Article Highlights How Medical Codes Affect Healthcare Costs

A very interesting look into the world of medical coding was published in today’s New York Times. The article tracks the case of a woman who suffered an emergency that required being helicoptered from one facility to another and a total bill of more than $350,000 for a three-week hospital stay.

Medical codes have their roots in the bubonic plague epidemic in the 17th century in England. The World Health Organization took over the process in the 1940s and renamed it the International Statistical Classification of Diseases, Injuries and Causes of Death, or more commonly known as ICD-9. Those codes describe just about every medical process known to man. Hospitals and healthcare facilities use the codes when billing for the services they render. Insurance companies are experts in understanding the codes, but, in most cases, individual patients are not.

Each billing decision, then, can be seen as a battle of coder versus coder. The coders who work for hospitals and doctors strive to bring in as much revenue as possible from each service, while coders employed by insurers try to deny claims as overreaching. Coders who audit Medicare charts look for abuse to reclaim money or fraud that needs to be punished with fines. Hospital coders teach doctors — and doctors pay to take courses — to learn how they can “upcode” their charts to a more lucrative level with minimal effort. In a doctor’s office, a Level 3 visit (paid, say, at $175) might be legally transformed into a Level 4 (say, $225) by performing one extra maneuver, like weighing the patient or listening to the lungs, whether the patient’s illness required that or not.

Individuals without insurance pay as much as 2.5 times for medical procedures and doctor’s visits as those with insurance, according to a number of different studies.

In working the case profiled in the article, patient advocate experts figured out that the medical center spent less than $60,000 treating the patient, despite sending her a bill for $356,884.42. The case nearly went to court before a settlement was reached. Terms of the settlement were not disclosed.

One of the problems is that coding has become such a specialty that it is actually increasing the cost of healthcare.

That discrepancy comes, in part, from the prolonged negotiations over payment and the huge number of coders, billers and collectors who have to be compensated: Their salaries and loans from those years of training in obscure languages are folded into those high charges and rising premiums. In addition, as is often the case in warfare, the big conventional army can be at a disadvantage: The insurance companies and government seem to be always one step behind the latest guerrilla tactics of providers’ coders.


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