Demystifying Coding Compliance: 3 Key Strategies for Navigating the Regulatory Waters of RCM

Noncompliant coding is a more significant risk to the revenue cycle than providers may realize, accounting for $36 billion in annual lost revenue, denials, and fines. In 2019 alone, the CMS and the HHS Office of Inspector General (OIG) imposed fines and penalties for coding noncompliance of $2.5 billion and $3.7 billion, respectively.  

What is coding compliance?

Coding compliance includes the processes that ensures the “coding of diagnosis, procedures and data complies with all coding rules, and regulatory guidelines.” Because lack of coding compliance falls under the “fraud and abuse” category of the American Medical Association’s Principles of CPT^® Coding, it is an area that is highly scrutinized by payers and subject to increasingly stringent government regulations.

In addition to the risk of audits and penalties, coding inaccuracies will impact revenue through an increase of denied claims. In 2022, 11% of all claims were denied. A recent survey of healthcare leaders found that coding inaccuracies were among the top three causes of denials.

Numerous healthcare regulations impact coding and noncompliance can put patients and entire organizations at risk. 

Three key strategies for improving coding compliance

There are three essential strategies that organizations should implement to reduce the risk and financial impact of noncompliance: Education, internal audits, and automation technology.

Education

One of the most strategic, impactful steps organizations can take to improve coding compliance is implementing a comprehensive education program for the coding team. Maintaining an optimal level of coding knowledge can be challenging, even for the most seasoned coders. Ongoing, rigorous education and industry certification are imperative. 

According to the AAPC, there are seven essential skills coders need to develop to be successful. Organizations should build their curriculum around these elements, which include the following items:

• Attention to detail
• Medical terminology
• Knowledge of coding systems
• Analytical skills
• Communication skills
• Knowledge of insurance policies and
• Time management.

Internal audits

Internal audits are essential to maintaining coding compliance as they help identify coding issues and problematic trends so they can be proactively addressed and process improvements put in place. According to the Medical Group Management Association, audits need to include samples of patient encounters as they were coded and billed. “To design an audit, identify strategic initiatives, such as performance measures, validation of coded claims, prevalence of diseases, and treatments and adherence to policies and procedures to ensure compliance.” 

As part of the auditing initiative, coding leadership should communicate regularly with the organization’s Chief Compliance Officer or Compliance Committee to work in collaboration to monitor compliance. The goal should be to detect, prevent, and remediate noncompliance. This should include risk assessments with the following actions:

• Creating an investigation process, 
• Developing risk-based plans and training,
• Action-based compliance program, including readjustments and reallocations, and
• Self-disclosures, cooperation, and remedial action.

Automation technology

Automation technology such as artificial intelligence (AI), machine learning (ML), natural language processing (NLP), and robotic process automation (RPA) are invaluable tools for audits and for improving day-to-day coding accuracy. They can perform regular analysis on charts, clinical documentation, and overall coding with limited human intervention. Automated triggers can be applied to various processes to generate specific actions. Once a human becomes involved, much of the work to investigate and identify a coding issue will have already been completed. 

When to get help

Organizations that lack the internal resources necessary to conduct ongoing education or to implement automation technology can benefit by partnering with industry experts who utilize automated systems. In this way, organizations can achieve a faster return on their compliance investment. When choosing a partner, organizations should select one with an advanced degree of coding expertise, deep coding and compliance knowledge, 

Success story

A health system with poor coding quality experienced increased payer scrutiny and poor revenue performance. By implementing a coding quality and compliance program, they were able to elevate coder performance and improve reimbursement accuracy and timeliness. The health system significantly reduced third-party audits and findings while elevating reimbursement profiles. 

Coding quality initiatives implemented included:

• Pre-hire online skills assessment for new team members
• Pre-production competency testing through initial and transitional quality reviews
• Monthly quality reviews with feedback and educational alignment
• Targeted and ad-hoc audits for root cause analysis and defect avoidance
• Pre- and post-billing audits in key focus areas
• Detailed reporting, analysis, and feedback

Maintaining compliance in an ever-changing regulatory environment

Of all the revenue cycle processes that have the potential to impact the bottom line, coding is at the top of the list. But it’s not just about submitting claims and getting paid. Errors in the coding process can lead to payer audits, takebacks, and significant penalties and can even harm an organization’s brand reputation. Therefore, organizations must take a proactive approach by implementing a comprehensive education program, internal audits, and automation technology. When that approach isn’t possible, partnering with industry experts is an excellent option.

Photo: Nuthawut Somsuk, Getty Images

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