What should you know about Denial Code CO 50?

co 50 denial code


Suppose a payer issues a CO 50 denial code or rejection on a claim. In that case, it indicates that they have decided not to pay for the service or procedure because they do not believe it was medically needed to be carried out. It is the sixth most frequent reason Medicare claims are denied.

CMS reports that approximately 30% of claims are lost, disregarded, or denied. In a world where payment is already complex, claim denials significantly impact the revenue cycle and are a major concern for hospitals.

You must be aware that each payer’s policy on medical necessity is unique and constantly changing. Additionally, “medical necessity” might vary greatly depending on who pays. While Medicare and the American Medical Association (AMA) serve as the basis for the criteria, it is crucial to remember that each state has its definition of what is medically required. Therefore, it is essential to comprehend medical necessity.

This post explores CO 50 denial code. The post highlights CO 50 denial reasons and intends to present solutions for denial code CO 50.

CO 50 Denial Code

The procedures are not considered medically necessary by the insurer; hence they are not covered. If the procedure code does not match the diagnosis code billed under the LCD/NCD guidelines, the insurance company will deny the claim with the CO 50 denial code. It indicates that the services are not covered because the payer does not believe they are medically necessary.

The lack of medical necessity means that the diagnosis code may not satisfy the NCD or LCD requirements for demonstrating medical necessity.

Local Coverage Determination (LCD) is defined by Section 1862(a)(1)(A) of the Social Security Act as a decision made by a fiscal intermediary (FI) or carrier regarding whether or not to cover a certain service for the entire FI or carrier. This decision is justified under Section 522 of the Benefits Improvement and Protection Act (BIPA).

Denial code CO 50 is issued because the correct diagnosis code for the procedure was not used. If the coding staff is knowledgeable and proficient with payer policies, contracts, local coverage determination (LCD) codes, and national coverage determination (NCD) codes, claims are less likely to be denied. Detailed documentation and effective communication from the clinical team will also be beneficial.

CO 50 Denial Reason

Healthcare services are medically essential if a clinician uses good clinical judgment to prevent, evaluate, diagnose, or treat an illness, injury, disease, or its symptoms. Medicaid and private insurance payers each have their requirements regarding medically essential materials, treatments, and services. These rules might be found in the payer’s payment policy or clinical guidelines. A claim submitted to the payer under CO 50 may be denied for various reasons.

Some of the CO 50 denial reasons are:

  • The item’s LCD may show it requires a certain diagnosis code or modifier code
  • Absence of a development letter seeking additional evidence to support the billed service within the allotted time frame
  • The item being billed for is medically unessential
  • The payer’s allocated time for hospital service has been exceeded

A “medical necessity” denial may mean that a practice must engage in many activities. The practice’s insurance agreement will outline its obligations.

denial code co 50

Solutions for Denial Code CO 50

According to the explanation in the CO 50 rejection code, the services at issue are not covered by the payer’s policies because the payer has not determined that they are medically required for the patient. So, it is critical to determine if the given diagnosis code meets LCD/NCD standards for billing and payment.

According to the LCD/NCD standards, if the diagnosis code on the bill cannot be paid, we must resubmit the claim using the correct diagnosis code. You have the legal right to contest the claim if the issued diagnostic code was based on LCD and supported the provided proof.

It is possible to appeal a claim that has been rejected with CO 50 denial code. Here is what must be done to rectify CO 50 denial code:

  1. Determine the precise reason for the denial: If you receive a CO 50 denial code, you should investigate further, contact the payer, and determine exactly why you have not been paid.
  2. Be prepared with your Claim Number: Remember that you cannot simply use the original claim number; you must include additional information to indicate that this is a corrected claim. It will prevent the claim from being returned to you as a duplicate.
  3. Record the data: It is crucial to note facts such as the date, the call’s reference number, and the individual you speak with when working with payers. Thus, you can utilize your skills if you need to make many phone calls to contest the claim.
  4. Follow-up: Even if you resubmit a rejected claim due to a CO 50, you should follow up at least once every month. You should never allow the claim to get lost in the shuffle.
  5. Send out letters requesting assistance: Include the claim number, the patient’s name, the date of service, the provider’s number, and your member ID when appealing a claim. Keep it brief and concise, and add any supporting evidence for your allegations. If you ensure everything is correct the first time, your appeal will not be denied.

It is essential to take the following measures to prevent CO 50 denial code:

  • Examine the patient’s medical history to determine if there are any indications of a treatable condition.
  • Check the corresponding LCD for modifier conditions.
  • Respond to development-related letters by the date specified in each letter.
  • Verify that all questions on the Certificate of Medical Necessity meet the policy requirements.
  • Suppose a supplier is aware that a beneficiary will not be able to receive the equipment. In that case, they can get an ABN (Advance Beneficiary Notice of Noncoverage) before delivering the equipment.
See Also: Medical Coding vs. Medical Billing: What’s the Difference?


CO 50 denial code is assigned when a procedure code is invoiced with an incompatible diagnosis and the ICD-10 code(s) provided are not covered by an LCD or NCD. Since the payer does not consider this a “medical necessity,” these services are not covered. The word “medical necessity” ensures that services rendered for diagnosing or treating sickness or damage are reasonable and necessary.

CO 50 is a common denial code. You are now aware of the CO 50 denial code and what to do if it arises. However, if you need any assistance with denial management, Precision Hub is here for you.

Precision Hub helps your practice increase profitability by improving operational efficiency. We are a group of certified billing and coding specialists who can assist you in boosting the productivity and efficacy of your practice. Contact Precision Hub immediately to learn more about how we may help you decrease the number of denied claims and enhance your practice’s revenue.

Stay Coding Compliant with Medical Audits

coding compliance audits


Accurate medical coding has a significant role in overall care quality and management of healthcare information. Coding audits are critical for ensuring that healthcare providers or organizations follow proper procedures and policies to achieve superior medical coding.

Coding compliance audits help reveal the inaccuracy issues in the medical billing or coding process. These issues could be fraudulent billing or outdated codes. Coding compliance audit provides quality assurance for helping the organization in the proper obtainment of reimbursement and in maintaining regulatory compliance.

Continue reading to learn more about coding compliance audits. This article explores the benefits of a coding compliance audit. Let’s learn the importance of having compliant coding.

Coding Compliance Audits

A coding compliance audit examines how coding is performed in a medical office. It consists of examining patients’ medical records. Audits of medical records examine the doctor’s selection and entry of procedure and diagnosis codes to ensure they are comprehensive and accurate. During a medical audit, the following are examined:

  • Correct use of CPT codes
  • Correct location of patient care
  • Absence or incorrect use of modifiers
  • Incorrect diagnoses, accurate documentation
  • Presence or absence of any bundling or clustering concerns

The failure to conduct coding compliance audits leads to serious consequences, including lost revenue and being exposed to compliance risk. A coding compliance audit helps reveal the issues. It, in turn, helps the providers to improve their procedures and policies.

Benefits of Coding Compliance Audits

Compliance is one of the fundamental reasons for doing a code audit. Medical coding and billing must comply with payer policies, including Medicare, Medicaid, and commercial payer policies. The company will face serious financial and reputational penalties if fraudulent billing is uncovered. Audits of medical coding not only show errors and places for improvement but also give information on the correct coding procedures already in use. Coding compliance audits offer numerous benefits, including the following:

  1. Compliance Improvement, Frauds Reduction

Compliance issues and fraudulent billing practices are significant issues in the healthcare industry. Most likely, billing errors or fraud causes incorrect payments. Some of the most common causes of incorrect payments include:

  • Wrong coding
  • Lack of documentation
  • Absence of medical necessity

Upcoding and billing for unnecessary treatments and invoicing for services that were never performed or missed appointments by patients are the most prevalent types of fraud. Medical coding audits can uncover incorrect billing practices that may have resulted from error or fraud. Healthcare organizations can adjust their billing practices and employee training to prevent more billing errors and fraud. Ultimately, compliant coding will reduce the risk for healthcare organizations and may prevent them from incurring costly fines.

Compliance Improvement

  1. Revenue Protection

When coding errors occur, healthcare organizations incur financial losses. Claims could be denied or rejected if the coding is incorrect. When a payer investigates and processes a claim, only to find that it is not payable, the claim is denied. It can occur if coding errors are discovered after the claim has been processed or if it does not adhere to the provider-payer contract. Since there are so many errors, rejected claims do not even make it to the payer review stage. It will take time to remedy errors on a claim and resubmit it for payment, regardless of whether the first claim was accepted or denied.

Sometimes, claims with incorrect coding will still be processed by the payer. When claims are under-coded, healthcare organizations lose money, and when they are over-coded, they risk incurring regulatory fines. Medical coding audits will uncover flaws in the practice’s coding procedure that result in financial losses. Healthcare organizations might alter their coding practices to prevent losing additional funds.

  1. Accuracy Improvement

An important element in medical coding is accuracy which is critical for avoiding compliance consequences. Accuracy is also essential for overall care quality as it significantly impacts risk adjustment and quality reporting of the problems and the provided service. Issues like wrong documentation affect the coding quality, which coding audits can identify early.

  1. Claim Rejection Reduction

Regular audits help maintain medical coding accuracy and ensure they are free of mistakes—accurate coding results in fewer claim denials and rejections. Incorrect diagnosis codes, wrong procedures, and insufficient documentation are the major reasons for claim denials. All these issues are uncovered in coding compliance audits. Hence, compliant coding helps in the timely identification and resolution of the issue to reduce the likelihood of claim rejection.

Claim Rejection Reduction

Frequency of Conducting Coding Compliance Audits

The frequency of medical coding audits is based on various factors, including the organization’s size, the pace of personnel turnover, and changes in regulatory standards. An external code audit should be conducted at least once a year, although many healthcare facilities choose to conduct them monthly to maximize their benefits.

Monthly coding compliance audits enable healthcare organizations to detect errors more frequently, allowing them to recover more money and correct errors that cost them money. Medical coders can use the knowledge gathered from monthly audits to prevent common errors and keep updated on the most current regulatory requirements. In addition, the results of monthly audits can be an excellent teaching tool for novice coders.

Annual audits examine the coding of the whole year. However, organizations may need to alter their operations more frequently than annually. When healthcare organizations have access to the results of monthly audits, they can better identify areas where clinical documentation can be enhanced, enhancing the coding process overall. The sooner incorrect information and lost revenue are discovered, the greater the return on investment.

See Also: Why Should You Hire A Medical Billing Company?


Coding audits look at how procedure and diagnosis codes were chosen and written by the doctor to ensure they are complete and correct. Coding compliance audits offer numerous benefits. Precision Hub assists physicians with accurate coding. Our coding audit services are designed to assist you in meeting various industry requirements.

Precision Hub is one of the most successful service providers facilitating payment for businesses. We assist practices with coding compliance audits by adhering to the most current coding standards and best practices. We have the skills and resources necessary to conduct an audit of your medical coding operations. We assist you in increasing revenue and safeguarding your organization against fraud and regulatory issues.

Medical Coding vs. Medical Billing: What’s the Difference?

medical billing vs medical coding


Despite the widespread misconception that medical coding and medical billing are identical, these two tasks are distinct in significant respects. To be successful, individuals in both industries must possess comparable skills. Nevertheless, how they achieve their objectives and the routes they travel to get there are vastly distinct.

Most individuals are uninformed of the difference between medical billing and medical coding. There is a degree of overlap between these two skill sets, as both positions entail encoding medical data into standard codes so that vital medical information can be transferred across individuals. A medical coder’s job is to provide the most comprehensive description possible of a medical visit. It is the responsibility of medical billers to provide accurate and timely reimbursement based on the used codes. A medical coder’s job is to provide the most comprehensive description possible of a medical visit.

The present post explores Medical billing vs. Medical coding. It identifies the difference between medical billing and coding. Moreover, the post also highlights the benefits of medical billing and coding services.

Medical billing vs medical coding

Medical Billing Vs. Medical Coding

Before discussing medical billing vs. medical coding, we must understand the meanings of billing and coding in the medical field.

Medical Billing Services: Medical billing involves the preparation and submission of medical claims on behalf of patients to insurance companies and government organizations in exchange for payment for services rendered to patients.

Medical Coding Services: Coding in medicine focuses on each patient’s health records. Correct coding reduces the likelihood that incorrect diagnoses or notes will be recorded. Medical billers must communicate with patients and insurance companies to submit claims.

Medical Billing vs. Medical Coding: Medical billers typically have more client-related responsibilities than medical coders. In contrast, medical coders typically collaborate with others in the healthcare industry to appropriately classify the services and products provided to patients.

Difference Between Medical Billing and Coding

Medical billing vs. medical coding: Medical billing and coding encompass a variety of duties, including patient registration, claim payment, and provider payment. It requires the collaboration of billers, coders, insurance companies, patients, and healthcare personnel to complete the process. Billers and coders ensure that the healthcare revenue cycle operates as efficiently as possible.

Let’s explore medical billing vs. medical coding.

Medical billing vs. medical coding involves submitting and following up on insurance claims so that healthcare practitioners can be compensated for their services. In contrast, medical coding is the process of translating various medical treatments into computer-understandable codes. Billing and coding for medical services are essential components of healthcare administration. They collaborate to ensure that patients receive the necessary care and that providers are compensated for their services. Unlike medical billing, which focuses primarily on the patient, medical coding concerns how insurance companies will reimburse for medical care rendered.

Medical coders must first translate how patients were treated into a computer-comprehensible language. ICD-10 and CPT codes are the two most prevalent types of medical codes. When medical billers submit insurance claims and add payments to patient accounts, they follow coders’ instructions. For claims to be reimbursed, the correct medical information is required. Billers collaborate with insurance companies to resolve issues with denied or rejected claims, finalize case facts, and send billing statements.

The following table shows the differences between medical billing and coding services:

Medical Billing vs. Medical Coding

Medical Billing

Medical Coding

Primarily entails entering information into a billing program using specialized software.

Categorize a patient’s care by consulting with physicians, registered nurses, and other health care experts

Providing insurance companies with proof of an insurance claim

Adding standard codes such as CPT, HCPCS, and ICD-10 to patient data to appropriately capture the services rendered

Maintaining contact with patients, healthcare providers, and insurance companies to ensure claims are paid.

Recording/Storing information into the Electronic Health Records (EHR) and Electronic Medical Records (EMR) software used in hospitals and private practices

Taking care of billing and managing payments for accounts

Including procedure codes on the surgical records utilized during the operation

Investigating claims that have been denied or rejected

Performing audits of medical charts if a claim is rejected

Ensuring that insurance companies compensate both patients and providers

Maintaining a level of familiarity with the most recent iterations of coding standards and federal laws

Determining whether or not medical coders have correctly classified patients’ services and products using the standard healthcare codes

Examining the medical records as well as histories of patients to guarantee that coding appropriately reflects a patient’s treatment


Benefits of Medical Billing vs. Medical Coding

Benefits of Medical Coding Service

Medical coding is quite similar to the process of translation. Coders transform medical reports from physicians into codes. The reports contain information including:

  • Patient’s condition,
  • Doctor’s diagnosis
  • Prescription
  • Any operations/procedures performed on the patient

These codes are a crucial component of the medical claim. Coders are responsible for ensuring that insurance firms receive accurate and comprehensive data. Below are the reasons why medical coding is vital:

  • Less past-due days in accounts receivable
  • Eliminating back billing, which can be costly
  • Fewer rejections when claims are clear
  • Accuracy above 98%
  • Capacity to generate customer-specific reports

Benefits of Medical Coding Service

Benefits of Medical Billing Service

Most practices know that medical billing services and revenue cycle management can assist cut costs and improving income by utilizing electronic eligibility verification and other benefits. Some of the most important benefits of medical billing are as follows:

  • Enhanced cash flow due to increased client revenue
  • Expedited claims processing
  • More time to concentrate on one’s primary abilities and achieve more
  • The practice’s overhead expenses dropped
See Also: How To Improve Medical Coding Quality


The post articulates medical billing vs. medical coding. People frequently believe that medical billing and medical coding are the same services. In contrast, medical billing and medical coding are two quite distinct professions. There are several significant differences between medical billing and coding.

Even though both of these services involve patients’ medical data, medical coders are the ones who examine the records and assign the correct codes based on what the medical staff says. After that, medical billers utilize specialized software to insert all necessary medical codes. Coders and billers work to ensure the correct amount is billed to the patient’s insurance carrier.

Precision Hub has been assisting customers with their medical coding and billing issues. Proficient medical billers and CPT-certified coders at Precision Hub can manage any volume of work and complete it on time to provide clients with the best possible medical billing and coding services. If you employ our services, we guarantee that your claims will be more accurate, you will have fewer denials, and your income will increase.

If you require assistance with any aspect of medical coding or billing, please do not hesitate to contact us; we will do all possible to assist you.

Tips for Effective Contract Negotiation for Physician Practices

negotiating physician contracts


A significant shift has occurred in the medical profession, and insurance companies are becoming more willing to negotiate payment rates with physicians. Insurance companies realize that small to mid-size groups (one to ten physicians) are the “bread and butter” of their network that they have ignored for far too long. So, it is necessary to know each aspect of negotiating physician contracts.

Insurers realize that if they ignore this network segment, physicians in this area will be forced to join larger groups to negotiate higher reimbursement rates. Payers are eager to communicate with physicians, but you must be prepared when discussing your pay rates to avoid complications. There are many aspects of negotiating physician contracts that you must know.

Commercial payers do not usually reward physicians who adhere to their networks with high pay. In the majority of practices, the physician handles negotiations. Doctors who manage their practices and have worked with various payers for years may be unaware that they have greater negotiating power than they believe. Effective physician contract negotiations require certain steps to be considered. This article presents tips for successfully negotiating physician contracts. Continue reading to find out how to negotiate a physician contract.

What to consider before physician contract negotiations?

  • Identify reimbursement issues

Compare the insurance coverage offered by each insurer to your most commonly invoiced CPT codes. When developing a report on usage, collecting and analyzing data that illustrates where discrepancies exist is advantageous. Record in a spreadsheet the frequency with which a regularly used CPT code was billed to a specific payer and the amount paid for it. The remainder is then divided by the current payment amounts. You may determine when you will begin to generate a profit by adding your physician reimbursement and overhead costs and dividing by the number of codes for which the payer will pay weighted average costs. You should better understand which contracts require the most care and which companies impose the greatest financial restrictions. It is a prerequisite for successfully negotiating physician contracts.

Identify reimbursement issues

  • Define your goals

With the identification of reimbursement issues, you have actual numbers to support your claims while negotiating physician contracts. It would be best to define optimal, minimum, and intermediate objective goals. The optimal represents the ideal terms, whereas the target indicates your desired position after the negotiation. With access to all this information, you will be in a much stronger position to negotiate with payers and reject any mistaken ideas they propose.

  • Avoid Terms

Avoid including “evergreen” terms in contracts. These clauses renew the agreement for an additional year unless a notice of termination is provided within a particular period. Include an “exit” clause, especially for ninety days, if you are getting into a contract with a new payer or one with whom you have had previous troubles.

  • Consider the timeliness

Another important consideration for negotiating physician contracts is timeliness. Certain payers issue retroactive denials, leading to refund requests for old claims. Verify if the contract states that payments older than 120 days will not be taken unless there is an issue with the claim.

Tips for negotiating physician contracts

1. Study the Current Contract

Get copies of the contracts and pricing lists and schedule for thorough study. Reviewing current contracts helps identify and correct payment disparities below the agreed-upon rate. It can be accomplished by comparing the actual rate to the contractual rate.

2. Review Payment Models

If you are not currently a member of an accountable care organization (ACO) or clinically integrated network (CIN), you should strongly consider joining one of these organizations. It will help in learning the practice’s different aspects, including the payment models. The payment systems continue to evolve. It is of the utmost importance that practices can adapt and evolve in a way that will ensure the survival of the organization.

3. Use Quality Data

The provision of quality data and cost statistics help demonstrate the care you offer. You can use this data to your advantage when negotiating physician contracts. Having these high-quality independent practices as part of the network benefits the payer.

4. Show Your Worth

You must first show the payer how valuable you are relative to others in your profession. Is your medical office, for instance, the only one in the area offering longer office hours and telemedicine visits on the weekends? Are you the sole primary care doctor within five miles of your practice? Do your research before negotiating the contract. It is straightforward to acquire the information by visiting a payer’s website and inputting your ZIP code to determine the number of doctors in your area.

5. Escalator Clause Incorporation

An escalator clause, a contract provision, guarantees a given payment increase over a specified period. For instance, a medical practice may agree to a three-year contract with automatic one-percent-per-year increments for each year.

6. Investigate the source of payment

It is important to analyze payment sources for negotiating physician contracts. Speaking with other doctors in your area about their contracted rates may help you determine what yours are. This data will be used to establish standards for payment rates, rejection rates, and other metrics.

Investigate the source of payment

7. Exemptions for regularly utilized services

Negotiating at a higher rate for the regularly used service is suggested. Your practice may be able to negotiate greater prices for office visits alone. It will be beneficial for maximizing the revenue.

8. Include Service Types in the Price List

Many physicians deliver COVID-19 vaccines and conduct lab testing, but the codes for these services may not be reflected on their fee schedules at the negotiated and contracted rate. Instead, they have often compensated a smaller share of the charges. You will be paid more for a similar service if you include these services in your price schedule. Include these services in your price list to negotiate a physician contract.

See Also: How To Improve The Patient Registration Process To Enhance Patient Experience

Final Verdict!

It is wise to hire a specialist to handle physician contract negotiations. It is in your best interest to pay a trustworthy consulting firm. A reputable consulting firm has the knowledge, skills, and connections to secure you better prices.

A third party’s participation in the negotiation process can be advantageous. Working with a respected third-party billing business can help you negotiate rates and conditions by providing you with a history of clean, reimbursable claims that fulfill the requirements of all payers, including CMS and private payers. It is an effective approach for negotiating physician contracts.

The experts at Precision Hub have access to cutting-edge revenue management tools and have worked with various payers to achieve their goals. Don’t hesitate to contact us so we may assist you in satisfying the reimbursement contract’s requirements.

What To Know About Medical Billing Errors And Patient Rights

medical billing errors patient rights

If you are a medical provider, you should know your patient’s rights when it comes to medical billing. In 2010, Medicare paid $6.7 billion in claims that were not appropriately coded or billed. The proper billing of services is vital for two reasons – patients get billed for the services provided to them, and your doctor’s office gets paid. Incorrect medical billing can cause problems for your practice, including making your practice look incompetent.

Medical Billing Errors and Patient Rights

If you want to prevent medical billing errors, it’s important to pay attention to details. Double-check your patients’ personal information, check for erroneous codes, and be careful with insurance details.

This article will go over some of the most common medical billing errors and provide solutions for preventing them. These mistakes are caused by a variety of different factors. By paying attention to details, checking for inconsistencies in your records, and using the correct codes, you can prevent many costly errors and improve your medical billing.

  • Unbundling

Unbundling in medical billing may occur due to a mix-up in the coding of a procedure. It is when multiple CPT codes are used for different parts of a single procedure. This may be the result of a miscommunication or a deliberate attempt to increase the payment for a procedure. Unbundling can be a problem if the billing service provider fails to review its records carefully to identify all instances of unbundling.

Using the most comprehensive code for a procedure is the best way to report this error. HCPCS, also known as the Healthcare Common Procedure Coding System, is a comprehensive coding system used to describe medical services. Using a single HCPCS/CPT code to report a group of procedures is known as unbundling.


However, providers should not bill separate CPT codes for the same procedure, unless the services were performed separately. This is known as “double billing/dipping”, and it is considered unethical for a health care provider to bill patients separately for procedures that are performed together.

While unbundling medical billing codes can be difficult to detect, you can readily recognize it from the fragmented billing and coding of each component of a service where one code was appropriate. As a patient, you have the right to demand a copy of your medical bills.

In many cases, unbundling errors are difficult to identify without the help of a whistleblower. Unbundling is also difficult to detect because people receiving healthcare are not necessarily familiar with the complex terminology used for medical billing and coding.

A recent False Claims Act lawsuit against Duke University resulted in the university paying $1 million in settlement for charges of false claims and wrongful billing. It was found that Duke had improperly billed for anesthesia and cardiac services by unbundling the claims. These types of unethical billing practices can expose providers to criminal and civil liability.

In addition to medical billing errors, patients should be aware of double billing, which occurs when a bill is submitted multiple times. It is not uncommon for providers to double bill, and patients should, therefore, check their bills carefully for possible medical billing errors or fraudulent practices.

  • Upcoding

If you believe that you have been a victim of upcoding, you may want to learn more about your legal rights and options. While upcoding is often the result of fraudulent billing, it can also be the result of clerical error or misunderstanding. As a result, it can be difficult to prove a healthcare provider’s guilt, even if the case is minor or insignificant.

Fraudulent upcoding costs health payers a lot of money, which they then pass on to consumers. Health insurance companies often raise premiums to cover the increased costs. The process can also result in duplication of orders for medications, lab work, and hospital room fees.

For example, a doctor may order a five-minute nurse consultation, but bill for a 45-minute doctor examination. This would constitute upcoding and a violation of patient rights. If you suspect you have been a victim of upcoding, call the customer service line and report the problem.

Similarly, report any fraudulent practices to the state Medicaid office. Action will be taken under the False Claims Act to lay severe penalties against healthcare providers, as well as significant fines. However, you can help ensure that upcoding is a rare occurrence by taking the time to review your billing processes.

On the other side of the fence, outsourcing services or hiring experienced professionals can help you ensure that your medical billing is accurate. Upcoding can also happen due to fragmentation and unbundling. While Medicare and Medicaid have lower reimbursement rates for the same procedures, providers are often unbundled and charged separately.

  • Incorrect Use of Modifiers

Using the wrong modifiers on claims is a serious billing error that can cause non-compliance, fraud, and even payment issues. When a modifier is used incorrectly, it can affect the payment for the service or procedure.

Additionally, the incorrect placement of modifiers can lead to medical documentation requests. It is important to make sure that the documentation contains the appropriate information and is comprehensive enough to adequately describe the service or procedure.

When using modifiers in medical billing, you should keep in mind that not all payers follow the same standards. It is vital to know the modifier policy for each payer to ensure proper claims adjudication. The correct use of modifiers in claims will also help reduce the risk of NCCI edits. Modifiers should always be placed in the first modifier position. By following these guidelines, you can be assured of the proper adjudication of your claims.

Correctly using modifiers is critical for accurate medical billing. If you are not careful with modifiers, you will be accused of billing for services you did not provide. Incorrect use of modifiers can also lead to denied claims and revenue leakage.

As a provider, it is imperative that you follow all the guidelines and the rules for using modifiers. This will ensure that you avoid the potential financial impact of incorrect modifier use.

Misuse of modifiers can be a major contributor to erroneous medical bills. If a diagnosis code is used improperly, it can cause the services to be rendered incorrectly. For example, a patient may receive an MRI on the wrong knee due to a missing two-digit modifier.

Incorrect use of modifiers may lead to payment delays. If a patient is not provided with the correct service, the provider could be held liable for the cost of the procedure.

Patient Rights

  • Patients’ Right to a Patient Advocate

A patient advocate is a valuable resource to patients and their families. They will be able to negotiate with the insurance company, provider, and hospital on your behalf to get your bills corrected. He or she can also help you dispute your bills with your insurance company.

These professionals will help you obtain a better understanding of your medical bills, including upcoding, unbundling, and balance billing. In the event that you are not sure about what to do, a patient’s advocate will come to the rescue by helping you make an informed decision.

A patient advocate will listen to your concerns and complaints, help you understand medical bills and your hospital’s policies, and navigate the medical billing process. They will also help you find local services and explain your insurance coverage. They will typically work with your medical team to resolve any issues.

Patients’ right to a patient advocate is protected under federal and state law. They have the right to receive a copy of their bills and will be able to contact their advocates for help with any issues that arise.

Generally speaking, patients have the right to receive a full explanation of their bill, an explanation of why they were transferred from one hospital to another, and a mechanism to keep them informed about their ongoing health care needs.

In addition, they have the right to request an interpreter if necessary, or to have someone with them who can translate the bill for them. However, it’s important to note that these rights can sometimes conflict with legal requirements.

The patient’s right to a patient advocate is a powerful tool that can help you fight for your rights when it comes to healthcare billing. These rights are part of the Patient’s Bill of Rights and can help protect you in many ways.

See Also: Improving Pain Management Services For Patients


Incorrect medical bills affect everyone – providers, payers, and patients. Billing errors delay payment, affect cash flow, and result in overcharges.

Although most extra costs are paid by insurance companies, patients can be directly affected by an inaccurate bill. By working together to address these issues, providers and payers can improve the quality of healthcare and help prevent medical billing errors.

In addition to advocating for better healthcare and supporting innovative technologies, patients can also examine their medical bills for errors and speak for their patient rights. Even though mistakes are inevitable, medical billing professionals must take steps to avoid them and protect patients.

If you are looking for a tailored billing and collection service for your practice, Precision Hub offers complete solutions for medical billing, coding, and claims management. We help you to deliver patient-centric care by avoiding these headaches and focusing on growing your practice.

For more information, please get in touch with Precision Hub Manager today!

Transforming The Healthcare Revenue Cycle To Optimize Performance

revenue cycle in healthcare

According to the latest report by the American Hospital Association, since the year 2000, hospitals have provided approximately $745 billion in uncompensated healthcare to their patients. This means that nearly $745 billion’s worth of care was not paid for by a patient or insurer. This is an extremely significant gap in costs and revenue and has led to almost 30 healthcare facilities closing down every year across the country.

With such statistics, it is clear that it is up to healthcare providers to look for ways to optimize their payment collections process by transforming their healthcare revenue cycle.

Continue reading to learn more about how organizations in today’s industry are looking to transform the revenue cycle in healthcare.

What is the Healthcare Revenue Cycle?

The healthcare revenue cycle is a set of clinical and administrative processes in hospital billing that allow for the collection and management of revenue for the services provided to a patient. In simpler words, the revenue cycle in healthcare is everything that happens from the second a patient’s account with your facility is created to the moment your organization receives payment for the healthcare services you have provided.

As the fundamental financial circulatory system of any healthcare organization, the healthcare revenue cycle is an extremely complicated process involving several factors. Some patients may have no insurance and must be billed directly for the services rendered to them while others may be fully insured, in which case payment must be received from their insurance provider. In some cases, only a percentage of the patient service costs may be covered by the insurance company and thus both the insurance company and patient must be billed accordingly.

However, as complex as it is, the revenue cycle in healthcare is an essential component of any healthcare organization’s processes to maintain adequate cash flow and also ensure the financial stability of their facility.

The Need for Transformation of the Revenue Cycle in Healthcare

Healthcare organizations heavily rely on methodical and planned healthcare revenue cycle management strategies to effectively file medical claims and ensure that their facility is fully compensated for the services that they provide.

With the healthcare industry becoming more and more complex by the day, the revenue cycle in healthcare is about much more than just billing patients and collecting payments. Today, the healthcare revenue cycle is composed of several different stages starting from the minute any service is provided to a patient to the time when the hospital is reimbursed for the service it provided. These stages include:

  • Preregistration
  • Registration
  • Establishing Charges
  • Submitting Claims
  • Processing Remittance
  • Follow-Up With Insurance Companies
  • Patient Collections

These stages are designed to better manage the complex nature of hospital billing while also maintaining a healthy cash flow that allows hospitals to deliver the best standard of care to their patients.

With escalating demands and large volumes of revenue lost due to Covid-19 in recent years, traditional approaches to the revenue cycle in healthcare are simply not enough. In today’s complex landscape in healthcare, organizations need to not only focus on ways they can enhance the quality of care they provide but also look for ways they can enhance their healthcare revenue cycle to improve their bottom line and reduce inefficiencies.

With declining reimbursement rates, escalating costs and claims denial rates, increased complexity in coding, and a shift to value-based purchasing, healthcare organizations are constantly looking for new strategies to boost their financial standing. In today’s time, many of their efforts are centred on only reducing costs. However, these efforts will never prove to be fruitful unless these organizations pinpoint areas of inefficiencies in their revenue cycle in healthcare and break down the silos between their front-end and back-end processes to ensure a smooth and streamlined revenue cycle journey.

How Can Data-Driven Processes Help?

Data-driven healthcare revenue cycle processes are helping healthcare organizations in today’s time become more adaptable and resilient to the current changes in the ever-evolving healthcare industry. This is done by converting data into actionable insight that empowers them to optimize their daily processes and revenue cycle management.

Let’s take a look at how adopting a data-driven healthcare revenue cycle process can benefit your organization and its revenue cycle:

Reduced Denial Rates

Claim denials and their management alone cost hospitals across the country approximately $262 billion annually, significantly harming their cash flow and subsequently their bottom line.

Healthcare organizations can reduce this number by leveraging the power of analytics software that can analyse data from several different sources to identify the leading causes of the claim denials such as patient eligibility and missing claims data. Empowered with this insight, hospitals can better predict future claim denials and implement ways to prevent the denials from ever occurring in the first place.

If a claim is still denied, hospitals can leverage data analytics to also identify better procedures for recovering their denials and ultimately maximize their operating margins.

Revenue cycle analytics also provides practices with valuable insight regarding the effectiveness of their revenue cycle management processes such as claims submissions and denial management. With the help of key performance indicators, practices can better evaluate their processes and discover ways to improve them.

 Reduced Denial Rates

Increased Collections

In 2018, hospital bad debts amounted to almost $56.5 billion in the US. This statistic gives a brief insight into why healthcare practices need to adopt a data-driven approach to patient collection. With the help of data analytic tools, practices can create reliable predictive models that can anticipate the probability that a patient will pay their dues within a specific period. This can not only help the practice increase its overall patient collections but also avoid wasting resources on collections that have a very low probability of following through.

Reduced Revenue Leakage

Healthcare organizations generally lose about 1-5% of their revenue due to leaks in the revenue cycle. Every healthcare system has a process to identify the leaks in its revenue. However, not all of these processes are effective. Healthcare revenue management systems driven by data are the most effective way of combatting leaks in revenue.

Data analytic tools will take billing data such as billing code attributes and compare it with past data to examine the difference between them. This will help practices correct errors in their back-end processes and reduce possible chances of losing revenue. Over time, these data analytic tools will improve their analyses and give better results through the process of machine learning.

Improved DNFB Rates

Discharged not final billed (DNFB) accounts remain one of the biggest threats to a hospital’s revenue all across the country. These are unbilled accounts where the patient has been discharged by the healthcare facility but a final bill has not been submitted from the time of the patient-provider encounter. This may be due to many reasons such as inefficient internal review systems, gaps in coding, or inadequate documentation. Whatever the reason may be, DNFB cases present a significant challenge for hospitals and their revenue cycle.

With the help of robust data analytics software and a comprehensive automated auditing program, hospitals can significantly improve their DNFB rates. Data analytics applications can leverage your clinical, financial, and claims data to deliver detailed reports on inconsistencies in your workflows that may be negatively affecting your organization’s coding accuracy, data quality, and ultimately your revenue. Empowered by these insights, you can better identify the areas of your workflow processes that need improvement and work on creating more efficient workflows for your organization.

Because of the recent time’s mounting complexity in healthcare, organizations must work towards adopting more advanced processes to maintain their financial health so that they can meet the demands of their patients and stakeholders. Data analytics has the power to reveal critical ways in which organizations can improve their healthcare revenue cycle.

Tracking the Revenue Cycle in Healthcare with Key Performance Indicators (KPIs)

Now that we’ve established the importance of data in revenue cycle management, it’s time to take a look at how practices can track the health and efficiency of their revenue cycle with the help of key performance indicators.

By developing key performance indicators (KPIs), hospital leaders can track the performance of their revenue cycle and find ways to better allocate different resources and enhance its efficiency. Let’s take a look at some of the most important KPIs that provider organizations can use to measure their performance against their goals.

Days in Accounts Receivable (A/R)

When looking to assess the overall performance of your revenue cycle in healthcare, evaluating your days in accounts receivable can give you an insight into where your organization stands financially and give you an early warning sign of a potential crisis in cash flow.

But what are days in accounts receivable (A/R)? Simply put, your days in accounts receivable are the number of days on average it takes for your practice to get paid for its services. It is a measurement of how quickly your practice converts its outstanding payments into incoming cash.

Days in A/R is a critical KPI that helps to give an insight into the overall efficiency of your organization’s credit and collection efforts and how well you manage your accounts receivables. Monitoring this KPI will not only help you identify ways to improve your organization’s ability to collect payments but also assess how quickly payers process claims and pay the money that you are owed.

To calculate this KPI, first find your average daily charges by adding up the charges posted during a specific number of months and then divide those charges by the total number of days in those months. Then divide your practice’s total outstanding accounts by the average daily charges you calculated to get your average days in A/R. You want this KPI to be as low as possible for your organization to show that your practice is quick at collecting debts.

Denial Rate

Another useful KPI to monitor is your denial rate. It is the percentage of claims submitted to insurance payers that have been denied. A high denial rate can be catastrophic for your organization’s bottom line. Your practice’s denial rate gives insight into the efficiency of your claims processing system. A low denial rate shows that your organization’s cash flow is healthy and that more revenue is coming in while a high denial rate may be an indication of potential bottlenecks within your organization’s revenue cycle management process.

Divide the number of claims denied in a set number of months by the number of claims submitted within those months and multiply that by 100 to get your claim denial rate. While a denial rate below 5% is ideal, the average claim denial rate is around 5 to 10%.

Clean Claim Rate

Like denial rates, clean claim rates also help to identify any potential problems in the claims processing and submission procedure. It is a measurement of the number of claims successfully processed and reimbursed in the first submission. While errors are bound to occur and eventually do get resolved so that claims are reimbursed, improving your clean claim rate means reducing the amount of money spent on fixing these errors and resubmitting those claims.

To calculate the clean claim rate of your practice, divide the number of claims accepted in the first submission by the total number of claims submitted for billing. The average clean claim rate is 70-85% but every practice should strive for a clean claim rate greater than 90%.

Clean Claim Rate

Gross Collection Rate

Another important KPI is your gross collection rate which gives valuable insight into your organization’s payment collection process and cash flow. To calculate your gross collection rate, divide the money received from payments within a specified time by the total number of charges posted within that time. By studying the changes in your gross collection rate over the years, you can even predict what your future gross collections will look like.

Transforming the Revenue Cycle in Healthcare with AI and Automation

As AI tools and automation gain popularity, several different industries have started to use these advancements in technology to better optimize their processes and gain an upper hand over their competitors. The healthcare industry is no exception.

Recent developments in Artificial Intelligence (AI) have provided healthcare organizations with the necessary resources they need to tackle the common challenges faced during revenue cycle management in healthcare. Let us take a look at how automation, AI, and machine learning can enhance operational excellence and reduce inefficiencies in different stages of the revenue cycle management process:

Patient Registration

When a patient enters your facility, they meet your front-desk staff first and foremost, who are responsible for entering their data into your system. The greater the volume of patients you encounter daily, the greater the likelihood of an error to be encountered during this crucial first stage of the revenue cycle management journey. Robotic process automation (RPA) and Intelligent Character Recognition (ICR) solutions can be used to automate high-volume rote tasks such as data entry and minimize the risk of errors.

Eligibility Verification

Verifying patients’ insurance eligibility is a very time-consuming task, especially if done manually. Shifting to electronic verification of insurance eligibility with the help of a built or custom API can not only save employee time but also reduce the risk of claim denials significantly by minimizing errors in this process of the revenue cycle.


The pre-authorization process can have not only a major impact on your claim denial rates but also on the health of your patients. Delays in this process can cause delays in necessary patient care which may even lead to serious adverse events in their lives such as patient hospitalization, permanent disability, or even death. An AMA survey shows that 94% of healthcare providers have experienced delays in necessary healthcare at some point in their career because they were waiting for health insurers to authorize the necessary course of treatment.

However, the good news is that electronic pre-authorization systems through today’s digital technology can significantly speed up the process and reduce inefficiencies. This reduces the risk of adverse patient outcomes caused due to delays in care.  A new study by America’s Health Insurance Plans (AHIP) even investigated the effect of electronic pre-authorization (ePA) systems on the pre-authorization process. The report showed that the median time between a pre-authorization request submitted and authorization received was reduced from 18.7 hours to 5.7 hours when electronic pre-authorization systems were implemented.

Charge Entry and Coding

Medical coding solutions are designed to streamline your charge entry and medical coding procedures by bringing all of your data into one unified solution. This helps to bring down costs by eliminating the need for keystrokes by the coder and minimizing errors in data entry.

Automated coding tools can streamline the coding process and maximize your practice’s efficiency by automatically prompting healthcare providers with proper codes during the documentation process. Not only will this make the coding process in your revenue cycle much more accurate but also simple since providers will only have to identify the correct codes from a selection of codes while documenting a patient’s visit at the time of the encounter. Healthcare providers can sign off on charts almost instantly rather than having to interrupt the patient’s care to look for the appropriate codes or having to wait till the end of the day to finish coding and close patient charts.

Claims Management

The claims management process involves the use of lengthy spreadsheets, burdensome documentation workflows, and time-consuming manual data entry processes. Automation, on the other hand, focuses on streamlining data entry methods, eliminating cumbersome tasks and error-prone spreadsheets, and improving the documentation of claims so that you can improve efficiency and improve the quality of service you provide.

In addition, automated claim denial management systems can optimize your entire denial management process and provide you with real insights into why your claims were denied. Such as system would also be capable of quickly identifying the necessary claims that need to be resubmitted or appealed.

Payment Posting

One of the most integral parts of revenue cycle management, payment posting provides a picture of the insurance payments receivable as per the Explanation of Benefits, payments that are receivable from patients, and insurance checks that are to be received from ERAs. It essentially gives you a snapshot of your practice’s daily revenue stream and allows you to identify any errors in the payment process early on in the revenue cycle journey.

However, manual payment posting is not only costly and time-consuming but also prone to a number of errors. Introducing automation and taking a software-driven approach at this stage of the revenue cycle can significantly enhance the revenue cycle process and eliminate errors caused by manual data entry. Artificial intelligence-based ICR solutions paired with the automated reading of Explanation of Benefits and Electronic Remittance Advices can enhance accuracy and speed up the process significantly. The digital solution automatically reads the EOBs and ERAs in little to no time for each service provided to automatically prepare a sheet that you can tally later on.


Automated collection processes are not an innovation anymore but rather a norm in today’s complex healthcare industry. An online collections process powered by RPA-based solutions will not only reduce costs but also drive accuracy and speed at this stage.

Outsourcing Revenue Cycle Management

To say that the revenue cycle management process is complicated would be an understatement.

With ever-changing rules and regulations and infinite complexities, healthcare organizations are realizing the importance of outsourcing revenue cycle management in healthcare. Even outsourcing a segment of your revenue cycle management process can help your organization elevate its performance and focus on what matters the most: providing patient care. Allowing experts who are experienced and trained to manage the revenue cycle in healthcare and handle your processes allows you to fix issues within your workflows and streamline operations.

See Also: What Is Coding and Revenue Cycle Management?

The Bottom Line

Today’s healthcare industry demands a revenue cycle that exceeds all expectations. While a complete transformation of your revenue cycle in healthcare won’t be achieved overnight, a successful revenue cycle in the future depends on what changes and strategic decisions you make today.

If you want to take your revenue cycle to the next level and boost your organization’s financial standing, allow Precious Hub to be your RCM partner at every step of the way. With state-of-the-art technology-driven solutions and industry experts, we are here to manage the administrative aspects of your practice to help you focus on improving patient-focused care.

How To Improve Medical Coding Quality

medical coding tips

If you notice reduced coding quality on one of your department’s ends and incomplete or untimely reimbursements, there is a possibility of repercussions for your medical organization. In most cases, this results in a loss of revenue. For efficient revenue cycle management, it is imperative to train your employees to execute quality coding by utilizing available technology and staying updated.

Regardless of whether you run a small clinic or a huge healthcare facility, regular analysis of your coding department along with the implementation of the following medical coding tips will certainly boost your coding operations and speed up the revenue cycle.

Consequences of Low-Quality Coding

To avoid your medical practice from being a target for intense scrutiny by the agencies that are responsible for analyzing and evaluating medical fraud at medical practices, it is important to adopt accurate and high-quality coding. Failure to do so might cause your healthcare practice to face sanctions and other punitive damages.

Inaccurate coding practice makes it likely for the coding team to be held responsible for falsifying claims. This commonly results in a vast decrease in your firm’s monetary gain. If this sort of medical abuse is ongoing at your practice and there is consistent evidence of falsifying claims or incorrect coding over a long period, your practice is very likely to be held liable for medical fraud.

In such large-scale corporations, it is impossible to prioritize intent over actions. If you send incorrect submission claims to the insurance agencies or government organizations, such as Medicare, for reimbursements, your mistake can cost you the future of your medical practice.

As terrifying as it is to be charged with falsification of claims and hefty fines, the most common consequence of low coding quality is less scary. Neglect in adopting medical coding tips and implementing them in your coding routine is likely to have insurance companies reject your submission for claims reimbursement. Incomplete or no reimbursements bring about a downgrade in revenue and your medical practice may cause significant financial loss, which may never be reimbursed.

coding quality

Medical Coding Tips to Improve Revenue

One of the core challenges that medical corporations face regularly is dealing with decreased medical coding quality and medical coding errors. During the global pandemic, the coding departments all around the world suffered greatly due to the lack of communication in remote work. In the section below, we have provided a detailed guide to a few of the possible medical coding tips that can be implemented at your healthcare facility to generate better revenue.


For any person to focus on their work, their work must go uninterrupted or undisturbed. Statistics show that for an average person who is interrupted working on a specific task with a deep level of concentration, it takes around 23 minutes for them to go back to the work with the same level of concentration. Even in general cases, such as children studying, once the work/study pattern is interrupted, it takes a while to regain the temperament.

Employees should be strictly advised to turn off their phone notifications during the time they are at work to minimize distractions. This effectively directs most of their concentration on accurate and high-quality coding.

Hiring a Coding Team

If you are well established in the world of healthcare, you may consider hiring a team solely dedicated to coding work. An outsourced team that is essentially qualified for coding could better handle the specific documentation required to improve the coding at a healthcare facility.

An alternate to this medical coding tip is training your staff regarding electronic medical records or EMR practices. This way you can train a handful of your employees and designate them to the coding department. A thorough understanding of medical coding and the medical coding tips required to boost revenue across the providers, support staff, coders, and revenue cycle specialists drastically decreases errors in coding and improves coding quality.

Limiting The Coder’s Tasks

The coders need to be assigned coding tasks. Any tasks outside the scope of a learned coder would overshadow their skills and not allow them to work on coding at their full potential. Overwhelming amounts of tasks, especially non-coding tasks, are bound to be tiring and the coders may not be able to deliver quality coding.

Establishing Effective Communication

Establishing an effective communication system between the provider and coding team ensures prompt and proper documentation of medical procedures. Communication qualifies as a medical coding tip as it allows the staff to not miss out on any procedural actions and modify the workflow to result in quality coding. Amid the release of numerous coding updates, a healthy and practical communication bridge should be established between the staff and the coding team.

Effective communication helps in coding compliance and staying up-to-date with the changed coding guidelines for all payments. Accurate coding of the said procedures saves up a lot of time amongst the hospital itself and the insurance companies associated with it during reimbursements.

quality coding

Using Technology

In today’s world, a great medical coding tip is to utilize various computer programs available for this purpose. These not only can effectively analyze healthcare documents, but also identify appropriate medical coding for a specific concern. This fairly reduces any room for errors, which may occur if coding were not digitalized. Computer assisting coding (CAC) software is a great option if you are looking to eliminate extra paperwork, speed up the coding process, and get greater coder satisfaction. Additionally, utilizing technology in the coding department is likely to boost your coder’s productivity and hence, increase revenue.

Performing Audits

The practice of performing audits is mainly for medical services that prefer quality over productivity and every medical platform prefers that. A coding compliance audit establishes a process that brings forward errors or coding inaccuracies. These can be addressed promptly, which without audit compliance, would generally be missed in final coding submissions. Performing audits might slow down your coding process but the speed would naturally have no merit if your codes were full of inaccuracies.

Explain to your coding department how their final goal of adopting all these medical coding tips and strategies is a sign of incoming and continuous professional growth, which is likely to have a largely positive impact on your revenue cycle.

Staying Up-To-Date On the Changes In Healthcare

Updates in ICD-10, HCPCS (health common procedure coding system), and CPT occur on an annual basis. Keeping track of every development in the world of coding, as slight as it may be, is imperative for accurate coding and billing. If your team or coding department fails to stay on top of every update in the coding guidelines or procedures, chances are you may risk losing scores for reimbursements. The cost of patient care is likely to get a feasible result following a deep understanding and implementation of new reporting guidelines and value-based care.

See Also: Everything You Need To Know About Urgent Care Coding Updates In 2022


To ensure high-quality coding, you must work to promote audit quality, and medical credentials, and provide sufficient training to your coding team. Precision Hub, along with the above-mentioned medical coding tips, offers you the best medical coding and billing services to improve the standards of patient care and increase revenue.

Accountable Care Organizations’ Pros And Cons And Their Challenges

accountable care organizations

Accountable Care Organizations are growing rapidly and are increasingly being recognized as a valuable part of the healthcare landscape. In a traditional payment system, providers are paid for every test, procedure, or service they provide, regardless of whether the patient needed it or not. ACO uses alternative payment models, such as capitation, to ensure that patients are receiving the best possible care.

With a huge 30% of healthcare spending considered wasted, there are many advantages to establishing an ACO. Compared to the current fee-for-service system, this new healthcare model helps reduce costs and improve quality care across the healthcare sector. They seek to improve patient engagement and clinical proficiency resulting in reduction of costs.

However, the current system has many problems. Accountable Care Organizations are not free from controversy. Moreover, there are financial incentives that can make them unpopular, and data challenges that need to be addressed. Considering the Accountable Care Organizations’ pros and cons is essential before making the final decision.


In the past few years, there has been much talk about Accountable Care Organizations (ACOs), and for good reason. ACOs have shared savings models in which payers and providers make arrangements to share the cost of care.

In exchange for sharing their cost data, healthcare providers receive a bonus if their costs stay below a set amount. ACOs are also subject to quality targets, so providers must meet them to receive bonus payments. ACOs don’t limit patients’ choices of doctors. Moreover, patients remain free to choose any other doctor they wish to see, and they are not locked into an ACO’s network.

The operating costs of an ACO vary widely. High-performing ACOs prioritize data interoperability and analyze claims data to identify opportunities to improve patient care and reduce system leakage.

While ACOs can build their own analytics tools, the cost of these utilities depends on the number of participants. On average, building analytics solutions in-house requires $24M upfront development. Annual costs for hiring analysts and data scientists are $6M.

Similarly, savings derived from ACOs vary greatly. The most commonly reported measure is the utilization savings. This measure reflects changes in provider patterns and relates to the ability of new payment models to improve healthcare utilization. However, it is important to remember that these savings are not purely internal and are shared between the payer and the ACO. They also tend to be lower than the savings from an ACO’s utilization. But the benefits of Accountable Care Organizations cannot be overlooked.


While hospitals and doctors’ groups claim to provide quality care, the question of how to define it is a difficult one. ACOs are a model of integration, designed to avoid the problems of previous efforts. Historically, ACOs were clustered around large hospitals, but these organizations have increasingly turned to doctor’s groups as their nucleus.

Primary care physicians, for example, understand patients better than most other physicians and are more likely to provide appropriate care. Pioneer ACOs include Atrius, a non-profit organization that has partnered with 32 hospitals and physicians to develop an organized care system for the purpose of sharing cost savings.

Pay-for-performance incentives are another important part of the ACO payment structure. While healthcare providers receive fee-for-service payments throughout the performance period, payers adjust those payments based on quality performance. Quality performance also determines eligibility for shared savings payments. Financial risk plays a key role here because ACOs tie payments to quality and hold providers financially responsible for their health care costs. The ACO payment structure requires physicians to provide higher quality care at lower costs.

Despite the many benefits of Accountable Care Organizations, it is difficult to implement a meaningful ACO without a strong reimbursement model. The reimbursement model, as designed by the Affordable Care Act, requires the healthcare system to bear the financial risk for quality care.

Financial Incentives

There are many financial incentives for accountable care organizations, including higher reimbursement and the opportunity to reduce costs. ACOs are more likely to be larger, have multiple payer contracts, and include a hospital.

However, the benefits of an Accountable Care Organizations contract go beyond financial incentives. For example, financial incentives may increase provider productivity and lower the cost of care by reducing hospital stays and emergency room visits. This is a significant goal for many providers, but ultimately, it will require a transition beyond ACOs to full financial responsibility.

ACOs have several types of members. Some are managed by insurers, while others are governed by physicians. Typically, the insurer is the sole payer for primary care, but a few ACOs receive capitated payments for all other care. Most of these ACOs are physician practices or hospitals with a long history of value-based care programs and an excellent track record of providing quality patient care. The current model is temporary and expires in 2026. ACOs are expected to serve two to three million Medicare patients by that time.

ACOs may choose to offer physicians financial incentives in exchange for quality scores. These measures can help reduce readmissions and improve hospital-physician alignment. In fact, many studies have indicated that ACOs can reduce leakage by as much as 10 to 30 percent. These programs can also extend to other parts of the healthcare system. So, why do hospitals want to be an ACO? Because they will receive more reimbursement and care management, they may want to invest in them.

As the ACO model begins to take shape, a number of challenges remain. The fundamental assumption underlying ACOs is that doctors work primarily for money, and this is an unproven assumption.

In reality, however, most physicians are motivated by other factors, which behavioral economists call intrinsic motivations. The incentives that come with an ACO undermine these intrinsic motivations. Ultimately, ACOs may encourage better quality care by promoting more integrated care and more efficient health services.

Data Challenges

The ACO model requires care providers to shift away from the siloed, disconnected nature of traditional medicine toward a coordinated, team-based approach. Health information technology is a critical enabler of the transition to the ACO model, supporting efficient data collection, analysis, and exchange.

Despite these improvements, data access remains a major challenge for ACOs. Identifying care gaps and tracking progress against program benchmarks require comprehensive data aggregation and analysis. Wait times can impede optimal performance.

The MSSP program requires that ACOs achieve financial and quality targets. These benchmarks are calculated by averaging historic expenses and risk-adjusted costs for an attributed population of patients.

While the ultimate goal of an ACO is to increase quality and lower costs, ACOs must successfully manage data to achieve these objectives. Some health systems refuse to share information and are resistant to ACOs’ requests for it. Moreover, Internet bandwidth and the adoption of electronic medical records vary widely across rural areas.

The ACOs also face a lack of standardized EHR systems. They would benefit from a single infrastructure that would integrate data from all participating providers. However, this is unlikely to happen unless member organizations work together to develop an infrastructure to synchronize data from multiple systems.

Data exchange technology could help ACOs achieve greater coordination and patient safety. Moreover, third-party payer investments in health information exchange technology could promote information sharing and analytics across multiple systems.

Accountable Care Organizations are built on collaboration and information sharing. These organizations are made up of various care sites and providers. They are typically a complex collaboration between care sites and providers, juggling different technologies and vastly varying levels of health IT sophistication.

The Pros and Cons of Accountable Care Organizations

The proponents of Accountable Care Organizations argue that they improve the quality of health care, increase access to quality providers, and decrease costs. But what are the cons?

As a healthcare provider, you may be wondering whether you should join one. If you are considering this option, you must be aware of the pros and cons of ACOs. The Medicare Shared Savings Program is the predominant model for ACOs in the U.S. ACOs are collaborative partnerships between providers who share patient records and cost information. The teamwork between providers cuts down on unnecessary testing and costs.

In addition, patients receive a care coordinator who ensures providers know what services they need. Patients will not have to repeat medical histories and undergo retake exams. Moreover, ACOs can result in significant cost savings, but only if the healthcare providers are willing to take on more risk.

Although the pros of Accountable Care Organizations outweigh the cons, the debate is still raging. Some providers are opposed to the idea, and others are recommending against it. The pros of Accountable Care Organizations are largely based on how they benefit patients. This new model involves grouping hospitals and other health care providers together to coordinate high-quality care for a large number of Medicare patients.

Among the pros of Accountable Care Organizations is reduced cost. It allows providers to focus on ensuring that patients get high-quality care, prevent medical errors, and cut unnecessary tests. It also reduces the burden on health care payers, since the ACOs are held financially responsible for the total costs of the patients they serve. In addition, if they can reduce costs through collaboration, they can receive a share of the savings. On the downside, ACOs can suffer losses if they go over budget benchmarks.

  • Ease of Use

ACOs help providers access and share critical patient information with other healthcare providers. This results in less paperwork and fewer hardcopy transfer of data. Electronic health records include CAT scans and MRIs, so collaborating with providers in an Accountable Care Organization can greatly benefit a patient’s health. However, the cost of building IT infrastructure can be prohibitive for some providers.

  • Risk-bearing Contracts

An ACO’s success depends on its ability to track its patients. In a risk-bearing contract, physicians must track patients from various facilities. As such, ACOs must develop data analytics and health information exchange capabilities.

See Also: 5 Most Common Billing Errors in Healthcare


ACOs are more than just a network of healthcare providers. The goal is to optimize the quality of care by analyzing data, eliminating gaps, and coordinating care across the healthcare continuum. Ultimately, they aim to increase patient safety and reduce costs while delivering better outcomes for healthcare dollars spent. Most ACOs comprise hospitals, specialists, nursing homes, and other healthcare facilities. And they may also reduce access to care for certain populations.

Are you looking for a reliable medical billing and coding solution? Precision Hub is a leading RCM consultancy dedicated to improving your medical practice through data-powered solutions. To learn more about our services, subscribe to our periodic newsletter.

The Fundamentals Of Pharmacy Billing And Reimbursement

pharmacy billing process

Understanding how the revenue management cycle works in a pharmacy is vital to navigating the nuances of the pharmacy billing process and reimbursement. While medical coding and billing ensure that patients and payers reimburse the healthcare providers for the services availed, pharmacy billing and reimbursement focus on payment collection on the provision of prescription medicine by the pharmacy as the pharmacist’s compensation.

In pharmacy billing and reimbursement (PBR), both the pharmacy and hospital outpatient department are part of the reimbursement process. The physician, for instance, writes the prescription and orders the drug on behalf of her/his patient. The pharmacist, on the other hand, completes the order by issuing the drug to the physician, and bills the insurance company for it.

In due time, the prescription is accepted by the health insurance company. The payer compares the charges to the patient’s benefit plan to determine how much the patient owes or what the insurance plan will cover. Information is then returned electronically to the pharmacy. The claims adjudication in a pharmacy takes place in a matter of seconds. This process helps to prevent errors and delays in reimbursement.

Managing the flow of pharmacy billing process, from entry to reimbursement, can be challenging. Nevertheless, understanding and efficiently handling the various stages of the pharmacy billing process is key to improving both income outcomes and patient care.

The Costs of Providing Pharmaceutical Products

The U.S. pharmaceutical industry spends $83 billion a year on research and development (R&D) of new drugs. Many of these drugs have valuable medical benefits. However, they are also very expensive, contributing to the rising cost of healthcare. Many policymakers have considered lowering drug prices and reducing federal drug spending, but those policies would reduce the industry’s incentive to develop new drugs.

Currently, the cost of brand-name prescription drugs is on the rise due to manufacturers raising prices for their current medications and the entry of new ones. An assistant professor at the University of Pittsburgh School of Pharmacy, Inmaculada Hernandez, compiled data on the price of 27,000 prescription drugs.

According to her research, the price of brand-name oral and injectable prescription drugs increased on average by 9% per year between 2008 and 2016, as compared to the general inflation of only 2% in the same period. It is, therefore, crucial to identify and address what is driving up costs for providing drugs to patients.

The Costs of Providing Pharmaceutical Counseling

The costs of providing pharmaceutical counseling vary greatly. Some costs can be avoided entirely, while others are reduced or eliminated altogether. One example is cost avoidance, where a pharmacist can suggest discontinuing a potentially inappropriate medicine and saving the patient the cost of hospital admission or referral to a physician.

Other costs can be avoided or reduced to a large degree, such as by eliminating the actual cost of the medicine. These savings, however, are often less apparent than the potential costs of not providing pharmaceutical counseling.

Another method of reducing the cost of medication is by engaging clinical pharmacists. Research has shown that engaging pharmacists is an effective way to reduce the number of prescriptions written and the costs incurred. For example, engaging pharmacists in the clinical setting can help hospitals avoid the negative financial consequences of improper medication administration and lead to better quality care for patients. The effective use of pharmacists in the healthcare team requires that physicians view them as full-fledged practitioners.

adjudication in pharmacy

The Pharmacy Billing Cycle

Obtaining a National Provider Identifier

Obtaining an NPI is an important step for pharmacy businesses. In order to be reimbursed for pharmacy services, a business must have an NPI. A business can obtain more than one NPI, such as if it is involved in both OCD (over-the-counter dispensing) and DME (durable medical equipment). However, if the business has a combination of both, it may only need one NPI.

The National Provider Identifier (NPI) is a 10-digit identification number issued by the Centers for Medicare and Medicaid Services to all health care providers. This number is used in health care claims and electronic health records, and it may be tied to notes made by the provider. In addition to health care claims, NPIs are also increasingly being used to match providers to data.

Getting a Detailed Contract

If you’re looking to improve your revenue and increase your profitability, it’s crucial to get a detailed contract for pharmacy billing and reimbursement services. The current state of health care has made it necessary for pharmacy practices to bill for prescriptions.

According to the latest statistics, $325 billion of prescriptions are paid for annually, and this number is only expected to increase after the Patient Protection and Affordable Care Act takes effect in 2018. The current process involves entering patient information and processing insurance claims. A pharmacy’s billing and reimbursement services should make this process as smooth as possible for both patients and pharmacists.

When choosing a third-party administrator, get a contract that outlines the process. The contract should outline what each party will do and will not do to ensure payment of prescription services. It should define which fees are included in the reimbursement process.

This document should also address 340B pharmacy fees, which apply only to independent pharmacies. To get the most out of the partnership, focus on the most important parts of the contract. Each decision may have an impact on inventory, cash flow, and financials. It’s best to have everything work in harmony to ensure a smooth operation.

Getting Paid For Services Rendered

If you’re a pharmacy provider, you’ve probably heard of the many challenges that come with billing and reimbursement. It’s an important part of the pharmacy business, but not everyone is ready to take the plunge.

The first challenge you’ll face in the pharmacy billing process is figuring out how to bill for services rendered. Because pharmacists are not federally recognized as medical providers, they must work within the legal system of their state.

This requires them to use the CPT/ICD-10 codes for medical provider services when they bill for clinical care services. They must also track the outcomes of these services, register with a National Council for Prescription Drug Programs database service, and implement a professional pharmacy billing software such as QS1.

Strategies to Improve Revenue Cycle Management

Managing the revenue cycle is an important mission-critical activity for all healthcare providers. When performed correctly, revenue cycle outcomes impact the quality and efficiency of patient care, including clinical documentation, timely reimbursement, and communication between payers and providers.

Over the last decade, many healthcare organizations have automated RCM processes, leading to greater efficiencies and improved patient experiences. However, significant challenges remain.

Implementing new technology and processes can help improve the overall efficiency of the revenue cycle. In addition, hospitals should ensure that their formularies meet the requirements set forth by payers. These changes should be implemented at the earliest possible time to maximize the financial and clinical value of their medicines.

In addition to implementing new technology, pharmacies must ensure that their processes capture maximum revenue and minimize the risk of losing reimbursement. To do this, pharmacists must understand the demands of the payers and develop processes to ensure that they are compliant.

adjudication pharmacy

Tips for Pharmacy Billing and Reimbursement

Pharmacists must understand how to manage the pharmacy billing process and reimbursement to maximize profits. The cost of dispensing a prescription and the total reimbursement rate determine the profit of a pharmacy.

Pharmacy revenue depends on both. This is why pharmacies need to be very careful in determining the cost of a prescription.

Proper documentation is required for every prescription. It is important to collect information from the patient and the prescriber, including insurance and DEA numbers (Drug Enforcement Administration). Pharmacy claims must contain accurate information to avoid denials by insurance companies.

Pharmacy workflow includes planning the entire process from ordering from a wholesaler to delivering a claim to the patient. To avoid a delay in payment, the pharmacist must have accurate information at all times.

Paying patients directly is possible in many circumstances. Many patients have private insurance or Medicare. However, a large portion of the U.S. population is uninsured or underinsured. While the percentage of patients paying directly for prescription drugs has declined since the passage of the Medicare Modernization Act, it still exists in some instances.

In such cases, pharmacy reimbursement formulas are similar to those described above. The patient is ultimately responsible for the amount of money he or she pays for a drug. Sometimes this is referred to as the “usual and customary” price.

Pharmaceutical goods are reimbursed in one of three ways: private insurance, public insurance, or cash. Private insurance plans are provided by the employer or family member. Individuals can also purchase insurance through the government or buy a health insurance plan themselves.

Public insurance, meanwhile, is provided by the government and subsidized by the government. If an individual does not have health insurance, he or she may pay for the drugs themselves.

See Also: Avoiding Prior Authorization Denials

The Bottom Line

The healthcare industry is complex. There are numerous layers of data handling and the complexities of the revenue cycle involved. Pharmacy claims may be distinct from hospital claims and may have HIPAA compliance requirements.

Consequently, pharmacists should understand how to manage this revenue cycle to ensure optimal patient care. If they are unsure about the proper way to bill patients, pharmacy management software can help. It is the best way to avoid pitfalls.

While pharmacists are increasingly becoming involved in clinical care, the pharmacy billing process and reimbursement process is not always flexible. The process can cause big losses in revenue, practice, and patient satisfaction. As a result, pharmacists should be aware of these risks and implement a flexible billing system.

A pharmacy management solution like revenue cycle management can streamline the billing process by providing comprehensive tools to optimize reimbursement for covered items. It is also the best way to stay up to date on new guidelines and regulations.

At Precision Hub, we offer end-to-end solutions for healthcare providers and pharmacists to help them meet their revenue goals. From BI tools and reports to coding services to finance and accounting, we provide complete revenue cycle management solutions to help you unlock the benefits of professional pharmacy billing and reimbursement.