Diligent coding is one way to boost sagging reimbursement

April 8, 2007

In an era when reimbursement for medical services is flat to declining, there is one sure-fire way to increase revenue: Better coding.

In an era when reimbursement for most medical services is declining, there is one sure-fire way to increase revenue: better coding.

"If you bill an initial office visit by a new patient at level 2 instead of level 4, which is what almost every new patient visit should be, you are losing $23,533," warned Michael Ferragamo, MD, of State University of New York University Hospital, Stony Brook. "And if you forget to bill just one patient a day over a year, you lose $27,020."

Accurate coding is growing in importance as payers ratchet down reimbursement, Dr. Ferragamo said. In 2005, 57% of urology practices reported a decrease in reimbursement revenue over 2004, he noted.

The median compensation per urologist was $336,364 in 2005, down from $346,114 in 2003. Earnings in 2006 and 2007 are expected to remain about the same as those in 2005. "Medicine continues to be a great profession," Dr. Ferragamo said. "But medicine has become a lousy business. That's the reality we all live and practice."

But the future is not entirely gloomy. Increases and decreases in Medicare reimbursement for urologists should net out to no change in total payments for 2007. That's good news for practices that can reduce operating expenses below the median of 56%. It's even better news for practices that can boost coding accuracy.

Evaluation and management codes account for 40% of Medicare billings in urology and more than 50% of billings for primary care. More importantly, the majority of Medicare increases for 2007 involve E&M codes. Most cuts involve treatment codes.

But at least a third of all practices lose money by incorrectly coding E&M services. Most new patient visits are actually level 4, Dr. Ferragamo noted, but too many practices code them as level 2. Most continuing patient visits qualify for level 3, but practices too often assign a level 2 code.

Even established patients should be coded as level 4 when they return with a new complaint, he added.

"These coding errors add up to significant dollars lost," he said.