Clinical coding: Offshore, onshore, or both

April 26, 2017
Cathy Brownfield, MSHI, RHIA, CCS, Vice President of Operations, TrustHCS

In 2005, Thomas Friedman introduced the concept of a flattened world: one in which services are measured by their accuracy, not where the work is performed. His book The World is Flat sold 4.5 million copies in 42 languages. Since then, India, the Philippines and others have built world-class workforces and secure service centers for all major industries—including healthcare. For example, most of the top health plans use offshore coders and coding auditors.

For hospitals, health systems, and other health providers, billing, collections, and transcription services are commonly performed using offshore partners. Is international clinical coding the logical next step? Many physicians, hospitals, and health systems say “yes.” Other organizations still insist that all medical record coding be performed in the United States by domestic coders and companies.

Organizational needs determine strategy

The type of outsourced clinical coding services used by an organization should be determined by its unique needs—which are often difficult to distill. Organizational philosophy, senior executive mindset, and health information management (HIM) director preference also drive the organization’s outsourced coding choice. By knowing where the organization places the most value, leadership can determine an optimal outsourced coding strategy.

Where onshore coding is best

Inpatient cases are typically more complicated, and most organizations still prefer internal staff or domestic coding companies to manage these encounters versus offshore services. While international coding teams can manage inpatient cases, the current trend keeps inpatient coding onshore.

Most onshore coding companies only employ credentialed coders. With onshore coding, you aren’t purchasing coding staff. You are contracting for better coding outcomes.

For example, specific experts are usually assigned on a long-term basis to ensure consistency in coding coverage—an important factor for many organizations that can’t find coding resources in their geographical area. Coders almost always work from home offices using strict privacy and security agreements and protocols.

Domestic coding companies are faster to engage and set up, making onshore services slightly better than offshore companies for quick backlog cleanup projects. However, onshore coding companies are usually a break-even proposition. Large operational cost savings are rarely recognized.

Where offshore coding is best

International coding companies tend to employ a variety of clinicians to perform the coding function, including physicians, nurses, and credentialed coders. Best practice for offshore vendors is to house all staff within a single, centralized facility with direct oversight and security management.

One of the primary benefits of offshore coding is around-the-clock and over-the-weekend coverage. With offshore coding, organizations can take their coding production to a 24/7 operation, avoiding fluctuations in discharged-not-final-billed.

Another important benefit with offshore coding is cost savings. Offshore services are typically less expensive than their domestic counterparts.

Vendor checklists converge

According to a 2016 Black Book Research Report on Outsourced HIM and Computer-Assisted Coding, 72% of hospital respondents are outsourcing more than half of their coding needs, up from 53% of hospitals before ICD-10 in 2015, and only 20% in 2014 and 13% in 2013. Along with this increase comes heightened vendor requirements. Coding companies are being held to a higher standard—domestic and international.

The following vendor checklist encompasses both offshore and onshore outsourced coding company evaluations since many of the same questions should be asked of both types of service providers.

Management, training, and oversight

  • Will a single account manager be assigned to our organization?
  • How is quality assessed, and what type of internal training program do you use?
  • How are errors communicated and remedied? What is your quality improvement process?
  • Is quality assurance review of your coded work included in the price or an additional fee?
  • Who owns the company, and what is their background? Do your homework before sharing any protected health information (PHI). Most domestic coding companies are well established and recognized within the coding industry.
  • What are the most recent staff and leadership turnover rates?

Privacy and security

  • What is your compliance plan, and how will my organization’s PHI be stored in any way?
  • Do you comply with industry privacy and security protocols such as SOCI, SOCII, and HITRUST? Early industry concerns regarding privacy and security with offshore resources have been mitigated in most circumstances.
  • Are coders for offshore providers working from a secure central location? Are they directly managed and separated from other types of workers? For example, coders should not be working alongside call center staff for a credit card company.

This list does not include every question that should be asked of an outsourced coding vendor, but it does provide a reasonable foundation to begin important partnership conversations.

Blended approach delivers best of both

The newest trend in outsourced coding services is a blended model. In this scenario, domestic and international coding partners work together to provide around-the-clock coverage, dedicated account management, and a unified outsourced program.

The blended approach requires flexibility from all coding resources involved—including those employed by the organization. Other benefits of a blended approach include the following:

  • support provided around the clock,
  • workload balanced between domestic and international resources,
  • single domestic project manager during hospital hours and mirrored single offshore project manager for evenings and weekends,
  • domestic experts to help the organization step into offshore support slowly and over time, and
  • trusted partner to provide quality coding results.

By outsourcing clinical coding services, hospitals can dedicate operational resources and physical space to patient care and revenue-generating activities. However, if these outsourced clinical coding services aren’t accurate, they are worthless. This is the same whether performed offshore or onshore. Quality is job #1 when it comes to clinical coding.

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