According to a recent survey1, 60% of healthcare organizations outsource their medical coding functions — and for good reasons. Enabling a third-party organization to handle coding can free up valuable team members for other important tasks — particularly physicians, who may understand the need to code their diagnoses and procedures, but who lack the training and knowledge of how the right code combinations will optimize their revenues and the revenues of their hospital organization. 

Working with a medical coding partner can give hospitals, health systems and physician practices better economies of scale and productivity, since the work gets done independently from individual coders’ schedules (i.e., vacations, sick days, etc.). A strong, third-party coding organization should also deliver better quality given their coders spend more time on training, specialty-specific education and certification, as well as adhere to more robust compliance standards. An experienced coding partner will be able to stay current with changes in denial trends and code handling for different specialties and different payers.

Outsourcing Coding to a Single Vendor: Five Key Advantages 

Once the decision has been made to work with a coding partner, many organizations will choose to work with multiple coding partners. Indeed, 45% of survey respondents report working with seven or more coding vendors. Perhaps they think that if one partner is good, more would be better. And while it is possible to cobble together multiple small, local coding companies that support limited and/or single-specialty coding needs, it’s far from the most efficient or effective approach. 

Through our work with thousands of practices and hospitals, McKesson Business Performance Services has identified five essential advantages of engaging a qualified, single-source medical coding partner: 

1. Timely, Accurate Enterprise-wide Reimbursement. 

Coding success requires the ability to conduct regular trend analyses and respond in ways that will optimize revenue. It demands consistent, rigorous compliance standards to help promote timely, accurate reimbursement while protecting against costly audits and penalties. And, it should deliver these results consistently across the entire enterprise, not just to individual locations, departments or practices. 

2. Greater Efficiency. 

Working with multiple coding partners can impede efficiency. At the corporate level, multiple vendors can drive expenses high with multiple purchasing arrangements, legal agreements and contracts. By contrast, a single-source medical coding partner can help your organization simplify vendor management, reduce coding expenditures and raise overall coding efficiency. 

3. Better Data and Insights. 

At the technical level, multiple partners are likely to employ different technologies, which can lead to incompatible reports and content that cannot be effectively aggregated to identify meaningful commonalities and trends. Even with a consistent set of metrics, each system will generate a different report, requiring custom programming to bring it all together. 

4. Clearer Communications. 

Effective medical coding requires more than the ability to match codes with diagnoses and procedures. It requires clear, consistent communication. For instance, when a hospital works with multiple vendors, revenue cycle leaders often must have the same conversations with each vendor, hoping that each will respond to concerns in the same way. Likewise, multiple individual coding partners may provide different – even conflicting – input and advice, which will be difficult for coding specialists and physicians to follow consistently. With a streamlined flow of communication between the vendor and financial leadership team, overall coding accuracy improves and, likewise, the acceleration of reimbursement. 

5. Better Trend Recognition and Response. 

An experienced, single-source medical coding vendor can quickly see trends across different specialties, population groupings, payers, and even among individual physicians. By contrast, multiple vendors can only identify trends within their own silos — which is fine until minor problems in multiple departments become major issues when viewed together as a whole. 

Strengths to Expect in Your Single-source Coding Partner 

Clearly, there are advantages to engaging one coding partner for your entire enterprise. However, not every company that says they offer single-source, enterprise-wide coding can deliver the advantages they should. When evaluating potential medical coding partners for your healthcare organization or hospital, set high expectations in the following key areas: 

  • Compliance. Any potential coding partner should have a robust compliance program. But to achieve the greatest benefits, look for quarterly monitoring and auditing of every coder — by individual client and across aggregate work. This action delivers a higher level of scrutiny as well as better recognition of potential issues before they become problems.
  • Education and Training. Seek a partner that insists on annual, required training and education, including AAPC and/or AHIMA certifications in addition to any internal certification offered for excellence in key specialties, particularly the more intricate ones that are most likely to experience changes.
  • Specialty Society Involvement. The right single-source coding partner should be involved in multiple medical specialty organizations. This connection enables them to be aware of relevant regulatory changes as they occur, as well as the most effective coding responses to them.
  • Specific Geographic Knowledge. Different states often have different policies that can affect coding. So if your healthcare organization spans multiple states, your coding partner needs to have programs in place that provide for timely awareness of changes that affect coding on a state-by-state basis.
  • Comprehensive Payer Knowledge. All coding service vendors say they know key payers. But a provider who has relationships with minor as well as major payers can deliver a significant difference to your revenues. Look for a partner that can achieve the economies of scale necessary to track individual payer changes as well as trends across multiple payers, interpret those changes and trends, and communicate them to coders.
  • Accuracy Benchmarks. The value of a coding partner is only as high as the accuracy of its coders. Work with a partner that regularly demonstrates at least 95% accuracy and has rigorous processes to keep those benchmarks high.
  • Pro-fee/Specialty Experience. Expect all coders provided by your partner to demonstrate at least a full year of experience in the specialties they serve, with individual coders showing excellence in multiple complementary specialties to enable the greatest possible flexibility to your organization
  • Hospital/Facility Experience. Hospitals and practices are vastly different worlds — with different forms, claims, necessary information and rules. Your medical coding partner needs to understand both approaches to deliver the greatest possible results whether working with employed physicians or with others who have privileges at the hospital. Be sure to seek a partner that understands how, when and where these worlds connect to help reimburse both the physician and the hospital appropriately.

Clearly, many factors can contribute to an efficient, effective and productive relationship with a single-source medical coding vendor. If you are in the process of evaluating existing or proposed new coding arrangements, take the time now to model and project how working with a single-source medical coding company can positively affect your organization and generate the greatest return on your coding investment.

Learn more about how McKesson can help you optimize revenue, control costs and improve compliance with a single coding solution.


Bess Ann

About the author

Bess Ann Bredemeyer is vice president, Compliance, at McKesson Business Performance Services. She has more than 25 years experience in optimizing revenue cycle operations for healthcare providers across the United States.