The Pros & Cons of Outsource Claim Coding

The Centers for Medicare & Medicaid Services’s (CMS) proposed Patient-Driven Groupings Model (PDGM) is a giant leap forward in shifting health care payments from volume to value, and from resource consumption to clinical status as the basis for payment. PDGM is more than a change to the prospective payment system—it represents a paradigm shift for agencies.

The transition from the current prospective payment system to PDGM is just one of the many regulatory changes that agencies must manage while increasing revenue and holding margin. Agencies are still adjusting to the new Conditions of Participation (CoPs), and some are preparing for the review choice demonstration (which many anticipate will become a national initiative in short order).

Every agency is working to maintain and improve Star Ratings and Home Health Compare scores, while nine states also are participating in the value-based purchasing demonstration. The Targeted Probe and Educate (TPE) continues, and the implementation of the updated Outcome and Assessment Information Set (OASIS-D) began in January.

Agencies are working to keep pace in an ever-changing regulatory environment, and that’s before you factor in the most important job of all: patient care.

Under PDGM, homecare providers will need to greatly increase their efforts to ensure complete documentation and accurate patient-assessment reporting that leads to the correct selection and sequencing of diagnosis codes for placement in the appropriate clinical groups.

Each functional area of your business, from intake to patient discharge, will require policies and procedures that can be measured, benchmarked and monitored for continuous improvement, as an agency’s long-term viability will depend on effective care management, including resource utilization. To achieve this, consider applying the principles of quality cycle management, a concept used in health care to hold staff and senior management accountable.

The initiatives required to ensure viability under the PDGM model also are good business practices under any payment model. They are difficult, but not impossible to achieve. For virtually every agency, it’s a matter of resource management, which means ensuring that every staff member is working to his or her highest level of competency and finding partners that can provide operational solutions to the biggest challenges. Whether an agency can handle those challenges alone, with its current staff, is another matter altogether.

To outsource, or not to outsource? Every homecare agency administrator asks this question at one time or another. There is no right answer. There is only the answer that is right for your business. And even that can change over time. But there are some things to consider once you reach that reflection point in your agency’s business development. Read over the following list of pros and cons to decide whether outsourcing claim coding is the right choice for the needs of your growing agency.

Advantages of Outsourcing (Pros)

Expertise—CMS’s rules and guidelines governing code selection and sequencing, and OASIS-D responses are complex and ever-changing. A mistake repeated on multiple claims, however innocent, can be construed as fraud, costing your agency time and money. Outsource coding companies are staffed by expert auditors who are carefully screened before hiring, regularly trained to new rules and guidance, and routinely monitored to ensure continued accuracy.

Efficiency—Auditors have the knowledge and skills to quickly review charts for patient data that supports the claim, and to know when additional information and documentation are needed. Because this is all auditors do, they do it more efficiently than a staff member who also is responsible for quality assurance, intake and/or scheduling.

Prompt and proper payment—Expert auditors ensure that every patient is assigned to the home health resource group that most accurately reflects the level of skill needed to achieve treatment results, leading to prompt and proper payments, lower risk of audits and improved cash flow management. Further, some coding companies are staffed 24/7, 365 days a year, so claims are always promptly processed.

Lower cost of doing business—Outsourcing coding and OASIS-D can reduce the number of full-time positions or allow more time for staff to focus on patient care. Working with the right outsource coding partner also can help lower annual training costs, as reporting on individual and agency-wide knowledge and skill gaps from your vendor helps you pinpoint precisely where training is needed.

Improved scores—In today’s patient-centered regulatory environment, scores matter—outcome scores, of course. But your Home Health Compare or Hospice Compare Scores, Star Ratings and value-based purchasing bonuses all start with accurate OASIS-D assessments. An expert can work with your in-house quality team to ensure that every patient encounter is properly reported.

Patients first—Patient-centered care isn’t just a regulatory directive—it’s the reason most providers work in homecare. Outsourcing coding and OASIS-D review and other operational or administrative tasks allows you and your clinical team to focus their energy and attention on caregiving, not record-keeping.

Disadvantages of Outsourcing (Cons)

Loss of control—The No. 1 reason for choosing not to outsource operations and administrative tasks is fear of losing control—control over workflow processes, control over quality, control over staffing. While that concern is understandable, you have more control over vendor output than you do over staff output. Any outsourced coding company is only as good as its last audit. Repeated failure to meet expectations is easily handled by ending the contract. There are numerous human resources issues to navigate when terminating recalcitrant staff.

Health Insurance Portability and Accountability Act (HIPAA) protections—Many agency decision-makers worry that protected patient health information will be compromised. That’s a legitimate concern, and it’s important when exploring outsourcing options that you be fully aware what protective measures a prospective vendor offers, and how often those measures are reviewed and upgraded.

Cost—This is always the chief financial officer’s first question: What is outsourcing going to cost? When viewed as a line item on your profit and loss statement, outsourcing can appear expensive. However, you might also consider the cost savings of fewer employees, salaries and benefits, or the value of having those same staff members perform work more appropriate to their skills and education. Also note that expert auditors with outsource coding companies often deliver higher episode payments through more accurate code selection and sequencing.

Quality assurance—An overarching concern for many agency owners is the challenge of assuring accuracy and compliance when tasks are completed remotely by non-staff. That’s a reasonable worry, which is why agencies are encouraged to thoroughly vet potential outsourcing vendors.