In-House Coder vs Outsourced Coding: Which Is Right for Your Home Health Agency?

Well-managed medical coding allows a home health agency to oversee many operations such as claims, reimbursements, compliance, and even revenue. Agencies can choose to utilize an internal coding team, an external team, or a hybrid. There are many benefits to both models. While an in-house coding team gives a coding manager direct control, an external team offers flexibility, staffing, and specialized knowledge. The coding model chosen depends on a few variables: budget, staffing capacity, quality requirements, and volume.

Understanding In-House and Outsourced Medical Coding

In-house medical coding is when you employ your own coding staff. In this case, you will have control over the recruiting, training, day-to-day operations, as well as performance and quality. This method offers internal staff coding closer with the clinical, billing, and administrative staff. You’ll be coding the agency’s internal records, which will give staff greater understanding and faster coding turnaround.

Home Health Medical coding outsourcing is the hiring of a third-party organization to complete some or all of your coding services. With outsourcing, you’ll send all documentation via your defined method and the external coders will review the documentation and complete the assignment of your medical codes.

For home health agencies, this may involve:

• Reviewing orders and documentation from your clinicians.
• Coding diagnoses and associated ICD-10-CM codes.
• Primary and secondary diagnosis information reviews.
• Identifying areas where your documentation may be missing information.
• Completing an OASIS review and flagging issues related to documentation and your coding processes.
• Identifying issues and coding errors prior to submitting your agency's claims.

In-House Coder vs Outsourced Coding: Key Differences

The biggest difference is the method of workflow management. With in-house coding, your agency maintains complete control of the process, but you will also need to hire, train, manage and retain your in-house coders. With outsourced coding, your coding partner takes over the burden of coding and workflow management. 

Here are the biggest differences to consider.

1. Hiring, Training, and Retaining Coding Staff

Coding staff at your agency is all on your agency. This means you will need to pay for and provide everything for the coding staff. That includes everything from finding and hiring your coders to paying their salaries and training them to the level that your coding requires.

2. Cost Structure

The expenses for coding staff are consistent at your agency. They include paying coding salaries, hiring costs, training costs, software costs, and benefits for your coding staff. Coding partners generally offer you coding services at a set price, so your coding staff is essentially free to you. Pricing models vary from coding per claim or coding per chart to long term coding contracts.

3. Coding Expertise

Your coders learn the ropes at your agency, and become proficient coding for your particular agency requirements. But training is a constant expense at your agency. A professional coding partner gives you access to coding staff that have coding expertise across different coding requirements, for different clients.

4. Coding Workload

An internal coding team has a hard cap. They only have the coding capacity they have at that point in time. An outsourcing partner can offer to provide your coding staff at a higher capacity to coding volume depending on your contract and capacity.

5. Quality Assurance 

The coding quality for your internal coding staff needs to be quality assured internally at your agency. This means you will need an internal quality assurance program. When considering coding partners, ask how your agency will receive quality assurance, how coding mistakes will be addressed, and how quality coding audits will occur at your agency.

Pros and Cons of an In-House Coder

For agencies that regularly require coding and have the resources to sustain an internal team, hiring a coder can be advantageous.

Pros of In-House Coding

• Direct control: Agency members can directly influence scheduling, workflows, and task ordering.
• Process familiarity: Coders will understand agency policies and procedures.
• Steady availability: Coders are guaranteed support at their agreed working hours.

Cons of In-House Coding

• Higher fixed expenses: Agencies have to fund staffing, benefits, recruitment, and training.
• Staffing challenges: In coding, having one less coder means having to wait, as a coder's absence affects the agency.

Pros and Cons of Outsourced Coding

When using outsourced coding for home health agencies, there is less of an internal coding team that needs to be managed, but agencies still get the support they need when there is a lack of coding support or an overwhelming backlog.

Pros of Outsourced Coding

• Agencies are free to scale the size of their coding teams based on the amount of coding to be done.
• Coders are hired through the coding company and not by the agency. 
• There are usually quality controls in place by the coding company. 
• Agencies are able to focus more of their energy and focus on agency operations like patient care coordination.

Cons of Outsourced Coding

• Agencies have little say and little control on how the agency’s daily coding is handled.
• Often agencies will see a slowdown in their coding if they are using a third party that has slow response times to queries.
• Coding companies need to safeguard their agency client’s patient information with robust coding contractual arrangements.
• Agencies could experience disruption to coding workflows if their agency is dependent on the service provider. 

In-House Coder vs Outsourced Coding Cost Breakdown

Cost is one of the main factors when deciding between coding internally or outsourcing coding services. However, it is essential for agencies to consider the total cost of maintaining an internal team versus the total cost charged by the external service provider.

Internal Coding Team Costs

An internal coding team can be expected to incur the following costs:

• Coding salaries and benefits
• Coding recruitment and onboarding costs
• Coding software and technology costs
• Costs for training and education to code
• Coding QA and supervisory costs

The agency will still incur coding team costs during periods when coding volume is low. 

External Coding Team Costs

The costs for outsourced coding depend on the service provider, the services, the coding volume and the contract terms. These factors result in pricing variations such as:

Per-chart pricing

The coding provider charges based on the number of charts the agency needs to have coded or reviewed.

Per-claim pricing

The coding provider charges based on the number of claims.

Custom pricing

This pricing is based on a custom solution designed by a provider for an agency's needs.

How Does Coding Accuracy Affect Home Health Reimbursement?

Reimbursement for home health care services depends largely on coding accuracy. With Medicare’s Patient-Driven Groupings Model, payment for 30 days is determined by a patient’s admission source, timing, diagnosis (including secondary diagnoses), and functional impairments. 

There are several steps to consider for home health agencies with a consistent coding process:

• Review physician or practitioner documentation. 
• Confirm support for the diagnosis within the documentation. 
• Review all reported primary and secondary diagnoses.
• Audit and check for coding errors within the claims before submission.

Additionally, coding within OASIS (Outcome and Assessment Information Set) must also be handled correctly. 

Hybrid Coding Model: Combining In-House and Outsourced Coding

Agencies have the option to combine their internal teams and outsourcing. This hybrid model keeps certain coding functions within the agency and outsources others. 

For instance:

• Routine chart coding can be handled internally.
• High coding volume periods can be supplemented by outsourced coders.
• An external coder can help to resolve coding backlogs. 
• Complex coding documentation reviews can be handled by an outsourced specialist reviewer.
• Queries and coding reviews can be managed internally. 

Using this model helps agencies retain full control of essential processes while allowing flexibility.

How to Choose the Right Home Health Coding Outsourcing Partner

Choosing a home health coding partner involves assessing much more than a price tag. There are a multitude of variables to examine including experience, processes, security and workflow support. 

Key factors to consider include: 

1. Home Health Experience

The vendor you choose should have deep experience with documentation and coding specific to the home health setting and all relevant Medicare guidelines. Experience in other health settings does not translate to home health.

2. Coder Qualifications

Make sure your partner's coders have relevant qualifications, training and experience. Ask your partner about the processes in place to ensure coding staff is updated about changing regulations.

3. Quality Assurance 

The vendor should be able to walk you through its quality assurance processes, error tracking and corrections. Request sample quality reports to give yourself confidence about the partner you are evaluating.

4. OASIS Knowledge

Make sure to find out what kind of OASIS support you'll need. Determine the difference between a coding review and a clinician's responsibility. Make sure your coding partner has updated OASIS documentation guidance. 

5. Security and HIPAA Compliance

Some coders/coding companies are business associates under HIPAA. Be sure to carefully evaluate a prospective partner's BAA, access and security practices, and even subcontractors. 

What to Ask Before Choosing an Outsourced Coding Partner

Before you sign the contract, you should ask the company questions related to how the services will be carried out on a daily basis.

• How many years of home health coding do you have?
• What training and credentials do your coders possess?
• What methods do you use to assess the accuracy of the coding?
• Do you support the review of OASIS documentation?
• What is your procedure when documentation is insufficient or inconsistent?
• What is the normal turnaround time for your services?
• Which Electronic Medical Records or Electronic Health Records do your employees work with?

The answers will help agencies to see if the vendor is going to meet their operational needs and compliance requirements.

How Gravita Oasis Review Supports Home Health Coding Needs

Gravita Oasis Review Solutions (Gravita) is a home health industry service provider offering OASIS reviews and a comprehensive suite of coding and documentation-related back office services including billing, revenue cycle, data entry, prior authorization, and clinical documentation support.

Home health organizations with internal teams who feel overburdened by administrative workflows should look to external providers like Gravita. Support offered by Gravita can encompass:

• Reviewing OASIS documentation for inconsistencies.
• Support with documentation review.
• Billing and revenue cycle support.
• Prior authorization assistance.
• Support with documentation data entry and verification.
• Development of documentation workflows.

Agencies can take all these points into account when deciding if they should partner with an external provider for coding and documentation.

Making the Right Coding Decision for Your Home Health Agency

Every agency must decide what is right for them based on their particular situation. If coding needs are consistent and staffing is sufficient, an agency may decide to employ a coder to maintain complete daily control over the coding process.

The choice to outsource is typically made when there are staffing problems or a constant shifting in coding workload. Other reasons for choosing this route would be if there is a backload in coding that needs to be addressed. 

FAQs on In-House Coder vs Outsourced Coding

Q1. What Is the Difference Between In-House and Outsourced Medical Coding?

In-house coders work directly for the coding agency. Outsourced coding is when an external service provides the coders for a given period of time for a agreed upon price.

Q2.  Is Outsourced Medical Coding More Cost-Effective Than In-House Coding?

Most coding agencies that offer outsourced coding are not the coding agencies that manage their coding employees. Agencies often decide that the convenience and lower overhead associated with coding outsourcing is a more effective business strategy.

Q3. What Are the Benefits of Outsourcing Medical Coding?

Coding expertise and access to support staffing. Reducing the agency's recruitment needs and having additional resources for quality control.

Q4. When Should a Home Health Agency Outsource Medical Coding?

Staffing shortage or high coding backlogs, an increase in the number of records an agency receives for processing, or maintaining the internal coding staff for the agency has become a problem.

Q5. How Does Outsourcing Medical Coding Improve Coding Accuracy?

A service that has coding experience will utilize skilled coders. Through regular audits and formal quality processes, they are able to achieve higher coding accuracy.