Report for the CFO on Coding Changes

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Table of Contents

Introduction
Major Constraints
Legal and Financial Penalties
Practices to Avoid Losses in a Long-Term Perspective
Conclusion
Works Cited

Introduction

Medical coding errors may be caused by the time-consuming process of examining patient records and presenting their data as a series of codes. Nevertheless, the responsibility for the mistakes made lies with coders since these procedures are carried out by personnel who have undergone special training. The case of hospital coding problems and the losses caused by their consequences is an example of how the management of this procedure can affect the financial aspects of work.

At the same time, while taking into account the reports of the subordinates responsible for coding medical data, one can conclude that changing the sequence of variables in code structures is unjustified. The key reasons lie not only in possible claims and fines from the supervisory authorities but also in even greater losses due to the inconsistency with the existing principles of remuneration and compensation from insurance services. Therefore, to avoid financial issues and legal claims, changes in the encoding are not permissible, despite the apparent benefits of such a procedure.

Major Constraints

Based on the existing rules governing medical coding, any intervention is an accountable practice due to the possible implications for a number of financial aspects of the work. According to the American Health Information Management Association (AHIMA), one of the principles is the refusal “to participate in the development of coding and coding-related technology that is not designed in accordance with requirements” (Bryant). This means that unauthorized revisions are prohibited in the existing coding systems since this is contrary to the norms of monitoring and managing health information.

Regarding justified reasons, one can mention engagement with private companies and national health insurance programs, for instance, Medicare, which make related payments based on the current codes. Any irregularities are fraught with delays or rejection of reimbursement due to the strict attachment of the existing coding to specific payment algorithms (Consequences of Medical Coding). As a result, both the hospital and patients may experience losses due to such incorrect encoding management work.

Revenue cycle operations, in turn, depend on which coding standard is currently being used. The management of clinics and other medical institutions may ask to revise the existing coding procedure. However, according to LaPointe, due to a tense workflow and a wide patient demand, for instance, in conditions of the current pandemic, the analysis and discussion of this proposal can take a long time.

The AHIMA argues that one of the key principles of work in this area is to support those codes that comply with the existing documentation standards and requirements (Bryant). The violation of this principle is a direct reason for insurance services to file claims. Moreover, incorrect coding is often associated with medical abuse due to false patient information that medical providers register. In this regard, such activity can be associated with a deliberate decision to avoid losses and gain monetary gain, which, in turn, is a reason for litigation (Consequences of Medical Coding). Therefore, financial and legal constraints are crucial factors explaining the unreasonableness of changing the existing coding principle in the hospital.

Legal and Financial Penalties

As a result of providing false information that changes in the coding entail, the hospital may be involved in serious legal proceedings and become a defendant in a case of the violation of insurance laws. The most severe consequences may be the outcomes of claims from public insurance programs, in particular, Medicare and Medicaid. Under the existing legislation, false patient information that results from incorrect or inconsistent coding violates the terms of the Federal Civil False Claims Act (Consequences of Medical Coding). This legislation does not provide any indulgence depending on whether false information is presented intentionally or unintentionally. Thus, the consequences for the provider’s budget and reputation can be critical.

According to the official information, the damage incurred by the state from the illegal actions of representatives of the healthcare institution caught in the forgery of data should be reimbursed in full. Moreover, based on the legal regulations and financial liability, according to the latest data, the amount of damage is threefold, excluding the fine, which can go up to $23,000 (Consequences of Medical Coding). The last resort that can be taken is the imprisonment of the party responsible for the violation of the law (Consequences of Medical Coding). Therefore, the head of the clinic and those who are responsible for changing the correct coding can be severely punished.

As a result of the denial of claims by insurance companies, the hospital cannot expect to profit in the long run. With confusion over coding, revenue cycle operations will change based on patient demand, which, in turn, will be less due to reimbursement limitations (LaPointe). The denial of insurance companies to pay for services will be justified. The reason is that, in view of the current practice of benefits and reimbursements, non-compliance with the official requirements for filing claims is an objective reason to ignore data with incorrect encoding (Consequences of Medical Coding). Thus, both the hospital and the patients will find themselves in a position that will inevitably involve financial losses for each party.

Practices to Avoid Losses in a Long-Term Perspective

To avoid increasing losses due to problems with reimbursement and the lack of adequate interaction with insurance companies, relevant practices need to be promoted in the hospital. One of the current methods is the creation of an educational program for the staff. As LaPointe remark, this practice aims to stimulate the learning of the fundamentals of financial practices that depend on the principles of coding (LaPointe). Advanced training is a valuable initiative to implement among the personnel, including managers and administrators, to ensure a sustainable knowledge-sharing process and avoid disagreements regarding the aspects of work in this field.

Another potential valuable measure to help the hospital avoid long-term losses is to conduct a broader audit of various aspects of economic activities. Bryant notes that the data required for external and internal reporting are to comply with the existing legal requirements. Targeted activities in this area may contribute to identifying gaps in the management of financial assets and ensuring the preservation of budgetary funds. This is critical to implement these practices in the near future to prevent even greater losses and protect the hospital from penalties.

Conclusion

Based on existing regulations and principles of financial reporting, coding changes are unacceptable since, in the long term, this can lead to legal problems and penalties. In accordance with the current regulations, insurance companies have the right to refuse reimbursements if healthcare institutions themselves change the reporting conditions because this amounts to false claims. As measures to remedy the situation, staff education and training should be promoted, including the managers of the hospital, as well as a broader audit of economic activities.

Works Cited

Bryant, Gloryanne. “AHIMA Revises Standards of Ethical Coding.” ICD10monitor. 2017. Web.

“Consequences of Medical Coding & Billing Errors & How to Avoid Them.” DuvaSawko. Web.

LaPointe, Jacqueline. “Top Challenges, Opportunities of Medical Coding and Billing.” RevCycleIntelligence. 2021. Web.

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