The Effect of Prospective Payment System on Coding Practices in Kentucky Hospitals

The purpose of this study was to identify the effects of the prospective payment system on coding practices, resource allocations, quantitative and quantitative standards and organizational structure in medical record departments of 108 acute care, general medical and surgical hospitals in Kentucky. The study results revealed changes in coding practices consistent with the demand under the prospective payment system for more timely, complete and accurate information for billing purposes. Additionally, accurate data were needed to establish a reliable case-mix data base upon which future reimbursement formulas would be based. Increases in human and capital resources, especially in the area of software purchases to enhance the coding function were documented. Standards to measure coding quality and quantity had not been consistently developed in Kentucky hospitals. Use of developed coding standards for performance evaluation of coders was not widespread. Activities to optimize reimbursement \u27ere employed by hospitals mostly on a concurrent basis. An organizational shift of the medical record department responsibilities to the finance area was not documented. However, a greater interdependence and cooperative relationship occurred between medical records, finance, administration and the medical staff