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At the Margins

Three ways that computer-assisted coding can improve financial performance

Jordan Stone, Financial Leadership Council

Computer-assisted coding (CAC) has generated great interest from finance leaders aiming to offset anticipated productivity losses and minimize revenue uncertainty associated with the ICD-10 transition.

The software, which aids coders in translating physician documentation into a set of billable codes, has the potential to improve a handful of revenue cycle metrics in the process. But many health system leaders we have spoken with are wary of making significant investments in financial and IT resources without better understanding how CAC can help—and what difficulties it may bring.

To gauge early results, we engaged eight of the most advanced CAC adopters we could find and asked them about their experiences with the software. Based on what they told us, here are the three ways computer-assisted coding can improve financial performance. 


1. Fewer missed charges, greater revenue capture

In several cases we found that CAC software could reduce the number of missed codes generated from a patient chart. The University of Pittsburgh Medical Center (UPMC) has seen perhaps the greatest improvement on that front; external audits found a 50% reduction in missed charges over two years due to CAC.

Driving this improvement was the software’s Natural Language Processing (NLP) engine, which identifies clinical terms and suggests codes that coders then either approve or reject. While this may be a best-case scenario, there is potential for many systems to achieve meaningful (albeit more conservative) improvements in revenue capture through CAC.


2. Faster coders can mean faster cash flow

For providers experiencing charge lag due to delays originating in coding, CAC may provide a way to expedite chart-to-bill times through enhanced coder productivity. St. Elizabeth, a six-hospital system in northern Kentucky, was able to reduce revenue from discharged, not final billed (DNFB) encounters from $30M to $15M by eliminating coding backlogs through CAC.

However, many systems have not seen meaningful reductions in DNFB because their bottlenecks involve physician querying or claims processing—two areas that CAC is not able to address.


3. Achieving economies of scale in coder staffing

CAC also has the ability to improve labor efficiencies within coding. Following implementation, one health system was able to absorb coding responsibilities for two additional facilities without adding any coder FTEs, all due to an uptick in overall coder productivity.

Another organization was able to reduce labor costs through attrition and internal migration, saving the system $300K in annual compensation.


Experiences Not All Positive

Although the most progressive users of CAC software have seen positive returns on their investments, they have faced a number of difficulties as well.

In several cases implementation challenges have resulted in months-long delays, and some of the health systems we profiled have seen more limited improvements in revenue cycle metrics.

To continue the conversation on computer-assisted coding, feel free to contact David Clain at claind@advisory.com with questions or comments.

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