Clinical documentation is an essential part of healthcare, not only for capturing a patient’s condition, but also as a critical component of revenue cycle management (RCM). The accuracy and specificity of clinical documentation directly influences reimbursement outcomes, and with healthcare margins tighter than ever, organizations shouldn’t overlook this connection.
Payers rely on precise clinical terminology, accurately mapped to standard administrative codes, to determine appropriate levels of reimbursement. However, achieving precise documentation is an added administrative burden for clinicians.
Understanding revenue cycle management (RCM)
Revenue cycle management (RCM) encompasses the complete financial process for a healthcare organization, from scheduling and registration to billing and final reimbursement. Each step along this path requires detailed documentation and accurate coding to avoid revenue delays and denials. RCM relies on precise clinical terminology that connects directly to standardized codes, supporting a smooth claims submission process.
Accurate documentation also affects risk adjustment, patient acuity levels, and payer compliance, each of which influences reimbursements. Without an effective RCM strategy, healthcare providers face increased claim denials, rework, and potential revenue loss.
How undercoding leads to underpaid claims
Undercoding is one of the biggest challenges in RCM. When a provider fails to document all relevant secondary codes, it can lead to underpayment. In our on-demand webinar, Undercoded & underpaid: Making it easier to document to optimize reimbursement, IMO Health experts discuss how imprecise coding can impact an organization’s bottom line and how an EHR-integrated solution can help simplify the process for those documenting at the point of care.
For key takeaways and clips from the webinar, continue reading below.
From clinical documentation at the point of care to claims
One must begin at the point of care to better understand how revenue cycle management within healthcare relies on accurate coding. When a healthcare service occurs, the provider completes clinical documentation describing their patient’s condition. Ideally, the clinical terminology used during that documentation is linked to the accurate primary and secondary standard codes required for claims, and all the appropriate charges are captured.
However, as the revenue cycle continues along to claims management, denials may occur if important secondary codes and Hierarchical Condition Categories (HCCs) are missing. This roadblock to payment creates additional work for clinical administrators who must track down the missing codes, apply them to the documentation, and resubmit the claim.
June Bronnert, MSHI, RHIA, CCS, CCS-P, VP of Global Clinical Services at IMO Health and one of the speakers on the webinar, further explores how clinical documentation impacts several areas that are important to revenue cycle management – from healthcare service, to code assignment, to claims management and analytics.
Secondary codes matter
While secondary codes may seem minor, they can dramatically impact payments. Consider a patient who is immunocompromised with COVID-19. As a provider documents this condition, they will likely see the primary ICD-10-CM code listed for each description.
| Diagnosis | ICD-10-CM |
|---|---|
| COVID-19 | U07.1 |
| Immunodeficiency, unspecified | D84.9 |
However, by employing a third-party solution that automatically maps each description to the accurate secondary codes, providers can easily capture specificity in the EHR without adding to the burden of clinical documentation.
For example, the Centers for Medicare & Medicaid Services (CMS) HCC code associated with the above patient’s condition would be HCC47: Disorders of immunity. Yet, in the absence of a third-party integration designed to capture that code at the point of care, the potential for reimbursement can go down, and the risk of a denied claim can go up.
| Without specificity | With specificity |
|---|---|
| No HCC | HCC47: Disorders of Immunity |
| Risk Adjustment Factor: 0 | Risk Adjustment Factor: .664 |
| RAF score difference: .664 | |
| Annual expected expenditure difference: $6,219 | |
Bronnert, further explains this example of how CMS HCC specificity can impact an organization’s Risk Adjustment Factor (RAF) scores and reimbursement.
Now that we’ve discussed HCCs, let’s see how HCPCS can impact your bottom line.
Importance of accurate HCPCS coding
Accurate HCPCS (Healthcare Common Procedure Coding System) coding plays a critical role in streamlining RCM, especially when it comes to surgical procedures. With precise procedure coding, surgery scheduling becomes more efficient, reducing scheduling conflicts and helping to ensure claims accurately reflect services performed. This process minimizes the likelihood of claim denials and accelerates payment cycles.
From clinical documentation to claims preventing denials
One of the most common roadblocks in RCM is claim denials due to missing or inaccurate codes. Incorporating standardized value sets can significantly reduce this issue by ensuring that documentation is comprehensive and compliant with payer requirements. Value sets offer a pre-defined selection of codes that capture all relevant aspects of a patient’s condition, reducing the risk of oversight. By implementing these tools, healthcare organizations can prevent unnecessary denials, saving time and supporting a smoother claims process.
Conclusion
Clinical documentation and precise coding are essential not only for delivering quality patient care but also for maintaining a strong revenue cycle. By focusing on accurate terminology, leveraging tools like value sets, and ensuring specificity in documentation, healthcare organizations can significantly reduce claim denials, improve RAF scores, and optimize reimbursements.
