Building a Medical Coding Team: In-house vs. Outsourced

August 16, 2017

Should you hire an in-house coder or outsource? Do you need to hire one at all? Answers to these questions and more.

In order to have its coding needs fulfilled, a practice could hire a part-time or full-time coder, or it could outsource the work.

When trying to decide which avenue to go, Richard J. Lucibella, CEO of Accountable Care Options, LLC in Boynton Beach, Fla., a direct risk contractor with CMS for Medicare patients, advises practices to base it on panel size and composition. "Consider the number of patients you see per day, the mix of insurance payers, and your involvement in pay-for-performance programs," he says.

If you have a single specialty practice only involved in fee-for-service reimbursement, it is quite possible that periodic training of internal staff, combined with a random chart audit will render external and perhaps even internal coders superfluous, Lucibella says. Existing staff members are oftentimes looking for advancement opportunities and there are plenty of resources available.

"Contracted accountable care organizations (ACOs) and HMOs will often provide extensive coding training and support," he says. "Therefore, [ACOs] generally look to our office administrators, medical assistants, and billing staff and offer them the resources necessary to obtain certified coder status. In this manner, the practice can grow into coding functions in a more fluid ramp up - adding staff only as [it] identifies needs."

If a practice requires coding expertise only for reporting CPT and G-codes (codes that report functional status such as mobility, cognitive ability, and self-care), then an external coder might be a good option. For larger practices, including those reliant on Medicare Advantage, commercial HMOs, or commercial and Medicare ACO programs, the importance of knowledgeable and experienced coders increases, Lucibella says.

Physicians should also consider the effects of value-based care and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) when deciding whether to use an in-house coder or outsource coding needs.

Maxine Lewis, president of Medical Coding Reimbursement Management, a company specializing in coding, reimbursement analysis, auditing, and compliance, and a member of the National Society of Healthcare Business Consultants, says MACRA will initiate the cost component to the Merit-based Incentive Payment System - which eventually will become 60 percent of the total MIPS score. This component will be based not only on bundled payments and the hierarchy of codes, but also episodes of care.

"A coder must understand the initial, subsequent, or sequel of the encounter, adding to that any referrals or additional treatment that will contribute to the diagnosis' cost," she says. "Providers will be responsible not only for the cost of their services, but also for others that are associated with the specific diagnosis. Keeping coding needs in-house will provide greater access to the referrals and any additional cost factors that may relate to the practice."

In-house: Employing Coders

There are both advantages and disadvantages to having coders on staff at a medical practice. Barbara L. Hays, CPC, coding and compliance strategist at Leawood, Kansas-based American Academy of Family Physicians (AAFP), points out that in-house coders allow for improved communication and education between the physician and the coder, as well as staff such as the front office and back office.

"By having a coder in-house and accessible in person, the communication loop is typically condensed," Hays says. "An in-house coder allows for communication barriers to be broken, particularly when dealing with the often misunderstood topic of coding."

Hays also says that an in-house coder may be privy to physical actions not properly documented in a medical chart that an outsourced coder wouldn't know are occurring. There are a couple of reasons for this. When interacting with staff, coders may see activities that are billable that staff may not know about. In addition, coders can physically observe physician encounters to verify if actions are occurring in the exam room that perhaps are being overlooked in documentation. For example, a physician may not be documenting a full history in an evaluation and management (E&M) encounter. However, during occasional observation, the coder may witness the actual exchange and help the physician see where he is missing recording information that was actually gathered.

But good coders are typically not cheap to employ. The AAPC, the nation's largest medical coding training and certification association for medical coders and medical coding jobs, reports that a coder's average salary is $49,872 annually. Other downsides of having coders in-house is the cost of employee benefits, service gaps during vacations and sick leave, turnover, and space requirements, Lucibella says.

As healthcare moves further into value-based reimbursement models and pay-for-performance, prospective chart review becomes increasingly important in order to catch gaps in care and identify treatment/coding opportunities.

"Programs frequently increase reimbursement based on a provider's recognition, treatment of chronic conditions, and specificity of coding - moving the focus from billing codes to diagnosis codes," Lucibella says. In these circumstances, in-house coding staff can be an invaluable resource in terms of reviewing charts prior to the patient being seen, alerting the physician to potential opportunities and diagnoses about to expire, and providing ongoing training to the physician or other providers.

Creating a Coding Team

For those looking to employ a team of coders in their practice, Hays recommends maintaining individuals with credentials, such as those who have earned the certified professional coder (CPC) title. Depending on the type of practice, different credentials may be applicable. For a family medicine practice, Hays advises not only seeking out a CPC, but also someone who is certified in E&M for family practice or a certified biller. Experience is not always mandatory if someone on your team can act as a mentor, she says.

Lewis says a basic understanding of anatomy and physiology is a plus - depending upon the specialty. "I frequently see a physician hire a coder who has worked in all types of specialty practices. There are nuances with all specialties, and having experience in a specific specialty may not be helpful in one diametrically opposite to it. For a physician practice, I would recommend a CPC or [certified coding specialist-physician]. While this may not definitely indicate the expertise of an individual, it is a level of competence and one which requires continuous learning."

"Familiarity with medical terminology and a working knowledge of primary care are extremely important," adds Lucibella. "Experience as a medical assistant is preferred because familiarity with medical terminology and a working knowledge of primary care are extremely important."

Coders should also have great interpersonal skills and be capable of navigating the roadblocks encountered at busy offices, he says.

Keeping Coders Up-to-Date

Having a substantial budget for ongoing training is not necessary - time is the major investment. Certified coders are required to maintain continuing education units and coding associations such as AAPC provide ongoing seminars and webinars, mail lists, and blogs for this purpose. CMS and other government entities also offer a number of resources and mail lists that provide up-to-date information and are typically free.

Another area to look for continuous coding education are professional societies and academies for physicians and other providers. "These entities devote a great deal of time and effort to interpret and clarify rules and regulations regarding procedure and diagnosis coding," Hays says.

Outsourcing: Pros and Cons

Outsourced coders also have benefits of their own. Lucibella points out that an external agency or motivated independent contractor might be more current on changing rules and guidelines regarding coding. External agencies provide service during non-business hours and offer part-time assistance when required.

For short-term assignments, such as medical leaves or searching for a permanent coder, Hays says outsourcing may be a viable option. Or, if a physician is providing a specialized medical service and coding staff does not know how to appropriately bill it, then outsourcing may be a good option.

If you decide to outsource your coding needs, Lucibella advises asking an agency about its training and turnover. Find out who specifically will be assigned to your practice and what their background is - including length of time with the agency. Also, what is the background of their immediate manager? Do they specialize in specific medical disciplines or specific programs such as hierarchical condition category coding?

Ask for references and take the time to call them, Hays adds. Find out if others are happy with the services they receive. Make sure revenues have not dipped prior to outsourcing. "If you do choose to outsource, monitor the submitted codes," Hays cautions. "It might be beneficial to hire a consultant periodically to review charts to make sure claims are being coded and submitted compliantly."