Offshore coding: The remedy for healthcare’s ICD-10 hangover

Similar to the Y2K efforts at the turn of the last millennium, the ICD-10 mandate for healthcare managers from their bosses was clear: Oversee a smooth migration — or else.

As a result, ICD-10 was a very expensive and all-consuming undertaking for most healthcare organizations in the lead-up to the Oct. 1, 2015, deadline, requiring extensive process overhauls, time-consuming software updates and hefty contractor fees to work through the 155,000 diagnosis codes. By virtually all early accounts, the preparation appears to have paid off: According the U.S. Centers for Medicare & Medicaid Services, only 10.1 percent of total claims processed in the weeks following October 1 were denied, a slight uptick from the historical 10 percent baseline.

But now the ICD-10 bill has come due. And in the coming months, healthcare decision makers will be reviewing their budgets for ways to cut costs. Hourly rates of $70 for facility coders will become a ripe target, as they should. In fact, a September 2015 Black Book Market Research survey indicated that more than three-quarters of provider CFOs expect to look outside of their organizations this year to meet their coding, revenue cycle and transcription needs.

In exploring their options among U.S.-based firms, however, CFOs will likely find few domestic opportunities for cost savings: The double-digit U.S. coding shortage has pushed the annual fully loaded salary for a medical coder to more than $65,000, hardly low enough to put much of a dent in post-ICD-10 budgets.

Fortunately, another option exists for U.S. healthcare providers: offshore business process outsourcing. Once a bridge too far for many organizations, providers today are giving a fresh look at BPO firms, an industry that a 2013 AHIMA report indicates has evolved dramatically in recent years:

"Offshore business process outsourcing companies have diligently tightened policies, procedures, and operations in response to HIM concerns. Advances in technology and Internet security now better protect electronic health information shared between hospitals, offshore workers, and their U.S. counterparts. Multiple layers of quality checks and stronger service-level agreements are in force. All of these efforts have worked together to ameliorate offshore services in healthcare, and offshore vendors claim clinical coding is the benefactor."

Today, there are three primary areas in which U.S. healthcare providers receive substantial benefits from offshore BPO providers without jeopardizing compliance: scalability, security and over 50 percent cost savings.

Scalability
Unlike in the United States, there is an abundance of highly qualified offshore medical coders looking for work. Medical coding in India is a very attractive career field that attracts the best and brightest graduates each year, and most domestic coders there are in their 20s or early 30s – making it a young, vibrant workforce that is technology savvy, eager to learn and quick to adapt to changing business needs.

By partnering with a well-established offshore coding company, providers gain access to the coding expertise and services their specific organization needs. These companies invest significantly in building a large, motivated workforce. Coders receive ongoing training under the supervision of credentialed auditors so they keep current with ever-changing and new coding rules, including those related to ICD-10. Coders are often required to earn and maintain certifications from AAPC and AHIMA. They also receive education on how to use the billing systems and electronic medical records relied upon by U.S. healthcare organizations.

With this abundance of coders, offshore companies are in a position to deliver customer-specific solutions that meet the needs of different types of organizations (e.g., hospitals, health systems, academic medical centers, physician practices) and different sizes (big, small and everything in between). These companies know they need to not only earn, but also keep an organization's business, and the best way to do so is to provide services that align with an organization's current needs and can be adjusted as those needs change.

Security
Data security is a major concern for healthcare organizations, and justifiably so. In 2014, for the fourth year in a row, the healthcare sector experienced the largest number of data breaches, according to a Symantec report. The 116 data breach incidents in 2014 represented 37 percent of all reported incidents, and exposed more than 7 million identities. Any effort by an organization to reduce costs cannot compromise security in the process. The financial expense of addressing a breach would quickly erase any savings and likely do significant damage to an organization's budget and reputation.

Offshore coding companies are aware of these data security concerns and understand that compromise of a client's data will result in a loss of business. This is why leading offshore coding firms build a secure environment in which their coders work. These companies will also maintain process controls and security certifications (e.g., ISO 27001) while ensuring compliance with HIPAA rules, including those governing business associate agreements.

Cost effectiveness
Compared with domestic coding companies, offshore firms can deliver coding services frequently at less than half the cost. And with the scalability delivered by offshore firms, organizations can receive (and pay for) just the services they want and need — nothing more, nothing less.

The savings associated with outsourcing coding to an offshore firm grow significantly when factoring in the cost of employing coders — particularly those with the experience and productivity abilities organizations are often seeking. As AAPC's 2014 Salary Survey shows, more experienced coders can earn almost double what coders new to the workforce typically receive.

In addition, there are the thousands of dollars in expenses associated with finding, interviewing and training coders who are new to an organization, plus the expenses associated with providing benefits, ongoing training, office space and supplies, IT equipment and software, and overtime. When an organization outsources its coding, those expenses are no longer a budgetary concern.

Find the right partner
While the benefits of offshore coding are numerous, they could be lost if an organization does not have a partner that can deliver. That's why it's imperative for organizations to conduct due diligence, do their homework and take the time to vet potential offshore partners.

Providers should make a list of qualities that their potential offshore partner should possess. These may include a proven track record of serving similar-type organizations; requiring certifications for coders; stringent compliance and data security; knowledge of billing systems, EMRs and coding applications; use of analytics and delivery of reports to help track and benchmark performance; and a robust (and redundant) IT infrastructure.

If your organization partners with the right BPO firm — one that can deliver a scalable, secure and cost-effective solution to meet your coding needs — you will put yourself in a position to more quickly recover from the financial strain associated with preparing for ICD-10 and establish a partnership that will deliver savings for years to come.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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