Risks Mitigation in Medical Coding Contracts Essay

Risks Mitigation in Medical Coding Contracts Essay
Healthcare organizations enter into written contracts every day. Typically, the HIM professional secures contracts for transcription, record copying, imaging, record storage, coding, other outsourcing, or consulting services. Although contracts can prevent confusion and conflict, they can also bind the inattentive signer to conditions that are difficult or impossible to meet.
Your CEO and CFO are in the process of reviewing contracts between outside vendors and your organization. They have asked you to review the current contract you have with ABC Coding Services. Your focus will be to identify any areas which may mitigate risk to the organization. Risks Mitigation in Medical Coding Contracts Essay.
As you read the contract, think about the requirements you have for your own staff within the HIM department: Confidentiality standards and requirements, disclosure or redisclosure of patient information, productivity standards, HIPAA privacy rule (42 CFR, Part 160-164)
Include the following.
    Review the current contract with ABC Coding Services: ABC Coding Services Contract.
    Identify five (5) areas you feel might pose a risk to the organization.
    Determine how you would change the risk areas addressed in the contract.

Contractual Agreement

This agreement is made effective as of September 1, 20XX, by and between ABC Coding Services and Rasmussen Hospital and Clinics. In this Agreement, the party who is contracting to receive services shall be referred to as Rasmussen Hospital and Clinics, and the party who will be providing the services shall be referred to as ABC Coding Services.


The parties agree as follows:

Description of Services: Commencing September 1, 20XX, ABC Coding Services will provide the following services (collectively, the “Services”):

  1. Provide ICD diagnoses and procedure codes for inpatient services
  2. Provide ICD diagnoses for outpatient services
  3. Provide CPT codes for outpatient services Risks Mitigation in Medical Coding Contracts Essay

Performance of Services:

  • Rasmussen Hospitals and Clinics will rely on ABC Coding Services to work as many hours as may be reasonably necessary to fulfill the obligations under this agreement.
  • Rasmussen Hospital and Clinics will not review assigned coders’ resumes, contact previous healthcare facilities, and reject any coders of ABC Coding Services
  • Rasmussen Hospital and Clinics will not review coded records from ABC Coding Services as to acceptable standards of coding accuracy and how performance will be measured
  • Rasmussen Hospital and Clinics will not terminate the use of a particular coder when acceptable standards of accuracy are not maintained


Price and Payment Terms: Rasmussen Hospital and Clinics will pay a fee to ABC Coding Services for the Services in the amount of $10.00 per coded record. Upon termination of this Agreement, payments under this paragraph shall cease, however, ABC Coding Services shall be entitled to payments for periods or partial periods that accrued prior to the date of termination and for which ABC Coding Services has not yet been paid.

Term/Termination: This Agreement shall terminate automatically upon completion by ABC Coding Services of the Services required by this Agreement. Either party may terminate this agreement with or without cause by submitting a 2-day written notice.

Relationship of Parties: It is understood by the parties that ABC Coding Services is an independent contractor and not an employee of Rasmussen Hospitals and Clinics. ABC Coding Services employees may be eligible for fringe benefits, including health insurance, holidays, paid vacation, or any other employee benefit from Rasmussen Hospital and Clinics.

Legal Fees and Court Costs: In the event any legal action is taken to enforce this agreement or any portion thereof, the party that prevails in that suit shall be entitled to recover from the other, reasonable attorney fees plus the cost of said suit.

Notices: All notices required or permitted under this Agreement shall be in writing and shall be deemed delivered when delivered in person or deposited in the United States mail, postage prepaid, addressed as follows:

Rasmussen Hospital and Clinics, P.O. Box 45, Mytown, MN

ABC Coding Services, P.O. Box 87, Ourtown, MN

Such address may be changed from time to time by either party by providing written notice to the other in the manner set forth above.

Entire Agreement: This Agreement contains the entire agreement of the parties and there are no other promises or conditions in any other agreement whether oral or written. This Agreement supersedes any prior written or oral agreements between the parties.

Amendment: This Agreement may be modified or amended if the amendment is made in writing and is signed by both parties.

Severability: If any provision of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision, it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited. Risks Mitigation in Medical Coding Contracts Essay.

Waiver of Contractual Right: The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party’s right to subsequently enforce and compel strict compliance with every provision of this Agreement.

Applicable Law: This Agreement shall be governed by the laws of the State of Minnesota.


Signature Party Receiving Service _________________________________


Signature Party Providing Service___________________________________



Review of the current contract with ABC Coding Services

A contract is to be signed between ABC Coding Services and Rasmussen Hospital and Clinics. ABC Coding services will be charged with the responsibility of coming up with common medical alphanumeric codes with regards to medical services, healthcare diagnosis, equipment and procedures in an efficient and effective manner.  Extraction of the codes in medical diagnosis and procedures can be obtained from medical records in results from the radiology, laboratory results. In addition, it will be the responsibility of ABC Coding Services to ensure that the process of billing for obtaining information from documents, allocating right codes and creating claims to facilitate payments is as precise and proficient as possible (Johnson & Linker, 2017) Risks Mitigation in Medical Coding Contracts Essay.

Furthermore, ABC Coding Services will have the task to make provisions of procedural codes and ICD diagnosis for inpatient services and CPT and ICD diagnosis codes for outpatient services. Payment by Rasmussen Hospital and Clinics to ABC Coding services will be $10 for every coded record. However, in case any of the parties may need to terminate the contract, a two-day prior written notice has to be provided.

Areas I feel might pose a risk to the organization.

Going by the fact that Rasmussen does not have the provision to review assigned resumes of the codes or reject any coders provided by ABC Coding Services is one of the greatest risks to the hospital. This means that the management of Rasmussen is not allowed to question the integrity of ABC Coding Services which may do away with the standards put across by the health organization to accept any coders presented by ABC Coding Services (Johnson & Linker, 2017).

Another issue of concern is the fact that coded records by ABC Coding Services will not be reviewed by Rasmussen Hospital and Clinics. In other words, this hospital is not allowed to verify that the required standards have been met by ABC Coding Services which puts too much confidence in the precision levels of this company. For this matter, Rasmussen cannot set particular anticipations that ought to be met by the vendor they contract which questions the ways to rate the performance of the company (Jurek, Mosay & Neris, 2016) Risks Mitigation in Medical Coding Contracts Essay.

By guaranteeing that ABC Coding Services employees are eligible for employee benefits form Rasmussen Hospital and Clinics is out of order and a risk to the management of the hospital that needs more attention. This is due to the fact that, ABC Coding Services is an independent organization and not employees of Rasmussen Hospital and Clinics.

Lastly, the condition that Rasmussen hospital and Clinics cannot terminate the use of any coder without levels of accuracy failed to be met is a great risk to the hospital management. By signing this contract, ABC Coding services will have the getaway not to do a credible job causing errors in the entire system that may result in additional financial losses. Another financial risk is tied to the provision of ABC Coding Services for payments in durations accrued before contract termination date. It is likely that the vendor may utilize this opportunity to regain unrestricted overpayment (Popov, Lyon & Hollcroft, 2016).

How I would change the risk areas addressed in the contract.

The best approach to mitigate the above-mentioned risks is not to agree to and make payments to demands that pave way for the vendor to perform a job that is not of particular set standards. With the fact that no review will be done for the medical records, efforts to ensure manipulation of claims has to be provided to counteracting such requirements. This can include a requirement by Rasmussen Hospital and Clinics to the vendor to notify and explain to a physician the existence of variations.

Another best approach is not to permit autonomous changes that give ABC Coding Services the liberty to undertake anything they think of. According to the contract, ABC Coding services awards itself a lot of authority. It is evident that it provides itself the go-ahead to perform a number of complex tasks and changes. Despite the goodness of the demands in the contract, the requirement to provide an earlier written notice in case there is a need for amendments has to be reconsidered Risks Mitigation in Medical Coding Contracts Essay.

Therefore, both ABC Coding Services and Rasmussen Hospital and Clinics need to come to an agreement with regards to both parties achieving satisfaction. Measures to ensure that the hospital validates the integrity, accuracy, and credibility of the services provided by the company needs to be met by particular measures laid down by the hospital agreeable to the vendor. On the other hand, the vendor needs to ensure the services provided to the Hospital are not interfered with by measures set by them agreeable to both parties.



Johnson, S. L., & Linker, R. I. (2017). Understanding medical coding: A comprehensive guide.

Jurek, J. H., Mosay, S., & Neris, D. (2016). Conquer medical coding: A critical thinking    approach with coding simulations.

Popov, G., Lyon, B. K., & Hollcroft, B. (2016). Risk assessment: A practical guide to assessing    operational risks. Risks Mitigation in Medical Coding Contracts Essay.