complexity is that it can stem from one or more individual or institutional drivers in unpredictable ways. This difficulty makes mitigating this issue challenging. We describe some of the most pervasive below.

Complexity of Medical Records

Medical records can be complex and nuanced, making accurate coding challenging. This is particularly the case for patients with multiple comorbidities As cases become more complex, physician bias in documentation style and the tendency to code services more accurately vis-vis diagnoses become more acute. This issue makes it difficult for coders to consistently interpret medical records.

Complex medical records also impact provider reimbursements. For example, there are studies suggesting comorbidities tend to be under-coded, potentially resulting in reimbursement/revenue losses. While there are no easy fixes to challenging medical records, there are ways to reduce the under-coding risk. Providers can introduce standardized documentation practices and provide training to medical coders on best practices for addressing complex medical records.

Ambiguity in Coding Guidelines

Coding guidelines can sometimes be vague or open to interpretation. This ambiguity can lead to differences in coding practices.

Some ambiguous coding guidelines have led to policy changes, such as the Two-Midnight Rule. The policy was implemented by CMS in 2013 to address issues in coding certain hospital services. More specifically, the policy was put in place to address an increasing number of hospital admissions for short-term stays that were coded as inpatient services but did not meet the criteria for inpatient care. Thus, the Two-Midnight Rule requires a patient to have a hospital stay that crosses two midnights, as well as having medical documentation that supports the higher-level care in order to be considered as inpatient admission.

The Two-Midnight rule is also illustrative of how coding standards are constantly being evaluated and changing. While the Two-Midnight rule has been shown to decrease inappropriate short inpatient stays, the Office of Inspector General (OIG) has found that there are still vulnerabilities that have not been addressed. Thus, OIG has resumed audits for short stay claims. The policy is likely to continue to undergo changes in response to evolving healthcare utilization and coding practices.

Inconsistencies in EHR Document Integrity

Bad EHR practices, including record cloning and over reliance on copy-and-paste, or use of the wrong templates in Electronic Health Records (EHRs), can lead to variations in coding practices among coders. A meta-analysis in 2017 found a 2.6% error rate in copying and pasting clinical notes in patient charts, resulting in issues such as medical coding inconsistencies, error propagation, and wrong documentation.

To address inconsistencies in EHR document integrity, healthcare providers should implement a range of best practices. At a high-level, best practices include educating providers on appropriate documentation practices, regularly auditing documentation practices, and implementing policies and procedures to prevent inappropriate copying and pasting.

Individual Coder Bias

Everyone has cognitive biases that impact any subjective review, including medical coding. A 2014 meta-analysis of several peer-reviewed studies identified 19 types of cognitive biases affecting medical decision making. To take into consideration biases that affect medical coding, metrics have been established for coding accuracy and reliability. These Inter-Rater Reliability metrics will be discussed in depth in Part 3 of this series.

Summary

In conclusion, consistent medical coding is critical to the healthcare industry. It enables effective healthcare delivery, medical billing, quality and performance assessment, workforce planning, morbidity and mortality tracking, and healthcare policy development. Many parties benefit from consistent coding practices, including healthcare providers, billing teams, insurance companies, patients, researchers, regulators, and policymakers.

However, there are several factors that contribute to variations in medical coding. These factors include the complexity of medical records, ambiguity in coding guidelines, inconsistencies in EHR document integrity, and individual coder bias. Healthcare providers can mitigate these risks by implementing best practices for documentation and providing education and training to medical coders on consistent coding practices.

Stay tuned for Part 3, which will dive into quality assurance metrics for measuring medical coding accuracy and reliability. We will discuss the strengths and weaknesses of these metrics, as well as how to implement these metrics in practice.