Getting paid fairly for the care and services you provide in this value-based business model should not feel like an uphill battle. Yet even a small slip in medical coding creates a domino effect, which unfortunately results in lost revenue, denied claims, lengthy adjudication processes, and, of course, compliance problems and patient distrust.

According to Experian’s New State of Claims 2024, claim rejection rates in the USA have reached as high as 10-15%. One of the top reasons for this major hit is inaccurate medical coding.

But here’s the silver lining: with a mix of technology (read AI and automation) and coding practices, you can reach the golden target of 95% accuracy within a quarter of a year.

In this article, let’s go over the most sought-after practices you can follow. 

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What Are the Different Types of Medical Coding?

You cannot improve what you don’t understand! So, before we get into the “How,” let’s clear the “What.”

Each medical coding type has its own rules, updates, and compliance challenges. Knowing these types can help you target your efforts where they will make the most significant impact.

1. ICD-10-CM and ICD-10-PCS Codes

International Classification of Diseases (10th Edition, Clinical Modification) codes record diagnoses and medical conditions. ICD-10-PCS (Procedure Coding System) codes record hospital processes and surgeries performed. Its system contains 72,000-87,000 procedure codes. Even one minor error can reject your claim.

2. CPT Codes

Current Procedural Terminology (CPT) codes are used to describe medical procedures and services provided. The CPT codes are categorized into three: one covers standard procedures, the second tracks performance, and the third covers technology used. Each category needs specialized coders.

3. HCPCS Codes

The Healthcare Common Procedure Coding System (HCPCS) codes capture the supplies, equipment, and services provided to the patient, like an ambulance or a ventilator. Most insurance companies are particularly strict about these codes, allowing no scope for mistakes from you.

4. DRG Codes

Diagnosis-Related Group (DRG) codes determine how much your hospital will get paid for inpatient stays. The 2025 list has hundreds of groupings, and each one can affect your reimbursement differently. 

DRG coding is tricky as it depends on multiple factors, such as primary diagnosis, secondary diagnosis, patient characteristics, and procedures used.

5. HCC Codes

Hierarchical Condition Category (HCC) codes capture the true severity of patients’ conditions, which directly impacts your risk adjustment revenue. You may need experts who can properly record all chronic illnesses and comorbidities. Fail to add a high BP complication, and you stand at risk of losing thousands in risk adjustment payments.

6. HEDIS Codes

Healthcare Effectiveness Data and Information Set (HEDIS) codes track the quality of the care you provide and your performance. This affects your organization's quality and star ratings. If the date of a single blood test code is incorrectly added, your quality metric can be reduced.

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Strategies to Achieve High Medical Coding Accuracy for All Types

If you want to consistently achieve 95% accuracy, your approach must be team-driven, tech-supported, and extremely structured. Here’s how you can improve your medical coding accuracy:

1. Use Dedicated Coding Teams for Each Type

Generic coders may not always keep up with each medical coding type's rules, updates, and guidelines. 

To avoid incompetence, appointing dedicated coders with certifications in each coding type, like HCC, HEDIS, or CPT, is essential. This way, you can rest assured that the right codes are applied the right way.

However, appointing and training a large team of skilled coders may increase overhead costs. In such situations, outsourcing medical coding services to expert revenue cycle management teams can prove cost-efficient.

2. Implement AI-Based Coding Solutions

If you know how to use it right, AI-assisted medical coding can be a game-changer for your organization. Automated tools can now quickly scan and review thousands of charts (in different formats) and suggest appropriate codes based on the discovery.

The real value? Artificial intelligence-led coding tools learn from patterns and corrections and update their skills autonomously over time.

If possible, you can integrate your EHR with the coding platforms to document codes without human intervention. Advanced coding tools can also check for compliance issues and correct them on the go, getting you those quality and star ratings.

3. Establish Strong Documentation Processes

The hard truth is that your medical coding is only as good as your records. When your clinical notes are clear and complete, it gives your coders the much-needed foundation and confidence to code cases correctly. It’s even more critical for HCC coding, which is directly linked to chronic conditions.

But unclear records are a constant challenge in the healthcare sector.

To make sure this doesn’t happen, consider using Clinical Documentation Improvement (CDI) experts and tools during the documentation phase. These experts work or have worked with physicians directly and are trained to review notes in real time and provide feedback immediately.

Studies also show that large language models (LLMs) can generate summaries that match or outperform human experts when adapted for specific clinical tasks.

Therefore, natural language processing technology in advanced medical coding applications can help extract necessary information from physician notes and document them properly, which also reduces processing time.

4. Use Data Analytics for Continuous Improvement

Sometimes, data captures things that your eyes miss. Tracking your denial rates, accuracy scores, and productivity metrics can guide your decisions rather precisely.

Benchmarking your medical coding with industry standards will give you context. Are you performing better or worse than your direct competitor? This external perspective will help you set realistic goals and assign resources intelligently. And with predictive analytics, you can identify claims at high risk for denials before they create colossal damage.

5. Be Flexible for Different Payment Models

Whether you use fee-for-service or capitation, your coding procedures should accommodate both. Flexible solutions free you from having to balance several vendors or systems. 

Regardless of the reimbursement structure, this flexibility will help you control several payer requirements, simplify processes, and deliver accurate medical coding every time. It also enables you to create smooth transitions and lessen administrative load as payment methods change.

6. Partner with a Dedicated Expert

Revenue cycle management partnerships give you direct and continuous access to trained and certified expertise, cutting-edge technology, and ready-made infrastructure without adding cost to building everything in-house.

Working with hundreds of healthcare providers every month enables dedicated RCM partners, like HOM, to bring proven methodologies, industry best practices, and expertise in medical coding services that can achieve high accuracy in no time.

Outsourced services for each medical coding type also provide flexible capacity during a staff shortage or peak season.

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Bottom Line

Medical coding that’s not only foolproof but also on time is essentially the backbone of the healthcare revenue cycle. However, changing regulations, new treatments, and diagnostic methods will make coding complicated in the future.

That said, achieving accuracy here is possible, even if you have limited resources.

With the right mix of processes, people, and technology, you can consistently hit the 95% mark and stay there year after year. This directly means more revenue, effective claim adjudications, better patient care, and an overall better rating.

HOM’s medical coding services combine the latest coding technology, effective practices, in-depth training, a large team of AHIMA/AAPC-certified coders and doctors, and revenue cycle experts.

Our medical coders have reviewed over 1.5 million charts and helped leading hospitals, clinics, and physicians achieve 95% coding accuracy, up from 85%, in just three months.

To find out how HOM can help you achieve a similar result, contact our revenue cycle specialists today for a free audit and comprehensive analysis!