April 25th, 2013

What hath codes wrought?

A doctor describes how billing codes have changed the medical profession:

Hospitals’ reimbursements for their Medicare-patient treatments were based on another coding system: the Diagnosis Related Group (DRG). Each diagnostic code is assigned a specific monetary value, and the hospital is paid based on one or a combination of diagnostic codes used to describe the reason for a patient’s hospitalization. If, say, the diagnosis is pneumonia, then the hospital is given a flat amount for that diagnosis, regardless of the amount of equipment, staffing, and days used to treat a particular patient.

As a result, the hospital is incentivized to attach as many adjunct diagnostic codes as possible to try to increase the Medicare payday. It is common for hospital coders to contact the attending physicians and try to coax them into adding a few more diagnoses into the hospital record.

Medicare has used these two price-setting systems (RBRVS for doctors, DRG for hospitals) to maintain its price control system for more than 20 years. Doctors and their advocacy associations cooperated, trading their professional latitude for the lure of maintaining monopoly control of the ICD and CPT codes that determine their payday.

It goes on…and on. And expect a lot more of the same sort of gaming with Obamacare, only at an even more convoluted level.

12 Responses to “What hath codes wrought?”

  1. G Joubert Says:

    To understand this fully, you have to include the factoid that Medicare and insurance carriers went to the prospective payment system (DRGs) in the 80s in effort to control runaway costs under the old fee-for-service payment system.

  2. T Says:

    IMO the unseen problem is that when the system gets unbearably complex, people spend their time “broken-field” running through the system. The more time we spend doing this, the less time we spend as productive members of society.

    It’s just like a complex tax code. The more time one spends trying to figure out legal end-runs around the code, the less time there is for actual progress. With this increasing complexity, govt creates a critical mass where, at some point, it becomes more profitable for an individual to game the system than to contribute to it.

  3. George Pal Says:

    The entire point of ‘convoluted’ is the plausibility of allowable, justifiable, and deniable; and the creation of committees.

  4. Lizzy Says:

    From what I’ve read the mandated software is a real pain to use (needless required keystrokes, etc.). It use to be that my doctor would talk to me; now, he sits in front of a computer in the examination room and is busy keying in my responses to the various questions.

  5. Mrs Whatsit Says:

    Lizzy, me too! I’ve been seeing the same doctor for more than 20 years. We’re friends by now and have always spent the history part of the exam face-to-face, chatting about our families and telling jokes between medical questions. Now he sits with his back to me and mutters to himself while he hunts and pecks on the keyboard.

  6. Don Says:

    The answer is free markets. Routine medical care should be paid out of pocket by the consumer; it is irrational that it is paid via a third party.

    Insurance does make sense for very expensive but rare conditions, and long term care. But for routine care it makes no sense at all.

    The key reason for the high costs of our system is that price competition at point of service does not occur. Why should it, when someone else is paying the bill?

  7. n.n Says:

    Obama’s “affordable health care” law addresses increasing revenue, while ignoring progressive inflation, supplies, resources, etc., which ensures that health care will not be affordable in the foreseeable future, and will become progressively marginal.

  8. T Says:

    The key reason for the high costs of our system is that price competition at point of service does not occur. Why should it, when someone else is paying the bill?


    You provide the perfect segue to a Milton Friedman thought:

    When spending one’s own money on onesself, one worries about cost and quality.

    When spending one’s own money on someone else, one worries about cost.

    When spending someone else’s money on onesself, one worries about quality, not cost.

    And when one is spending someone else’s money on someone else, one worries about neither cost nor quality.

  9. Don Carlos Says:

    CPT (Current Procedural Terminology) was invented by, and is owned by the AMA. I am sure CMS pays big licensing fees for its mandated CPT code use/requirement. Any wonder the AMA endorsed Obamacare and supports the admin.?

    I hasten to remind readers that 85% or more US MDs are NOT members of AMA. Like the GOP it is not what it was. Today’s members are weasels.

  10. Michael Adams Says:

    I read the Obamacare bill before it passed, unlike the majority of Congress critters. I was struck by how very much the bill does to magnify the problems with today’s health care, too costly, but mostly, too fragmented. Last fall, my wife had her gallbladder out. From seeing the doctor to getting the X-Ray to seeing the surgeon to actually having the procedure took nearly two weeks. I am a nurse, and I could see that she was a classic gall bladder patient, as could the doctor. There was also a problem when we got anything integrated. The anesthesia department wanted to see an EKG, not unreasonable, in view of her age. BUT, having it at the hospital, we were charged four hundred and fifty six dollars American for this simple test, when we could have gone across town and had it at the doctor’s office for a third of that amount, or less. Yes, insurance hides the costs from the people who pay the bill, but ten percent of ten grand is still a pile of money.

  11. Don Carlos Says:

    You omit some important data on your wife: How sick was she with her GB? Two weeks from PCP to abd CT to GB surgery is entirely reasonable if she was not acute, and I suspect she was not. Otherwise, her GB saga would have started at an ER, most likely.

    You read the Bill before it passed? All 2700 or so pages? When others could not get it? How did you?

  12. Ymarsakar Says:

    The Left intends for the system to fail. It’s not that they go out of their way to break things or that they fail due to incompetence.

    It’s part of their overall long term strategic goals. They don’t go out of their way primarily because they don’t need to. Things will break so long as their plan continues on.

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