I have blogged frequently about the irrationality of hospitals bills (see, for example: Two Reasons Why Medical and Hospital Bills Are Such a Mess; High Deductible-Health Plans Causing Hospital Billing Problems; Upcoding Can Result in Greater Healthcare Costs After EMR Deployment). The New York Times recently published a lengthy, well-written article about the relationship between the high cost of care and hospital bills (see: Those IndecipherableMedical Bills? They’re One Reason HealthCare Costs So Much). Read the whole thing -- it's will worth your time. For this note, I want to concentrate on the hospital coding for medical services and how it contributes to the high cost of care as described in the NYT article. An excerpt is shown below:
There are, of course, many factors that have led to the United States’ record-breaking $3 trillion health care bill: runaway drug prices, excessive testing and sky-high charges for even the most basic medical interventions. But all of those individual price increases have been enabled — indeed, aided and abetted — by the complex system of billing and coding that underlies bills....That system, with its lines of alphanumeric codes and arcane medical abbreviations, has given birth to a gigantic new industry of consultants, armies of back-room experts whom medical providers and insurance companies deploy against each other in an endless war over which medical procedures were undertaken and how much to pay for them. Caught in the crossfire are Americans...left with huge bills and indecipherable explanations in languages they cannot possibly understand....[Billing] codes became an invaluable tool, a common language for epidemiologists and statisticians to track the world’s afflictions. But over the last several decades in the United States, codes gradually took on a bedrock financial function as the basis for medical billing.....Coding systems begot new coding systems, because few hospitals wanted to be paid according to Medicare’s relatively low DRG standards. And because strategic coding meant increased payment, that begot coding specialists and coding courses and coding degrees....Seemingly subtle choices about which code to use can have large financial consequences....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 nutshell, the coding of medical services by hospital personnel drives the generation of the bill that patients receive. For most of us, these bills are incomprehensible, partly by design. As stated in the excerpt above, "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." If you have health insurance, you are partly or even totally protected in that the health insurance company and the hospital each understand the game that is being played. The insurance companies have negotiated to pay a certain percentage of the bill and are aware of the tendency for hospital upcoding and will challenge payment when it occurs. However, the system is rigged for the uninsured, self-pay patients, who may have little recourse when challenging hospital bills.
In a previous note, I suggested that the uninsured patient should approach the hospital billing office at the time of admission and negotiate a discount in exchange for a promise of cash payment (see: Hospitals in California Offer Steep Discounts to Uninsured Patients). In this era of high-deductible health insurance, however, even "insured" patients suffer financial pain from a hospital bill. Uninsured patients patients may thus need a knowledgeable advocate to review a hospital bill for coding errors and upcoding. I can't vouch for the site, but Healthcare Bluebook claims to list “fair” prices for hospital services, defining fair as a small premium above the average fee local providers accept as payment from insurers. Web sites such as this one may offer the names of lower cost providers but consumers need to be aware of potential quality differences across various providers. The lowest cost provider may not be a bargain in many situations Of course, none of this advice will be of value at the time of an emergency admission to a hospital when time is of the essence.