Outpatient Coding: Overcoming the Biggest Challenges

By AGS Health

July 23, 2022

However, the anticipated resurgence in outpatient volumes will mean more struggles with accurate, efficient coding and revenue containment.

Compared to inpatient coding, outpatient (O/P) coding is subject to more unique constraints and variables. It requires skillsets tailored for specific services, and despite lower per-encounter reimbursement rates, the much higher volumes make outpatient coding a critical revenue driver.

At the same time, since only a small number of outpatient encounters are audited, the result is a less than adequate coding workflow that fails to yield the financial value of O/P services.

Most Common Challenges of Large-Scale O/P Coding

When it comes to identifying challenges in outpatient coding, accuracy and complexity stand out as two of the most prominent factors. O/P coding accuracy is often subject to low visibility and high variability. These factors raise the risk of revenue loss, and profits slip through the cracks.

Disparity and lack of uniformity in outpatient coding management across different organizations exacerbate the problem. In the absence of an effective Quality Control (QC) process, the resulting skills gap often creates chances of potential errors that, if left unchecked, could lead to significant revenue leaks and compliance risks.

Some of the most common outpatient revenue integrity challenges include:

  • Claims editing: Claims editing was introduced as part of the O/P coding process to reduce the impact of missing documentation and code duplication. Complex tools, such as claims scrubbing software and analytics, are used. As a result, providers find it challenging to navigate the claims editing ecosystem amid the growing volumes.
  • Disparity between professional fees and hospital O/P coding: The growing need to integrate physician practices and healthcare systems lies at the heart of this problem. Merging professional fee services with facility-based O/P coding can be tricky, especially since each requires specific training, skills, and knowledge.
  • Changes to coding guidelines: Coding guideline changes, which occur as often as once a year, are necessary to improve care quality, but they can be a pain point for O/P practices. Regular changes mean coders must stay updated through periodic reviews to ensure accuracy. On the flip side, using outdated codes is a primary cause of increased denials, delayed reimbursements, and inappropriate charges, impacting the revenue cycle.
  • Managing medical necessity: Hospitals and clinics that lack evaluation processes for the medical need of procedures at the front end frequently miss out on codes and documentation that support a valid diagnosis. As a result, hospitals often write off lower costs of outpatient diagnostic tests instead of resubmitting claims, which causes significant hidden revenue losses. According to the Advisory Board, a surge in medical necessity denials is one of the most pressing challenges medical facilities with inadequate infrastructures face.

Overcoming the Odds: On the Path of Automation

When we consider the challenges plaguing O/P coding practices, the predominantly manual, paper-based processes impose a significant burden on healthcare staff. The negative impacts include lower productivity, reduced capacity for case reviews, and under-optimized Disease-Related Group (DRG) assignment. By leveraging Artificial Intelligence (AI) and Natural Language Processing (NLP) capabilities, integrating AI/ML (Machine Learning) into automated coding solutions will further enhance the potential of these tools to simplify complex and traditionally manual processes. This, in turn, can help health systems simplify standard procedures and help overcome the shortcomings in outpatient coding.

AGS Health’s award-winning NLP-based Computer-Assisted Professional Coding (CAPC) solution helps care providers achieve greater quality and accuracy benchmarks, while also surpassing them with rapid and consistent improvement through learning models.

This customizable, comprehensive service helps healthcare providers enhance their outpatient coding performance. The CAPC software helps facilities improve their financial and organizational performance. The powerful clinical NLP engine leverages deep knowledge graphs to automate accurate code suggestions that help reduce the financial impacts of denied or delayed and reworked claims.

The benefits include:

  • Higher coder productivity
  • Increased risk score capture
  • Reduced coding denials
  • Lesser number of days in Accounts Receivable (AR)

With the healthcare industry’s value-based approach taking center stage, accuracy in coding and billing is more essential than ever before. Fortunately, AGS and its AI-powered services are here to ensure you hit the mark every time. AGS makes recommendations based on your needs, resources, and goals. This customer-centered approach ensures you receive the support your need, and if your needs change, AGS is able to scale with you.

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AGS Health


AGS Health is more than a revenue cycle management company—we’re a strategic partner for growth. Our distinctive methodology blends award-winning services with intelligent automation and high-touch customer support to deliver peak end-to-end revenue cycle performance and an empowering patient financial experience.

We employ a team of 12,000 highly trained and college-educated RCM experts who directly support more than 150 customers spanning a variety of care settings and specialties, including nearly 50% of the 20 most prominent U.S. hospitals and 40% of the nation’s 10 largest health systems. Our thoughtfully crafted RCM solutions deliver measurable revenue growth and retention, enabling customers to achieve the revenue to realize their vision.

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