Healthcare financing is largely shifting to insurance organizations as many people are covered under different healthcare insurance plans. Therefore, medical coding is a mediator between healthcare organizations and insurance reimbursement. Medical coding involves the transformation of medical information from the healthcare facility such as diagnosis, prescriptions, procedures, and other healthcare services into universally accepted alphanumerical codes (Baker, Baker & Dworkin, 2018). As such, coding greatly facilitates the repayment process to healthcare facilities.
Finance is a critical component in the running of a healthcare facility. It facilitates the acquisition of the resources required to provide adequate healthcare and promote patient wellbeing and recovery. For instance, healthcare facilities utilize finance in the purchase of drugs as well as medical equipment and material. Moreover, such finance is utilized in paying the healthcare workers who provide healthcare services to the patients (Baker, Baker, & Dworkin, 2018). Therefore, it is important for healthcare organizations to manage their finances properly. This finance management involves putting in place an elaborate system that facilitates the payment of the services that the hospital renders to its patients. Healthcare coding plays a critical role in facilitating this payment particularly through reimbursement by healthcare facilities.
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The medical codes are used by insurance companies in the reimbursement process of a medical procedure. As already noted, the prescriptions and the entire medical services and procedures performed on a patient are converted into medical codes on the claim form. Among other things, the codes tell the insurance company not only these procedures that were conducted for the patient but also the justification for such procedures. Therefore, it makes it easy for the insurer to evaluate both the cost as well as the justification for a refund (Baker, Baker & Dworkin, 2018). Through this method, medical codes greatly facilitate the process of making claims by healthcare facilities as well as reimbursement from insurance companies.
Third-party payers include all healthcare insurers that pay healthcare facilities for healthcare services they offered to a patient insured under their healthcare scheme. These include private insurers, public healthcare insurers as well as other organizations that offer to cover people in the area of healthcare. The major features of third-party payers include receiving reimbursement claims from healthcare providers, assessing the viability as well as the cost of services provided by the healthcare facility and making payment either partially or wholly for the healthcare services rendered to their insured patient (Baker, Baker, & Dworkin, 2018). Therefore, third-party payers greatly utilize medical coding to fast track the assessment of claims and in reimbursing healthcare organizations.
Third-party payers use five main methods when reimbursing healthcare service providers. These include a discount for billed charges, value-based, shared savings, free for services and bundled payment (Baker, Baker, & Dworkin, 2018). Under discount for billed charges, the insurer and the provider agree on a negotiated discount to be offered on all billed charges. In this case, the insurer agrees to pay all claims with that negotiated discount. The fee-for-service method involves a negotiation of the rates for every medical procedure performed. As such, the insurer pays at the negotiated rates.
Under the value-based method, the insurer pays at a negotiated rate just like the fee for service method. However, this method equally incorporates a quality component when determining the reimbursement amount. It serves as an incentive to provide quality patient care and promote quick recovery. The bundled care method involves compensating specific care episodes. Lastly, the shared savings involves pre-negotiating savings with the service providers in costing and service provision (Baker, Baker, & Dworkin, 2018). Regardless of the method employed, coding has a greater impact on reimbursement. It enables the insurer to quickly interpret the information provided in a claim and assign cost on each claim. As such it facilitates a faster reimbursement process.
Reference
Baker, J. J., Baker, R. W., & Dworkin, N. R. (2018). Health care finance: Basic tools for nonfinancial managers . Burlington, MA: Jones & Bartlett Learning.
