Careful analysis of the emergency department's facility coding and billing processes led to dramatic improvements in revenue for a tertiary care hospital.


Savannah, Ga.-based Memorial University Medical Center (MUMC) had been using an outdated voucher system to record the procedures, services, and supplies provided to emergency department (ED) patients. Charge entries at the 622-bed hospital were based on nursing documentation alone, rather than including physician documentation and orders. This resulted in an incomplete picture of the services performed. In numerous cases, ED documentation did not match charge entries.

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Assessing the Opportunities

An extensive chart assessment identified ED and observation facility coding issues as a primary culprit. In total, MUMC learned it had the potential to improve gross revenue by $24 million per year with more accurate charge capture and coding.

A consultant reviewed a sample of ED and observation charts, including the department’s medical records, chargemaster, and itemized patient statements. The two-day, on-site review process focused on accuracy as well as the quality of the documentation and facility charge capture process. A sample of 64 ED charts and 20 observation charts were reviewed, using patient population totals from the financial analysis provided by MUMC. Patients were assessed using the American College of Emergency Physicians’ ED Facility Level Coding Guidelines

Snapshot of the results. The assessment concluded that the hospital was under-assigning the patient level of service approximately 75 percent of the time by undervaluing the resources actually used for those patients. The result was very low distribution levels (about 60 percent of patients in facility charge levels 1 and 2) for a Level 1 trauma center with 100,000 ED visits per year. A more accurate distribution would not only improve revenue, but also result in the ability to distinguish patients with relatively high-resource requirements from those with lower resource intensity. 

Areas for improvement. The assessment identified the following areas for improvement.

  • Errors and omissions were found with both CPT coding and assignment of injection/infusion codes.
  • Coders were not adequately trained to apply billing modifiers to reduce downstream stops in the revenue cycle. 
  • Patients kept in observation status had charges omitted and assigned without supporting documentation.
  • Resource utilization was undervalued for observation patients.

Observation specifics. An analysis of observation patients revealed that clearly documented procedures often were omitted from the bill, amounting to approximately $141 lost in gross revenue per patient. Some charts were missing infusion stop times, which resulted in an inability to bill those services. Of the 20 observation patients who received injection and infusion services, only one patient was billed accurately in accordance with clinician documentation for an overall accuracy rate of 5 percent. 

Taking Action

MUMC determined it did not have the staffing or skill sets to make the necessary process changes and opted to bring in a consultant to provide full-service facility coding for its ED and observation services, including facility evaluation and management (E/M) calculation, code assignment, and quality assurance. Using coding software and professional coders, the consultant pinpointed documentation deficiencies and other improvement opportunities. 

With the technology-enabled service, billing modifiers could be appropriately assigned, providing additional information about procedures and allowing for more accurate payment. Documentation review and query processes were adjusted to include information recorded by physicians so no procedures were missed. 

Measuring the Results

By the end of the first month, MUMC’s per-visit gross revenue increased to $258 per patient, and by the middle of March the average patient charge reached $1,260, up from the baseline of $1,040. 

A few months after transitioning to the new coding and billing services, MUMC’s annualized gross revenue had increased by $24.8 million, the level originally estimated by the assessment, and per-patient charges also had increased to more appropriate levels: 

  • $258 increase per patient for facility E/M charges
  • $31 increase per patient for facility procedure charges
  • $502 increase per patient for observation services charges

An additional benefit was that the new system and team of coding experts brought the assurance of compliance and data integrity, resulting in accurate, defensible charges for MUMC. 

Distribution levels improved to a normal bell curve appropriate for a hospital of MUMC’s size and scope of services, as shown in the exhibit below. Previously undervalued services were remedied by charge capture that more accurately reflected the resources expended by the facility. 

Improvement in Facility E/M Level Bell Curve

As a result, a higher level of service was assigned for about 65 percent of the ED patients, and a lower level of service was assigned to 3 percent. Also, a higher level of service was assigned for about 70 percent of observation cases, where patients routinely require a significant amount of resources. 

Coding turnaround times improved to consistent rates of less than 48 hours, well under the contracted time of 72 hours, improving the speed and efficiency of billing. The faster turnaround times led to improved rates of patient payment.

Improving Financial Health

With the support of an outside facility coding service, MUMC had transformed its system of charging and coding while increasing accuracy and efficiency. The technology-based solution enabled the query process between physicians and coders to work, effectively improving documentation overall.

In the end, careful analysis of its coding and billing processes led to improvements in Memorial’s financial health. Improved accuracy and efficiency were the staff’s primary goals, and those were met in the first month of implementation. MUMC’s future plans include consideration of the same services for its labor and delivery department. 

Steve Hendrix is a vice president at T-System Inc., Kansas City, Mo. 

Elizabeth Morgenroth, CPC, is a medical business analyst at T-System Inc., Kansas City, Mo. 


About Facility Coding

According to the American College of Emergency Physicians, facility coding reflects the volume and intensity of resources utilized by the facility to provide patient care, whereas professional codes are determined based on the complexity and intensity of provider performed work and include the cognitive effort expended by the provider. There are five ED facility charge levels (with five corresponding CPT codes 99281-99285) that differentiate ED care provided by the severity of the patient symptoms and the intensity of resources needed to treat the patient. For example, a patient presenting with an uncomplicated insect bite who only requires a quick assessment would be assigned to a Level 1 facility charge level (CPT 99281). In contrast, a patient with a severe infection who requires constant monitoring and an MRI would fall into Level 5 (CPT 99285). There is also a critical care code, CPT 99291.

Facility E&M (or E/M) codes refer to those for evaluation and management, and are related to reporting care received in nonprocedural encounters—such as instructing a patient how to use crutches, taking a health history, or obtaining a translator for patient communication. Facility procedure codes refer to traditional clinical care. 

Source: American College of Emergency Physicians, ED Facility Level Coding Guidelines

Publication Date: Thursday, December 05, 2013