The process of billing for insurance payments on medical treatments is far from perfect. Some studies indicate that certain medical bills may have error rates of 80% or higher, with errors ranging from misused procedural codes to minor spelling mistakes. Although there are multiple reasons driving such staggering levels of billing errors, a large portion of the errors come from mistakes made during the coding process, which involves extracting relevant information from physical or electronic medical records and clinical documentation for purposes of creating insurance claims for patients. During this process, medical coders may input an inaccurate code which could result in the patient being liable for a much larger medical bill or lead to denials from insurance companies which would require the coder to re-submit a corrected claim.
Given medical coders have to work through over 1 billion patient charts per year, the monetary cost and waste of resources from making mistakes could compound rapidly. There are at least 250,000 professional medical coders dedicated to this sole task which add up to $14 billion in operational costs for hospitals or individual clinics. This is on top of $17 billion of administrative waste per year that is created by errors in billing mistakes that require re-submission of corrected documentation. Although some health systems may code in-house, the majority of the work is outsourced to third-party providers that have dedicated revenue cycle management capabilities. The medical billing outsourcing market is projected to reach $17 billion by 2021, and will continue to grow at more than 10% CAGR.
A major driver of increased outsourcing in medical coding has been the shift from paper-based medical records to electronic medical records. Instead of relying on bulky coding manuals and sifting through individual sheets of paper medical records, coders are now able to remotely access a plethora of electronic medical records with just one click. As a result, medical coders no longer have to be located in hospitals or offices near physical patient records and can even work for outsourced providers remotely. Another catalyst has been the switch from ICD-9 to ICD-10 coding system which increased the number of medical codes from 17,000 to more than 150,000 in an effort to include more diseases and treatments. Although the new coding system now allows for more precise billing of medical services, it resulted in an increasingly complex system that required more specialized education for medical coders.
The growing demand for specialized coding services, alongside the increasing focus from hospitals to reduce the cost of billing procedures, has led to an increased dependence on breakthrough technological solutions to streamline the billing process. Relying on the latest technologies such as machine learning and Natural Language Processing (“NLP”), companies are now able to use computer algorithms to identify key elements of the language from large sets of data. One such application is assigning medical codes to patient records. Only about 20% of the information in an electronic medical record is structured as clinical data, while the remainder is unstructured clinical documentation such as notes from physicians, which are much harder to decipher without the use of technologies such as NLP. Companies that are able to more accurately detect key words and compare against a clearly defined set of coding guidelines could significantly lower the level of coding errors that is prevalent in the industry. Moreover, these language processing systems only get more accurate over time as they continuously receive feedback from previous interactions about whether the results were correct or wrong.
Kli Capital portfolio company, Nym Health, is at the forefront of this technology and has built an autonomous coding software that incorporates superior language processing capabilities that capture the full clinical picture of each patient visit and then use this clinical understanding to automatically assign relevant medical codes to each patient report. The company’s highly accurate system is able to achieve over 98% accuracy while also completing the task much more quickly and efficiently than a human coder. A certified human coder can code a medical record in about 12 minutes, while Nym Health can code a record in under five seconds. Given this technology requires zero human interaction, the company is also able to drive lower operational costs for customers such as hospitals and revenue cycle management companies that are able to reduce the size of their coding team. Their technology has revolutionized the revenue cycle management process for their customers by reducing overhead expenses, lowering claim denials from insurance providers, increasing coding efficiency, and driving reduced accounts receivable collection times. Moreover, the platform ingeniously creates an audit trail that allows customers to easily monitor the exact steps of how specific codes were assigned through AI-based algorithms, which is more difficult to monitor when conducted by human coders and is often a risk that the healthcare company has to manage through additional validation processes.
The Tel Aviv, Israel-based company was founded in 2018 by Amihai Neiderman and Adam Rimon, two founders with extensive product and software development experience.
“Through our autonomous coding technology, we are able to introduce to the market a fully autonomous and compliant coding solution with higher efficiency, lower operational costs and an overall streamlined process to hospitals and patients, allowing everyone to benefit from a more accurate claiming process,” said Amihai Neiderman, CEO and co-founder of Nym Health, “We are truly excited to continue to improve the patient experience while helping the hospitals improve their revenue cycle management. We firmly believe that we are transforming the revenue cycle management process”
The Company raised a $6 million seed investment round in 2019, led by Bessemer Ventures with participation from other investors such as Zach Weinberg and Nat Turner (founders of Flatiron Health), and Kli Capital, among others. We at Kli Capital are enthusiastic about Nym Health’s differentiated NLP platform and believe that the company has exponential growth potential as it partners with larger customers such as health systems that are searching for ways to streamline their billing processes or by offering services in complementary areas such as malpractice insurance claims.
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