The accuracy of hospital trusts’ clinical coding has improved significantly in the past three years, but remains very poor at some organisations, according to the Audit Commission.

The commission’s assurance review of payment by results information for 2009-10, published today, found 11 per cent of clinical codes were wrong. This represents an improvement of 5 percentage points from 2007-08, when the commission’s payment by results programme started.

Codes recorded for payment by results are used to plan and monitor services as well as for billing commissioners.

The commission said the error rate in healthcare resource group information, which is based on the clinical coding and used for billing, has also steadily fallen since 2007-08.

However, the worst performing trust, which is not named by the commission, has an HRG error rate of 28 per cent.

Audit Commission head of health Andy McKeon said: “It is clear the NHS has put increasing attention on getting its coding better, helped by the assurance framework. It is pleasing the errors and range among trusts has reduced, but it is still too high and there is obvious room for improvement for those with far higher rates.”

He said this year the commission is concentrating on trusts which have most to do to improve.

For the first time the commission has estimated the total NHS spending accounted for by wrong codes in some areas. Of the £21bn spent between 2007-08 and 2009-10 nationally in four specialties - general medicine; trauma and orthopaedics; cardiology; and paediatrics - the commission said £1bn was paid on the wrong resource group.

In general the errors mean hospital trusts are underpaid in some cases and overpaid in others, so neither they nor commissioners are systematically losing out.

The review included national findings on data for outpatient procedures also for the first time. It found significant variation in trusts’ error rates, and that primary care trusts were generally slightly overpaying trusts.

The commission said its 2010-11 work would include helping PCTs analyse the impact of their providers’ coding; looking at the implications of tariff and payment changes, including acute readmissions; and assessing the impact of clinical coding on hospital standardised mortality rates.

The commission’s report says PCTs in particular need to improve how they scrutinise provider information and contracts.

It said: “We believe commissioners can improve their contract management and monitoring and understanding of provider activity.”