2020 was one of the most challenging years for medical billing and coding companies. While frontline healthcare workers supported by other clinicians risked infection to battle the COVID-19 virus, medical coders and billing specialists had to come up with innovative revenue cycle management solutions to support healthcare organizations and practices.
A new report from business consulting firm Grand View Research presents the revenue forecast for the U.S. medical coding market for the period 2021-2028, including the competitive landscape, growth factors, component insights, and trends. The key predications of the report titled “U.S. Medical Coding Market Size, Share & Trends Analysis Report By Classification System (ICD, CPT, HCPCS), By Component (In-house, Outsourced), And Segment Forecasts, 2021 – 2028” are as follows:
The value of the U.S. medical coding market size was USD 16.4 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 8.3% from 2021 to 2028. The report estimates the market size value in 2021 to be USD 17.9 billion and predicts that this will reach USD 31.4 billion in 2028. According to the report, the following parameters are driving the growth of the U.S. medical coding market:
- Insurance Fraud and Issues Due to Misinterpretation of Medical Documents: If clinical documentation and codes do not support the levels of services billed by physicians, it amounts to fraud. The National Health Care Anti-Fraud Association found that healthcare fraud costs in the U.S. amount to USD 68.0 billion annually. This is a main reason for the increasing significance of accurate medical billing and coding in revenue cycle management, which is driving demand for these functions.
- ICD Segment: In the medical code segments, the ICD segment held the highest market share of over 69% in 2020 due to high utilization of these diagnostic codes by healthcare organizations. ICD 10 code has about 68000 codes and correct reporting can ensure benefits such as fair pay and enhanced efficiency, notes the report. The frequent revisions in the classification systems for medical coding is also driving the market’s growth. ICD-11 will come into effect in January 2022. The ICD 11 was presented in May 2019 and will come into effect in January 2022. The ICD-11 code format is structurally different from the ICD-10 format and utilizes a suffixing approach to add attributes to the stem or foundation code. ICD-11 will have 13 parameters to address errors due to duplication and code confusion.ICD-11 requires an even higher level of detail in documentation than ICD-10. ICD 11 has several new chapters, has 55,000 codes for classifying diseases, disorders, deaths, and injuries, and is designed to support Electronic Health Records (EHRs). In 2020, new ICD-10 codes were introduced for COVID-19. The support of skilled coding and clinical documentation integrity (CDI) staff will be crucial to understand ICD-11 and help physicians report diagnoses correctly.
- CPT and HCPCS Segments: The report says that the CPT and HCPCS segments will also witness significant growth over the forecast period. Used by Medicaid, Medicare, and third-party insurance providers, HCPCS codes were made mandatory under the Health Insurance Portability and Accountability Act (HIPAA). CPT codes are used for billing treatments and procedures, and are also tracked for measuring disease prevalence and healthcare spending.
- Increasing Implementation of Computer-Assisted Coding: Computer-assisted coding is also driving the market’s growth as it speeds up the medical coding process and increases accuracy. Moreover, it enhances productivity, increases transparency, improves accuracy and compliance, reduces costs, and provides traceability. The report cites a 3M Company survey which found that computer-assisted coding increased medical coder productivity by more than 30%. The development of new technologies, such as Artificial Intelligence (AI)-assisted technology to improve the speed and accuracy of coding is also expected to support market growth.
- Rising Demand for Certified and Skilled Medical Coders: According to the report, another factor driving the growth of the U.S. medical coding market is the high demand for medical coders due to the rising need for universal language in medical documents. Medical codes represent medical procedures and diagnoses in the form of universally-recognized alphanumerical numbers. The universal language of medical coding allows healthcare professionals, organizations and systems to communicate effectively with each other. Error-free coding also invaluable for accurate billing and proper reimbursement. With the aging population and rise in the incidence of chronic diseases, the demand for qualified medical coders is rising and contributing to the market’s growth.
- Technology and Social Media: The report also highlights the role of EHRs, mHealth, healthcare IT, etc. is supporting the growth of the medical coding market. According to the Centers for Disease Control and Prevention (CDC), 85.9% of the office-based physicians use EMR/EHR, while 79.7% office-based physicians have a certified EMR/EHR system. Social media also plays a key role in helping people find the healthcare services they need.
The Grand View Research report also compared the pros and cons of the outsourced and in-house medical coding segments. The outsourced segment saw the highest revenue share of over 64% in 2020. This segment is expected to expand further at the fastest CAGR during the forecast period 2021 to 2028. The services of certified professional coders and auditors is critical for accurate coding and review of medical record documentation to determine whether the organization/practice is following payers’ guidelines for correct billing. Expert coders are knowledgeable about ICD, HCPCS, and CPT codes and closely monitor any changes. The study found that the number of healthcare organizations outsourcing their revenue cycle management including medical coding is growing.
Compared to outsourcing, the in-house component allows providers to retain control of coding operations, but the high costs of coding software and the challenges of hiring skilled coders are restraining the segment growth. The report also notes that the benefits of outsourced medical billing and coding, such as reduced operating costs, minimized claim denials, and scalability, are restraining the growth of the in-house component segment.
This market analysis clearly shows that the medical coding service market is set for rapid growth. With frequent updates to coding sets and payer reimbursement policies, yearly education and training has become a necessity. The COVID-19 pandemic has magnified that need. As a recent article in Revenue Cycle Intelligence notes, “COVID-19 has shone a spotlight on just how important education, training, and communication are to ensure accurate documentation and denial prevention”.
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