September 2015

Inpatient Coders: Get Your Money's Worth
By Judy Sturgeon, CCS, CCDS
For The Record
Vol. 27 No. 9 P. 8

While qualified inpatient hospital coders have always been in demand, the looming start date of ICD-10-CM has created a mad scramble for their services. During the adjustment period to the new coding system, hospitals expect a reduction in both coding and billing productivity.

As a result, several economic factors are at play. For example, contract coding agencies want to hire hospital coders and rent them back to the facility. At the same time, coders want to maximize their income potential while demand is high. External auditors, including Medicare and Medicaid, need coders to perform recovery audit reviews, and commercial payers are seeking them out to make sure that they, too, are being billed correctly.

Factors in Play
Coding managers in a position to hire, retain, or determine appropriate salary levels for hospital inpatient coders should consider several issues.

The first variable is the term "qualified." A coding credential or academic certification alone isn't likely to secure a position. The level of experience and skill, a credential, and the education required of an inpatient coder is best reflected in this job posting from a major urban teaching hospital:

"The Inpatient Coder performs varied and complex diagnostic and procedural coding for accurate DRG [diagnosis-related group], severity of illness, and risk of mortality assignment.

"Preferred candidates will have completed college-level coursework in anatomy, physiology, and medical terminology, and a formal inpatient coding training program. CCS, RHIA, or RHIT is preferred. Two to three years of experience in complex diagnostic and procedural inpatient coding within an academic medical center supported by a high school diploma or equivalent is required."

Next, define what's expected from the inpatient coder. The above job posting isn't extreme in its expectations. It's typical for a qualified candidate at a medium to large medical and surgical hospital, and the experience required of a coder candidate is likely to be at a facility of equivalent or greater patient complexity.

A small community or specialty hospital may not require the same experience as a large urban/teaching hospital, but the job criteria should match the level of skill and experience appropriate to the facility and be sufficient to ensure that both productivity and accuracy can be met.

Know the hospital's payer mix. Establish what percentage of inpatient cases are paid by a Medicare plan of some kind, how many are reimbursed by Medicaid plan types, how many have commercial insurance that pays by some form of DRG payment, and what percentage falls into "other." In this case, "other" means that the accuracy of the codes doesn't affect the payment made to the facility. Medicare pays by Medicare severity-DRG; Medicaid may follow suit or it may pay by all patient refined (APR)-DRG. The latter requires better coding accuracy because there are expanded levels of complexity in how, and if, secondary diagnoses can affect the APR-DRG and the resulting payment. Once this information is determined, managers can more accurately determine the type and level of coding expertise necessary.

If a facility's patient population is sparse in the DRG-payer mix, coding accuracy is still critical. For all inpatient hospital patients, the facility case mix, public reporting of quality indicators, including hospital-acquired problems, severity of illness, the risk of dying at the facility as compared to neighboring hospitals, and the expected length of stay are directly sourced from the codes assigned to the claims. Train less-experienced coders on non-DRG payers, but still expect excellent accuracy in a reasonable time frame for all inpatient coding.

Salary Concerns
How much can facilities afford to pay inpatient coders? A better approach may be determining what they can afford to lose. Of course, the hospital has a budget, but consider what the competition is paying. Based on the search results for "inpatient hospital coder Houston" at www.indeed.com, the average annual salary is $58,000, with a low of $45,000 and a high in the neighborhood of $75,000. These amounts don't include overtime or bonuses, meaning a top coder is likely to exceed any of the listed base salaries.

This is an exercise that can be performed for any geographic area. For those skeptical of search engine results, the direct approach has been known to work. Human resource and coding directors can inquire at similar nearby hospitals to get an idea of the salary range for their inpatient DRG coders. In either case, it's a safe bet that if one hospital is paying its inpatient coders $45,000 annually while another is offering $75,000, the best coders won't be applying at the former.

What is the best method for determining the value of the "best coder available"? A typical large, urban hospital could have 3,500 Medicare inpatients for a total annual Medicare payment of $80 million, plus an additional 20,000 Medicaid inpatients at $100 million in annual payments. If the coding is correct, the payments are correct. But what if the staff is undercoding or overcoding, or maybe some of both?

It's tempting to think that if those overcoding and undercoding "cancel" each other out, Medicare and Medicaid will ignore the issue. In reality, while there are deadlines for rebilling corrected undercoded Centers for Medicare & Medicaid Services (CMS) claims, overcoded and overpaid claims must be repaid no matter how long it takes to identify the error. Health care organizations have limited time to recoup underpayments, but are liable for overpayments essentially forever.

If the coding at the sample hospital isn't up to snuff and there's only a 2% error due to undercoding, the result is a $3.6 million loss. Raise the error rate to 4% and the losses double. For this reason, it makes financial sense to dedicate an extra $20,000 in salary to attract high-quality inpatient coders to offset the potential millions that can be lost by hiring less-competent staff. The savings may allow the facility to hire extra utilization review nurses to help manage the Medicare two-midnight rule, replace equipment, or open a few more beds.

Should a recovery audit uncover a pattern of 5% overpayment and extrapolate back three years, the sample hospital's risk is $27 million. If CMS finds fault or negligence, multiply that figure by triple indemnity. Hospitals can adjust these numbers to reflect their situations and conduct a salary analysis based on current quality reviews and productivity achievements.

In all likelihood, saving $10,000 or $20,000 per coder salary will no longer be viewed as a bargain. Considering the cost of errors, can a hospital really afford to skimp on the coding talent?

To minimize risk and maximize both reimbursement and the accuracy of publicly reported data, it's necessary to consistently submit the best possible initial coding. Paying the highest salary won't ensure an organization will hire the best coders, but it will attract them to apply and stay for the long term.

— Judy Sturgeon, CCS, CCDS, is the clinical coding/reimbursement compliance manager at Harris County Hospital District in Houston and a contributing editor at For The Record. While her initial education was in medical technology, she has been in hospital coding and compliance for 26 years.