What are the Medical Coding and Billing Challenges faced by Hospitalists?

by | Last updated Jun 14, 2023 | Published on Feb 7, 2023 | Medical Billing, Medical Coding

Hospitalist Medical Coding and Billing
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A hospitalist is a physician focused in caring for patients in a hospital environment. While they have the same qualifications and skills as primary care physicians, hospitalists specialize in treating hospitalized patients. They evaluate patients who are admitted, order laboratory and imaging tests, analyze results, order treatments and medical services, and prescribe medications. Hospitalists may specialize in fields like pediatrics, gastroenterology neurology, obstetrics and gynecology, and oncology. Medical billing and coding services are available for physicians who work in any clinical setting — hospitals, physicians’ offices, and outpatient centers. While the medical coding and billing challenges faced by hospitalists are related to the specific services they provide, they need to overcome certain pain points that are unique to the hospital setting.

Medical Coding and Billing Challenges for Hospitalists

One of the most important things that hospitalists should pay attention to is to document and code the appropriate levels of service. Undercoding and overcoding can trigger audits and impact hospital reimbursement.

Hospital billing is more complex than physician billing for various reasons:

  • Multiple medical billing codesHospitalist medical billing involves using various medical billing codes on claims submitted to Medicare and private insurance companies. In addition to the essential ICD-10, CPT, and HCPCS codes for diagnosis, procedures and medical goods, hospital billing requires revenue codes. Revenue codes are used on the UB-04 or CMS-1450 form to convey to the payer either where the patient was or when they received treatment or what type of equipment was used. There are specific revenue codes to convey if the procedure was performed in an operation theatre, emergency room, or another setting. Medical claims should have a valid procedure code plus a revenue code.
  • Billing and coding inpatient services and outpatient services: Services performed in outpatient and inpatient settings are reported using different code sets and guidelines. Also, these services are paid differently. Inpatient services are typically coded according to Medicare Severity-Diagnosis Related Groups (MS-DRGs) and the principal and secondary diagnoses and procedures impact the MS-DRG and reimbursement. Further, each hospital may have its own standard protocols that need to be followed.
  • Reimbursement challenges: Hospitals have to keep up payer rules and changes. Hospitals deal with more than 1,300 insurers, according to the American Hospital Association (AHA). Each has different plans and multiple and often unique requirements for hospital bills. Private insurance company payment rates vary widely. Although Medicare has uniform premiums and deductibles, the beneficiary State of residence determines the benefits paid out. Each state also determines how it will reimburse Medicaid recipients. Hospitals also provide uncompensated care, both free care and care for which no payment is made by patients, which the AHA estimates as making up about 6 percent of the average hospital’s costs. Government regulations make hospital billing even more complex (www.aha.org).

Strategies to Navigate Hospital Billing Challenges

Here are the 5 strategies that can help hospitalists overcome their medical billing and coding challenges and increase revenue:

  • Ensure precise documentation of diagnosis: Hospitalists should ensure clear, accurate, concise documentation that accurately depicts current situation and the plans for the patient. The focus should be on high-quality documentation that conveys clinically valid information to other caregivers. Documenting invalid diagnoses with the intent to increase the severity of illness resulting in a more favorable DGR is considered fraud. From the inpatient technical side of hospital billing, if the diagnosis documented at the time of discharge is qualified as “probable,” “suspected,” “likely,” “questionable,” “possible,” or “still to be ruled out,” “compatible with,” “consistent with,” or other similar terms indicating uncertainty, the condition should be coded as if it existed or was established. If there is a strong suspicion that a condition is present, best practice is to document an uncertain diagnosis and document definitive signs and symptoms. This will allow the coder to code the uncertain diagnosis (if it is still present at the time of discharge or demise).
  • Report the specific diagnosis code: While physicians are expected to document the most specific clinical diagnosis, coding professionals should assign diagnosis codes to the highest degree of specificity documented. Payers make payment determinations based on the specificity of reported codes, and payment reform is focused on developing policies based on coded data. Coders should carefully review the clinical documentation associated with unspecified diagnosis codes to derive a more specific diagnosis code. Supporting documentation, such as imaging reports, can also help coding to the highest degree of specificity when the physician has already documented a condition.
  • Document medical necessity for diagnostic tests: Hospitals generally provide large volumes of diagnostic services and overpayments could result in significant costs for Medicare. Hospitalists should ensure compliance with the documentation requirements for diagnostic tests. The physician who orders the service must maintain documentation of medical necessity in the beneficiary’s medical record. Review of lab data or radiology reports, discussion of the case with other providers, or collection of the history must also be documented. Hospital personnel who receive orders for diagnostic testing should ensure that the orders meet the requirements are not met – they are signed, dated, document the diagnoses, and are specific. Having these processes in place can eliminate/minimize denials of diagnostic tests.
  • Know the rules for reporting initial hospital inpatient or observation care service: In 2023, there are new rules for CPT coding in the hospital setting. The Initial Hospital Inpatient and Observation Care Services code sets have been merged into the 99221-99233 code set in 2023. However, while the MDM and Time requirements are the same for Initial Hospital Inpatient vs. Observation when using the 99221-99233 code set, code selection depends on the patient’s “status”. Previously, all services performed in other settings were bundled into the final destination hospital code – that is, only the Initial Inpatient Hospital service was reported if a patient seen in the office is told to go to the hospital and admitted on same day. This has changed in 2023:
    • The E/M service can be reported with modifier -25 appended to the “other” E/M service code.
    • If the initial inpatient service in the hospital is a consultative service, the admitting physician should report it using a SUBSEQUENT Hospital Visit Code, 99231-99233.
  • Stay up-to-date with payer rules: Payer rules and guidelines keep changing and actively monitoring them is important to prevent denials. As CMS promptly publishes their changes on their sites, it is relatively easy to monitor these changes and research Medicare questions. For other payers, best practice is for providers to sign up on the payer website for policy change notifications and email updates. Monitoring changes should be a continuous process, especially for high cost/high volume services.

Having expert medical billing and coding support can make a big difference when it comes to hospital revenue cycle management. Medical billing outsourcing companies have professional teams that can help hospitalists ensure that all services are billed using the correct codes. If the documentation is conflicting, imprecise, incomplete, illegible, ambiguous, or inconsistent, expert coders will query the physician to assign the most appropriate codes, which is crucial for accurate reimbursements.

Julie Clements

Julie Clements, OSI’s Vice President of Operations, brings a diverse background in healthcare staffing and a robust six-year tenure as the Director of Sales and Marketing at a prestigious 4-star resort.

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