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Considering the use of outsourced coding can be a daunting thought if your agency has never utilized outsourced options.  ICD-10 Coding has become increasingly complex and ensuring you have the right expert whether that be internal or external is key. Coding determines the primary clinical indicator and comorbidity adjustments which makes up 50% of the reimbursement for Home Health Claims under PDGM. This could put your agency at a significant disadvantage without utilization of the right resources. 

An initial financial assessment should be conducted to determine whether the use of an internal FTE or the use of an outsourced provider is the best fiscal decision.  The cost of an internal FTE for coding may cost the agency a high salary including benefits, education, training, and overhead. In an analysis of Decision Health’s 2023 Home Health Coding Salaries Survey, agency coders were higher on the salary scale than an outsourced coder. The use of outsourced coding to a third-party vendor can range depending on what services are utilized. The cost typically includes fees for these services as well as software licenses or any associated administrative expenses. A large provider with an in-house coding team would also need to have considerations for IT support, equipment, and supervisory personnel.

Let us discuss some of the advantages of outsourced coding. With over 72,000 codes to choose from and a variety of ways in which those codes must be applied based on coding guidelines and regulations as mandated by HIPAA, use of an expert to ensure claim accuracy and top reimbursement is a key advantage. A reputable outsourcing partner with certified coders may guarantee a certain level of accuracy which can reduce the risk of claim denials. In-house coders can certainly provide a certain level of expertise, but this can vary based workload, productivity, other job roles, and experience. While outsourcing may involve upfront costs, the potential savings for increased efficiency, accuracy, and compliance can yield long term financial benefits for health care organizations.

Another economic advantage of using an outsourced coding solution comes from the reduction in FTE costs and/or increased productivity. If you have someone fulfilling a dual role and the burden of coding is lifted, there should be and increase in productivity in which that personnel can direct their attention to other agency needs. Outsourcing can help reduce overhead costs and offload those administrative responsibilities to the coding vendor. Outsourcing capability also allows your organization to adjust resources according to the fluctuating demand of your agency. In-house coders may find it challenging to quickly upscale or down quickly during peak periods or staff shortages.

Whether your agency chooses to utilize internal personnel or the use of an outsourced option, be sure to use a reputable coding company to assure regulatory compliance. Industry experts utilized by a quality coding organization understand the importance of assuring coding is done from an appropriate medical record ensuring compliance measures are in place for compliant coding. This can help mitigate risks related to billing errors, compliance violations, and/or audit penalties.

Lastly, if your organization chooses to use an outsource coding solution consider what services your agency needs to utilize. Do you need all your Oasis to be coded or is there something internally that your QA personnel can manage, i.e., non PDGM insurance payers? Consider matching your outsourced coding numbers with your PDGM payer claim numbers if you do not want the cost of outsourcing all assessments. Do you need to take advantage of other offered services that might be beneficial to your internal processes such as outsourcing Oasis reviews and or QA services?

Most importantly ensure the company you utilize will ensure process alignment between your entity and theirs. There must be a minimum quality standard, greater than 95% accuracy is an accepted standard in the coding industry.

Further questions to consider:

• Does the company you are considering conduct internal audits to ensure accuracy?
• Does the company utilize certified staff?
• Does the startup time frame match the internal goals of the agency?  
• Do the terms of the contract require a mandatory minimum commitment and/or monthly minimum number of assessments?
• Only you can determine the best ROI for your organization as you consider the value and cost effectiveness of outsourced coding versus in-house coding, but I hope this information will prove to be a valuable resource to make the most educated decision.

Nanette Minton, MAC Legacy