Mind Your Risk-Coding Vendors


If you contract with an outside service to help you recover diagnostic risk-codes and those codes are rendered invalid through a whistleblower suit, it’s your revenue that’s going to be clawed back.




I’m not just taking about the standard CMS audits (although if extrapolation becomes official policy, those audits will become more dangerous too). I’m talking about qui tam and whistleblower lawsuits.




Code-harvesting arrangements usually involve the health system or medical practice compensating the outside vendor with a percentage of the revenue their efforts generate.



Your compliance systems may be robust, but what about theirs?



Here are some recommendations:


  • Structure the compensation in these agreements to be flat rate, rather than commission, to reduce the moral hazard of over-coding.
  • Funnel all their codes through your own robust compliance system and include in your contract that you’ll only pay for codes that make it through.
  • Make certain in your agreement that you hold them 100% financially responsible for any clawbacks you suffer as a result of compliance failures.


Better yet, risk-share with your primes, check their compliance,  and don’t worry about code-harvesting at all.



You’re expenses will go down, your net revenue will increase, and when the scandal of Medicare Advantage breaks your organization will have the reputation of being one of the “good guys.”