Inpatient Coding Impacts

How Inpatient Coding Can Indirectly Affect Your Financial Health Accurate inpatient coding is vital for a hospital since it has both direct and indirect impact on the financial health

OUTSOURCE STRATEGIES INTERNATIONAL 8596 E. 101st Street, Suite H Tulsa, OK 74133

www.outsourcestrategies.com

1-800-670-2809

Hospitals encounter a number of hurdles in connection with payment for inpatient hospital services – these include the DRG (diagnosis-related group) methodology for Medicare inpatient reimbursement, pre-approval for certain services, date of admission and length of admission period. With accurate inpatient medical coding, you can specify an inpatient encounter clearly, prove medical necessity and ensure correct reimbursement.

Reimbursement has to be calculated for each inpatient hospital encounter using inpatient coded data. This data can indirectly impact your hospital’s financial health in many ways. 

The population for quality projects (such as core measures) is determined on the basis of code assignment. It is very important to accurately identify which hospital encounters require abstracting and reporting for this process. In addition to that, hospital acquired conditions (HACs) are exclusively determined by code and POA (present on admission) assignment indicators. This quality data is included in the calculations for the value-based purchasing adjustments in the Centers for Medicare and Medicaid (CMS)’ efforts to link Medicare’s payment system to a value-based system and thereby enhance healthcare quality.



Severity of illness (SOI) and risk of mortality (ROM) scores calculated during APRDRG grouping are used for comparative data for hospitals and individual physicians.

It requires clear, concise and complete physician documentation and accurate code assignment to determine these scores.



The codes that are submitted in the form of US-04 claims to the CMS are stored in a database (MEDPAR). This database is analyzed to make annual updates to the Inpatient Prospective Payment System (IPPS).



Medicare cases that come under certain MS-DRGs are used in the calculation for Readmission Reduction Program by the CMS, which imposes financial penalties in the form of rate of adjustment for an excess number of readmissions to the hospital.



From fiscal year 2008, the IPPS started to include an annual coding and documentation adjustment so as to keep the MS-DRG reimbursement system budget-neutral. This was done on the assumption that quality in coding and clinical

www.outsourcestrategies.com

1-800-670-2809

documentation will continue to improve. Thus, it is very important for hospitals to work actively to improve these areas. 

Even though the discharge disposition rarely affects MS-DRG assignment, it usually impacts whether reimbursement is adjusted as indicated by the post-acute care transfer policy for qualifying MS-DRGs. Inpatient coders need to validate the discharge disposition before the claim submission.



When it comes to hospitals that participate in bundled payments, accurate MS-DRG coding is crucial to determine the inpatient encounters that are included or excluded in the bundle.



Apart from MS-DRG reimbursement, certain Medicare inpatient cases are eligible for add-on payments for the use of new technology, devices and medications that are approved each year in the IPPS. You must assign specific codes to enable the processing of add-on payments.



Other uses of inpatient coded data include clinical research, disease maintenance, registries (tumor, trauma, birth defects), population, physician credentialing and privileging as well as volume statistics for activities such as market share analysis, transparent pricing and payer contract negotiations.

Effective Coding in the Current Scenario Is Challenging Inpatient billing and coding faces several challenges in the current healthcare scenario. The DRG system has evolved into MS-DRGs, APR-DRGs, and other variations while Recovery Auditor (RA) activities have increased to monitor coding quality and compliance with payer requirements. The most significant change is the transition from ICD-9 to ICD-10 medical coding classification system when assigning the diagnosis and procedure codes required for grouping DRGs. This increased the code options from less than 20,000 in ICD-9 to more than 120,000 in ICD-10. The increasing use of electronic medical records (EMRs) also has an impact on inpatient coding since it has improved access to medical information and facilitates remote coding. www.outsourcestrategies.com

1-800-670-2809

It requires two distinct skill sets to ensure accurate inpatient coding in the current circumstances such as: 

The ability to read and interpret a medical record and determine which diagnoses and procedures can be coded; this requires knowledge of medical terminology and abbreviations, disease processes, anatomy and physiology, surgical techniques, diagnostic testing, and treatments.



The ability to choose the correct codes based on the index and tabular instructions of the classification system, official coding guidelines, and advice from the American Hospital Association (AHA) Coding Clinic. Correct code assignment and sequencing ensures accurate DRG assignment, which will help obtain proper reimbursement for each inpatient encounter.

When it comes to inpatient coding, you should consider its direct and indirect impact on your financial health and train your coders accordingly. There is no doubt that coding professionals have a distinct role to play when it comes to securing reimbursement for the healthcare services you provide.

www.outsourcestrategies.com

1-800-670-2809