The Biggest Challenges to Outpatient Coding (and What It Takes to Overcome Them)

The Biggest Challenges to Outpatient Coding (and What It Takes to Overcome Them)

In 2018, Delloite published a report that captured the growth in the number of outpatient visits in the US. According to the report, the aggregate share of outpatient services in total hospital revenue had almost doubled between 1994 and 2016. A year later, another report by the American Hospital Association (AHA) revealed that outpatient revenue had grown to 95% of inpatient revenue. The consistent rise in outpatient care volumes is indicative of a growing trend in the value-based care ecosystem.

However, for many hospitals across the US, this increase in outpatient volumes means more struggle when it comes to ensuring accurate and efficient coding and minimizing revenue integrity challenges.

When compared to inpatient coding, outpatient (O/P) coding is subject to more unique constraints and variables and requires specialized skill sets that are tailored for specific services. And despite lower per-encounter reimbursement rates, the much higher volumes make outpatient coding a critical revenue driver for healthcare organizations.

At the same time, the fact that only a small number of outpatient encounters are audited often leads to a less than adequate coding workflow. Service providers are also likely to settle for a mediocre system that heavily understate the total financial significance of O/P services.

Prevalent Challenges of Large-Scale O/P Coding

When it comes to identifying challenges in outpatient coding, accuracy and complexity of code stand out as two of the most prominent factors. O/P coding accuracy is often subject to low visibility and high variability. This raises large scale concerns of revenue loss and opportunities slipping through the cracks.

The issue is further aggravated by disparity and lack of uniformity in outpatient coding management across different organizations. 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: A relatively new challenge scenario, claims editing was introduced as part of the O/P coding process to reduce the impact of missing documentation and code duplication. The process involves using a number of complex tools such as claims scrubbing software and analytics. As a result, care providers often find it difficult to navigate the claims editing ecosystem amidst the growing volumes.
  • Disparity professional fee 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 a tricky affair, especially since each of these groups require distinct training and skills as well as specific specialized knowledge.
  • Changes to coding guidelines: The increasing frequency of changes to coding guidelines (as often as once a year), while necessary for the improvement of care quality, can be a thorn in the side of O/P practices. Regular changes mean coders must stay updated through regular reviews to ensure accuracy. On the flip side, using outdated codes is a primary cause for increased denials, delayed reimbursements, and inappropriate charges – all of which further impact the revenue cycle.
  • Managing medical necessity: In the absence of an effective evaluation process for the medical necessity of procedures at the front end, hospitals and clinics miss out on codes to support a valid diagnosis. As a result, hospitals often write off lower costs of outpatient diagnostic tests instead of resubmitting claims – which in turn causes significant hidden revenue losses. According to the Advisory Board, a surge in medical necessity denials is one of the most pressing challenges that medical facilities with a less than adequate infrastructure 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 AI and NLP capabilities, Integrating AI/ML 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 significantly and help overcome the shortcomings in outpatient coding.

EZDI’s award-winning NLP-based Computer-Assisted Professional Coding (CAPC) solution can not only help care providers achieve greater quality and accuracy benchmarks but surpass them with rapid and consistent improvement through learning models.

As a comprehensive solution that is custom-built to help healthcare providers enhance their outpatient coding performance, the CAPC software helps facilities improve their financial and organization 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
  • Increase 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, EZDI and its AI-powered solutions are here to ensure that you hit the mark every single time.



By designing a next-generation clinical NLP engine supporting advanced documentation and coding functions, EZDI turned their vision to reality. Their CAC and CDI solutions received tremendous feedback, providing system accuracy and ease of use. EZDI removes the data complexity and highlights what matters for healthcare professionals.

EZDI is a provider of AI-based mid-revenue cycle management solutions to Hospitals and Health Systems.

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