Revenue Cycle Management 101: Impact of ICD-10 Coding in Inpatient RCM
Revenue Cycle Management is a method of tracking patient care episodes from registration to final payment. Briefly, the cycle starts with admission, then care is provided, documentation and charging for services follows, then ICD-10 coding, later billing, and finally collection.
We can’t delineate this process without considering Errors & Denials and Claim Follow-up. Much of the revenue is collected on the back-end, after discharge. Until the patient bill is paid, vendors, staff, equipment, overhead, etc. are paid through loans or bonds. Hence, there is an incentive to code and bill efficiently, to limit the interest paid. Revenue can also be totally lost if contractual billing deadlines are not met, or if there are limited funds available and paid on first-come first-served basis. Don’t be last in line.
When leadership makes decisions based on the assumption that ICD-10 coding impacts the revenue cycle process while only in the coding stages of the process, opportunities to decrease DNFB (discharged, not final billed) days are missed. As consultants, we see that accurately and timely coding is not always enough. Keeping the coding staff informed of the DNFB on a daily basis, has a tremendous impact on keeping the unbilled accounts within expected dollar figures. As coded encounters go through the coding and reviewing process, coding managers and staff must be understood as essential components in the RCM process. Here is a brief overview of how ICD-10 coding can impact in various stages within the RCM process. This overview provides a good start for decision makers to assess and identify key aspects in which ICD-10 coding can improve DNFB.
- Clean bills avoid delays with claim rejections. If everything is correct the first time, there is no need to reprocess and rebill the claim. Many third-party payers use DRG (diagnostic related groups) to determine payment. This system was developed to standardize payments to hospitals for similar admissions (Pneumonia, Appendectomy, Stroke, Hip Replacements, etc.). Encoders are available to help find the appropriate diagnosis and procedure codes and select the DRG. They also identify age/gender edits, inappropriate principal diagnoses, and assist with sequencing of diagnoses and procedures.
- Scrubbers are billing programs that do a final check before releasing the bill. They can find medical necessity issues, and errors in abstracting (procedure date, surgeon, and disposition). These errors will need to be returned to coding for correction.
- Assistance from coding may also be needed in the appeals process of claims rejected by third-party payers. There is a tendency to let these claims sit and miss deadlines for appeal, even if the cause is due to a minor technicality that can be easily corrected.
- Retrospective Audits can be another tool to assist the revenue cycle process. They provide expertise in identifying coding and sequencing errors that can result in over or under payment. They can provide education to the coding team, keeping them current with quarterly and annual updates. They can also provide reassurance against major coding issues that can result in negative third-party payer or regulatory agency actions (intensified review, fines, and/or penalties).
Pay close attention to what can impact ICD-10 coding efficiency as well. ICD-10 coding can be affected by resources downtime, staffing shortage, holds for missing documentation and quality review. Investing in reliable equipment and redundancy will limit the first item. Staffing shortage can be managed by overtime, contract coding, and/or hiring additional staff. Productivity should also be monitored. Timely resolution of Holds requires Identifying the correct party to resolve the hold, and making them responsible.