Over the last few years, particularly since the COVID-19 pandemic, healthcare providers and payers have faced significant changes. Not only are there more claims and more medical services required by patients, but also there are fewer medical health professionals, which adds to the stress on the system.
At the same time, security breaches have directly impacted patients and payers. Adding to the issues are mistakes in medical coding, which are typically a direct result of human error. These issues create challenges for the entire healthcare system and often cause delays in payment, distorted payments, and bottlenecks in the claims process.
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The Current State of Healthcare Risk Management
Healthcare systems are not without risk management strategies. The issue is more about the focus of healthcare risk management. In the past, this focus has been directed to protecting providers by improving the patient experience and reducing the number of medical errors. These two factors combine to limit the liability for the provider, which is an important consideration.
Today, both providers and payers must also focus on revenue cycle and risk management that apply to their financial operations as well as patient care and service.
According to ASHRM (American Society for Health Care Risk Management), there are eight areas where risk management is crucial. Known as Healthcare Enterprise Risk Management or Healthcare ERM, these eight sectors are equally important in minimizing risk to healthcare organizations.
Operational risk includes staffing, supply chain issues, and the ability to manage internal processes effectively. Closely linked to this is patient and clinical safety, including medication and treatment errors and disease and conditions acquired by patients while in a healthcare setting.
Joint ventures, partnerships, advertising, and planning the direction of a healthcare organization fall under the strategic risk umbrella. Financial risk includes claim reimbursement rate, external capital acquisition, and the growth of the organization.
Human capital is always critical. This area of ERM includes all aspects of employment, from recruiting to managing all human resource issues and policy compliance. In addition to compliance in human capital, the legal and regulatory risks in healthcare can be significant. These factors involve mandatory regulations at the local, state, and federal levels as well as licensure, accreditation, and the risk of fraud.
Technology is increasingly a factor in all healthcare settings. This includes electronic health records, clinical management, billing, accounts receivable, and training programs can all pose a risk. Social media is another technology risk that healthcare organizations must manage.
The final sector is focused on hazards that impact the assets and infrastructure of the healthcare system. This could include natural disasters that impact the functioning of the facility to physical structures that are old and failing.
The Challenge of Medical Coding and Risk Management
Although the eight sectors identified by ASHRM are not specific to medical coding and are more related to healthcare providers, there are areas of overlap. The use of technology in medical coding and the transmission of data between payers and providers creates a potential for risk.
In addition, slow or delayed processing of claims or inaccuracies in processing medical claims have a direct impact on the patient experience with the provider. When these errors occur, even though they are usually not intentional or fraudulent, they still create additional time and inefficiencies for the provider. The provider must work with the payer to first identify the mistake, appeal the claim, and then wait for the claim appeal to be reviewed and the correct reimbursement provided.
This is not an occasional issue for most healthcare systems. In a study supported by the Centers for Medicare and Medicaid Services, inadequate coding of claims data was determined to be a foundational component in payment to healthcare systems. This creates a risk management concern that links medical coding mistakes with delayed payments.
One of the most effective ways to address medical coding risk management for both providers and payers is to outsource medical coding to a dedicated, third-party service. This service should be specialized in the healthcare industry and should implement the latest in technology and risk management strategies to reduce human error while increasing claims processing, accuracy, and claims data administration efficiency.