Code Red, Code Blue, Code Crazy
by Kristin Chambers
Imagine you make your living crafting gorgeous pottery bowls, mugs, and plates. You know precisely what your materials cost and how many hours are required to create your products. Being a savvy businessperson, you keep tabs on what your competition is charging. To arrive at the best price for your product – one that compensates you fairly and is reasonable in the eyes of the buyer – you crunch all the numbers and come up with a cost. Simple economics.
But what if your customer doesn’t pay you directly or only pays you a fraction of the cost? What if the customer paid a flat fee to a company (call it Comp-A) to pay for whatever he or she decides to buy? In that case, it is in Comp-A’s – and its shareholders’ – best interests to squeeze you to hold costs down. It’s a big headache to haggle with Comp-A so you hire Comp-B to negotiate your prices. Now, it’s in Comp-B’s shareholder’s interests to find the highest price it can force Comp-A to pay.
This being the digital age, both Comp-A and Comp-B hire people with computer skills to “code” all the customer’s buys, assigning labels and dollar values to all their purchases. Let’s say that Comp-B expects you to be compensated for a set of dinner plates the customer bought but Comp-A says they’re only salad plates and won’t pay the full price. You probably want to tear your hair out about now!
This, of course, describes an aspect of the health care system in America (and only in America) where each billing decision can become a battle of coder versus coder. An example cited in “Those Indecipherable Medical Bills? They’re the Reason Health Care Cost So Much”, NY Times Magazine, 3/29/2017, is of a patient who had a heart problem. If a hospital coder indicates the diagnosis code for “heart failure” instead of the one for “acute systolic heart failure,” the difference could mean thousands of dollars. Hospital coders teach doctors – and some doctors pay to take courses – to learn how they can “upcode” their charts to a more lucrative level. A Level 3 visit could be upcoded into a Level 4 visit by performing one extra maneuver, like weighing the patient or listening to the lungs, resulting in a fee upgrade whether the patient needed the procedure or not.
Another example in the “Those Indecipherable Medical Bills” article concerns a woman who suffered a stroke. She was uninsured and thus on the hook for the entire bill – a whooping $356,884.42. She offered to pay the actual cost of her care; the hospital countered by offering a 20 percent discount, trimming the bill to $285,507. She shared her story on Facebook and several experts came to her rescue. In vetting her bill, they encountered roadblocks from the medical center who did not want to reveal an itemized list of their charges. It was finally determined that Medicare would likely have paid $80,000 for her care, the VA would’ve paid $70,000, and a medical-billing expert determined that the hospital actually spent less than $60,000 treating her.
Twenty-five percent of United States hospital spending is related to administrative costs, “including salaries for staff who handle coding and billing,” according to a study by the Commonwealth Fund. Attempts by the government to control questionable coding has fueled attempts by coders to creatively pad their invoices. For example, when Medicare declared that it would pay a set fee for the first hour and a half of a chemotherapy infusion, and a bonus for time thereafter, a raft of infusions clocked in at 91 minutes.
This entire mess begs for reform. That insurance companies’ business model pits them against health care providers in a coding war for profits is simply outrageous. We need to establish what care really costs, including fair compensation for doctors, hospitals, nurses, medications, and all the ancillary expenses of providing health care. Doctors absolutely deserve to be paid for their education, their years of sacrifice, and their ability to practice the art of medicine. But doctors and hospitals shouldn’t be incentivized to perform procedures that aren’t necessary or in their patients’ best interests.
Americans are wrestling over the shape of our health care system of the future, unsure whether we should, or can afford, Medicare-for-all or should develop some hybrid of public and private plans. This is a healthy debate. What is clear is that our current system is unhealthy. We must have universal coverage. No one should face a bill of over $350,000 for a product (a three-week stay in hospital) that cost less than $60,000. That’s just code-crazy.